Interview with Whispir CEO Jeromy Wells: Strong growth ahead!
October 21, 2022
We spoke with Jeromy Wells, CEO of Whispir (ASX:WSP), about the company’s unique communications platform that it’s rolling out across Asia and North America.
Full transcription below.
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Marc: Hello and welcome to Stocks Down Under. Today we’re joined by Jeromy Wells, CEO of Whispir. Welcome, Jeromy.
Jeromy: Marc, thank you for having me.
Marc: No worries. We are clients of Whispir, right? We use it every day for our Stocks Down Under subscribers, but for viewers that don’t know WhispIr, can you talk us through what you guys do and, you know, why clients need you, basically?
Jeromy: For sure. At the simplest level, we do a few things. We simplify the complexity of communications management. It’s actually quite challenging to deliver accurate information to people on the right device at the right time on the channel that they prefer and sometimes in the language that they prefer. And when we think about the communications ecosystem, there’s a lot of different channels. There’s email, there’s SMS, there’s voice, there’s text-to-speech, there’s social channels, there’s WhatsApp, there’s Viva, Telegram, and what have you. And it’s not possible for organizations to send communications across all those channels and be consistent and do it manually. Now, organizations really spend a lot of time thinking and being thoughtful about their communications. But they really need tools and software to automate those processes so that they can be leaner, more efficient, and be more impactful. Because you want the communications to be engaging. Now, we all receive a lot of email with PDF attachments, but increasingly we are mobile-first. And to see content that’s optimized for your mobile device that’s flexible, that’s dynamic, that you can respond to is a lot more powerful.
Marc: Right. All right. And so some of your customers have hundreds of use cases, right? Can you talk about one or two that are sort of most common among your customers?
Jeromy: For sure. Well, I think the strength of our business is the diversity of use cases that we support. Really tens of thousands of different use cases because our customers use our no-code tools to build their own templates and to build their own workflow. And so they can start small with a single-use case. So for example, the Australian Red Cross Blood Service uses our platform to communicate with people that are going to give blood. So once you’ve scheduled an appointment, you’ll get a reminder the day before reminding you not to take, you know, well, to remind you not to have any alcohol the day before or anything else. And to remind you of the time of your appointment and to ask you, would you like a milkshake or what flavored milkshake you would like to improve engagement.
And that way, they’re capturing more information. You’re much more likely to go and turn up to your appointment if you know that they’ve made you a caramel milkshake and it’s gonna be on your chair whilst you’re in the chair. And if they send you a reminder the day before, the percentages are of people attending much higher than the cost of actually sending any communications or licensing the software. So it saves them money as well as getting more optimal use of their infrastructure. That’s a simple use case, right? So it’s kind of relatively straightforward, but we do much more sophisticated things. When you think about Queensland Correctional Services who manage the prisons and related facilities in Queensland, 95% of their employees do not have email on their phones. And so they rely on manual calls.
So voice-based calls in order to capture information from the edge of the organization. Now there’s a lot of calls, so there’s a call center, people will… So, if an employee is doing their rounds and they identify that there’s a broken lock, or there’s a burst water main, or they’re feeling threatened, or there’s inappropriate language, then they can report that using Whispir. And to access a template to slip from a few variables, because these incidents are highly repeatable. They’re often similar. And then when they report that incident, that can then trigger a response. Maybe they’re feeling unsafe and they need support, or maybe that content that there’s a burst water main or what have you at that facility then goes to a facility manager. You don’t need a human call center to facilitate that communications management and there’s a record of everything. And the challenge with voice-based communications is there’s opportunities for misunderstandings and for errors to occur. I thought you said this, you thought you said that, and action wasn’t taken. And so we reduce errors, but we make organizations much more efficient and we drive a, well, we enable them to drive a digital transformation agenda across the businesses.
Marc: Right, Right. We don’t do caramel milkshakes, but we use it to send out equities research. So yeah. We’re in terms of Net Promoter Score, we’re big fans of Whispir even apart from, you know, the share price developments, that’s [inaudible 00:05:10.540]. So yeah, we’re big fans. Looking at what’s happened over the last couple of years, COVID had a big impact on the company. We’re coming out of the pandemic now. Can you talk a little bit about what the effect was initially and where you are now in terms of revenues derived from messaging around COVID, etc.?
Jeromy: For sure. Well, COVID had a huge impact on everyone. And you know, for some organizations, you know, it really put pressure on them. You know, we saw Virgin went into administration for a number of months, but they continued to use Whispir every day and paid our invoices on time every month because we’d become part of their critical communications infrastructure. That said, for the vaccination rollout, we obviously, played a critical role in delivering and enabling communications to people around the vaccination rollout programs or appointments, follow-ups, health checks, and what have you, which is very sophisticated, complex communications. And our platform was elastic enough so that it could surge to support these workloads across various states. What that did is it’s validated in the market here in Australia in particular, just the enterprise capacity of our platform and what we’re able to achieve when organizations are under pressure. That has created a sort of a flywheel effect in the sense that we now have bigger, more sophisticated, more complex customer opportunities that we might not have otherwise had access to, which is terrific for our business.
So our pipeline is looking really strong and it has created I suppose a lot of follow-on initiatives. So when organizations implement Whispir, if it was to assist people would, in terms of working for home, they’re creating new business processes. Now, these are not flippant transitory things. These become part of the new ways of working. And what we see organizations do is incrementally building out new use cases over time. They’ll start with one use case and build it out two, three. When they get to three use cases, generally, our customers nearly always renew their contracts. So we have very sticky long-term relationships with customers. Our net revenue retention’s about 125.5% year on year, which is a really strong number, which talks about the support we’re providing organizations. And it’s not digitization. And digital transformation is not an easy thing because, you know, you have to think about what a next-generation service would look like. How do you envisage it? How can it be mobile first? How can you get the quality of differentiation cut through that reflects your brand, that reflects your organization? It’s not just taking a 12-step process and turning it into a mobile form. So that takes time. And that’s why we see, you know, growth in our customer base starts off small, but you know, after 18 months, 2 years we see customers really kicking on, putting more workload on the platform.
Marc: It’s probably good also to mention that while you serve airlines like Qantas and a whole range of other type of companies, the platform is agnostic, right, in the sense of what the content is.
Marc: So that’s a good thing. But selling is, to some extent, done through the telcos as well, right? So in Australia, for Telestra is a very big component of delivery of service. It’s Cintel in Asia. So that’s a big part of your strategy. Can you talk a little bit about expansion strategy, you know, how you drive long-term growth? And maybe also focus on the U.S. because obviously, that’s the holy land for anything scalable, basically.
Jeromy: For sure. Well, we have an awesome, profitable, thriving business here in ANZ and we really respect what we’ve been able to achieve with Telstra. But we still have a long way to go. We probably have sort of 30%, 33% market penetration here in terms of the enterprise sector. So there are many more enterprise customers, and I would say nearly all of our existing enterprise customers can do more. So, Australia is still a lot of work to be done. Asia is quite different. I mean, Asia, we have a fabulous portfolio of blue chip customers already, but our mega deal with Cintel last year in December, really has transformed our business. The beauty of having carriers as customers for their own use was obviously, they get familiar with the platform and they use it every day themselves, but they’re well placed to introduce market-ready, proven technology to their customers, which delivers on their brand promise.
Now, even though our wedge sales strategy is to start small and to build out and grow over time, you might say, “Well, it doesn’t really shift the needle for the telco in terms of new revenue.” What it does do is it gives them the opportunity to talk with different stakeholders about business solutions’ impacts, and to move away from commodity-based conversations just around price, speeds, and feeds. And that’s really valuable to the carriers. So those two relationships work well here in ANZ and in Asia. In North America, we have carrier relationships and we also have our own digital direct capability. Well, the key objective for us is to build referenceability in North America as quickly as possible. So that we can have a portfolio of customers that people can identify with, can be trusted, they might even know them, and can be comfortable that we are an appropriate fit for them.
Now, we’re going flat out. Now, it would be fair to say that our growth hasn’t met our expectations for what we would’ve liked to have achieved, but we are being very considered about how much capital we deploy, and we are judicious about how much money we’re spending there. We have been obviously working with our channel partners and our channel partners brought us an awesome deal at the end of last quarter. It’s our first seven-figure deal. And it really plays to our strengths, which is the depth of the platform, the ability of the platform to do heavy lifting that other, sort of, point solutions are unable to support. And so, it’s really given us a spring in our step and great to see that product market fit validation in North America.
Marc: Yeah, awesome. Look, it’s impressive in its own right. I think that you’ve got these deals with Telstra, with Cintel because the ASX is lured with companies that thought they could get the telcos to do the sales work for them that never got anywhere, right? Because telcos, sales guys, salespeople, I should say, at telcos have, you know, they are risk-averse in a sense. If you got multimillion-dollar customers there’s an added risk of bringing on a smaller company like Whispir into the portfolio, right? So it’s impressive that you’ve got this far with Cintel and Telstra. And look, I think that strategy could potentially work. Like you said, if you’ve got some reference clients in the U.S., that could be the big push that you need, right?
Jeromy: Yeah, for sure. And this customer came from one of our telco partners in the U.S.
Marc: That’s even better.
Jeromy: It’s so good. But we really respect the carrier and we’ve got a successful playbook with Telstra. We’re replicating that with Cintel. That works. And we’re realistic about what’s involved in dealing with carriers. They’re very large organizations. There’s a lot of different stakeholders that you have to bring on the journey, but we’ve done that work successfully here at ANZ and we’ve well and truly kicked that journey out for Cintel.
Marc: Yeah. So maybe you answered this question already, but what is your biggest challenge right now? I mean, if you talk about the U.S.
Jeromy: So we have so much opportunity. That’s the biggest challenge. So we have terrific opportunities in Australia, Asia, and North America. And it’s really, you know, our objective is to deliver positive even to our operations in the second half of this financial year.
Marc: Which is only two months away, basically.
Jeromy: Yeah. And that’s a really important priority for us. But at the same time, we’re still investing in R&D. So our R&D spend was about $16.8 million last year. It’ll be about $17 million this year. So we’re not taking our foot off the accelerator in terms of the R&D, but having said that, we have to balance competing priorities to get that optimal model through the next phase of our growth. But we are looking forward to sustainable, profitable growth from the second half of this year.
Marc: All right. And what’s keeping you up at night? What do you worry about?
Jeromy: Well, I think we’ve gotta be respectful for these challenges with cybersecurity and, you know, making sure that we’re doing everything that we reasonably can to protect customer data. Obviously, we’ve built a reputation for security, resilience, and scalability. In December last year, we won the Department of Defense here in Australia. So, I think that we have a role to play in supporting customers dealing with these challenges and these issues. But it creates interesting opportunities for our company as well. And so there is this sort of concern about, you know, the unknown and, you know, bad actors and what their intentions are, but we have built a really strong security team, and that they do an awesome job in terms of protecting our digital assets. So, I would say that that’s the number one risk that we have to contend with and it’s evolving. I think the other challenge is we are in an environment where regulation is changing, where governments are responding to the community in respect to this unwanted spam that they’ve been receiving in different channels. For us, it’s a rare opportunity. Because of the regulation, companies are unable to use simple pipes and simple communications tools because the regulation requires them to do many different things. And you cannot do that at scale without software, which is really good for us. And so we have a role to play there. So changing regulation is something we’ve gotta be super vigilant about. The security things we have to be vigilant, but, you know, we have a very much a full purpose organization. We’ve got a very stable workforce, we’ve got an excellent leadership team. We’ve got a clear vision for where we’re going as a company with no anxiety, we’re well-funded. Like there are many things that we don’t have to worry about.
Marc: And that’s good, right?
Marc: Yeah. All right. Well, it sounds like there’s much more opportunity than there are challenges I guess. So, for investors, there’s a lot to look forward to, especially at the current valuation, current share price. I mean…
Jeromy: Totally. And you think about the implications of 5G. You know, business really hasn’t got its head around 5G, and into a limited extent, the carriers haven’t either. And when you think about 5G, you go, “It’s gonna be faster.” But 5G is much more than just speed. There’s all sorts of services that you can innovate in the 5G environment that you can’t support in other networks. We are super well-placed to support carriers and our customers in this modern 5G world. So we’re really looking forward to it.
Marc: All right. Exactly. A lot to look forward to. Jeromy, thank you very much.
Jeromy: Marc, thank you. Thank you very much.