SpringBig Holdings, Inc. (NASDAQ:SBIG) Q3 2023 Earnings Call Transcript

So, that’s one issue that you have. But the other issue you have is the cycles of the people working those accounts to try to get them paid. So, we’ve gotten much more aggressive in terms of if they’re not paying by a certain date, we suspend their services. That does bring a lot of them back to the table, by the way. So, it is helping us kind of reengage with customers and get them back to the table to pay what they owe, so their systems can get turned on. But there are just a larger percentage of customers than we’ve seen in the past that just cannot afford to pay their bills. So, they just can’t pay it. And what’s happening, if that’s the case, is we are suspending their services, turning off their ability to use the platform, and sending them to collections to get paid because on the one hand, we don’t want to take the cycles on our side from an accounting standpoint to manage that process.

And number two, we want to make sure that we’re not counting on revenue that were suspect is going to get paid. So, we’re getting more aggressive. I do think we’re getting through a lot of them over the last few months. So, I think — I wouldn’t say we’re in the eighth inning, but we’re definitely not in the second inning. We’re probably somewhere in the fifth or sixth inning of this process, basically cleaning out customers that quite frankly, are just not healthy customers. They’re not paying their bills, they’re not healthy. So, we’re probably in the fifth or sixth inning of cleaning out the unhealthy customers, and we’re adding in new customers and all of the new customers that we’re adding in to avoid this issue in the future, we are putting them on a prepaid system.

So, therefore, we don’t have to worry about going to collect from them. We are actually going to make sure that they’re prepaying for their services. So, before they get to use the platform or before they get to send out messages, they paid. And if, in fact, they run out message credits from their subscription, and they need to buy more during the month to fulfill whatever marketing needs that they have, they’ll have to buy those credits upfront. So, as we clean out, kind of, like these accounts that just weren’t paying their bills, when we add in all these new accounts, this issue will greatly be diminished because we’re moving all of these types of customers to prepaid accounts.

Scott Fortune: That’s helpful.

Paul Sykes: Scott, we may get a little bit of pressure on revenue but we’ll certainly see some in the bad debt expense we’ve been experiencing. So, we’ll have a lot higher quality of revenue.

Scott Fortune: Yes, for the industry, [indiscernible] but you can’t control that, that you can from there, and that’s great. And then one last question for me. You provided a little bit of color on the adoption of subscriptions by SpringBig and that loyalty, VIP loyalty base. What’s going to really drive that ramp? And then how should we start looking at that kind of cadence or the opportunity from a revenue standpoint going into 2024? Just kind of a little more color of the opportunity there as we go forward.

Jeff Harris: Yes, sure. So, from a subscription standpoint, the key for us is focusing on our customer base that have larger consumer bases. So, we have a — we have two additional programs that are launching. One is launching next week, one is launching a week after that just have much larger consumer bases because this is this is a play on larger consumer bases because some percentage of that consumer base is going to join the VIP program, our retailer’s VIP program. So, we’ve had over 20 client signed contracts. We have four programs that are actually active right now. It is taking a little while for retailers to kind of think through and build out what their VIP program is going to look like. And then in addition to that, they need to make sure that they have the time to train their retail staff because this actually gets sold in-store for the most part.