Expecting solid margin gains. Our Adjusted EBITDA estimate of $11.2mm is just above consensus at $10.8mm. We expect another solid quarter of Adjusted EBITDA margin expansion (18.1% vs. 16.8% last quarter and 15.7% in Q1/F24), driven by better revenue mix and flat cash OpEx. Our H2/F24 Adjusted EBITDA margin forecast is in-line with the mid-point of the reinstated F2024 guidance.
Potential update on its capital allocation strategy and GenAI plans. There has been a significant improvement in FCF generation this year, with >$10mm in FCF in H1/F24, almost equal to the total for F2023. We expect the improved FCF performances to continue, as we forecast FCF nearly doubling in F2024, helping provide more flexibility from a capital allocation standpoint.
Last quarter, management indicated it planned to provide colour on its capital allocation strategy this quarter. We believe M&A could be back on the table, with tuck-ins more likely until its valuation materially improves and/or its leverage materially declines (2.2x exiting Q2/F24). M&A has historically been a key catalyst for the stock, albeit under the prior management team.
Early GenAI-enabled features have focused on contact center solutions, where it is likely seeing the most GenAI-related competition, as features like real-time transcription services, summarization, sentiment analysis, and chatbots for agents are becoming must haves. We look for updates on related customer uptake, which should help drive ARPU expansion, and new GenAI releases.