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6ec732207ccaa729dbec4fea6da4ae52 | Yeah. This is Ryan Leonard on for Manav, and also wishing you the best, Sally. Just in terms of the long-term targets, I was wondering if you could just help us out -- I mean, we've -- this mid-single-digit has been thrown out there before. So I'm just wondering if you can break that down at all in terms of -- is that from volume growth, is it from pricing, is it expect new show launches. Can you just help us think about how we get there, just in terms of some buckets? | I mean I'll start and then you can add. I mean in terms of where does mid-single-digit growth come from, I think we talked about the opportunities within value-based pricing over time. The initiatives are focused on improving the show. So we would expect volume growth within shows over the longer term. And we have a number of new show ideas, new show launches that are being considered. So I think it's a combination of all of those things. One, no more than the others at this point. Plus the diversification of the revenue stream, which Brian discussed earlier, we believe, is going to also lead to growth. | intermediate | [
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3a8585935ebd02b38ba1be14487a40ec | Got it. And then just on that diversification, is that really focused on existing shows that exist today? Or do you think there is a need to diversify the current portfolio of shows? | The current outlook right now is we're looking at how we can diversify revenue in all of our existing shows, wherever those opportunities arise. And then as we contemplate new launches that may happen in the future. Of course, we'll be looking to contemplate how those types of bundles are built into them from the day one. | direct | [
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f9b8029a9a0c0157d22c255e8c3f82fd | Got it. And then finally for me, just on the cost management side and the growing at a profitable margin, is it safe to say that if revenue growth is mid-single-digit, EBITDA growth should be in line with that, if not better? | So I think that's a good question because, ultimately what matters is EBITDA growth. That's our primary focus. And I think, obviously, revenue growth is key. Margin plays a role. But when you're looking at revenue -- at EBITDA growth over time, getting the growth rates, I would suggest, is probably slightly more important than pushing for the highest possible margin because growing business at a slightly lower margin is worth more than a contracting business at a very high margin. | intermediate | [
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113af2191fec659fc17bbf0ee598593a | Thank you. So based on this value-based pricing, I mean, how should we think about price increases for like the total show portfolio in '20 and '21? I know that it's not really being implemented until 2021, but just thoughts over the next two years would be helpful. | Yes. So the overall effect, you're right, aren't really going to bear out until 2021 based upon the cyclicality of the way the shows run, whereas I mentioned earlier, introducing the value-based pricing modeling across a handful of our shows at this very moment. Can't do everything at once. So we're doing this in batches. We'll be moving forward into additional shows and how value-based pricing rolls on to them over the course of next year, which will have an effect forward as those shows stage two. So we're looking -- those will be 2021 and into 2022. And David, this is Phil. The current pricing yield growth is in the 2% to 3%, which is pretty typical and pretty -- we've always seen over the last couple of years. So I think that's sort of our expectation going into 2020 and then a little bit of a boost potentially in 2021 from the introduction of value-based pricing in a bunch of the shows. | direct | [
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c76e0edc5a6e0696be691e7782027d79 | OK. Great. That's helpful. And then just given the current assessment of the portfolio, just any update on potentially discontinuing any shows? | We're always looking at what makes the most sense for our portfolio. At this point, we don't see anything that makes sense to discontinue. At the same time, it's always an open question. And as we continue to analyze and go and continue to look for proof points about the effectiveness of the tactics we're employing, that may change. But at this point, no. | direct | [
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cdb1f7dfd2dcd168a06b53ffbe20776b | Got it. OK. And just last one, just quick housekeeping. What was organic growth for the three segments? | I don't have the supplemental materials right in front of me right now, but it's on the website, the breakdown between trade shows, other events and other marketing services. | fully_evasive | [
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98242770238a774aa7bdb9647d448455 | Great. And Sally, best wishes on the road to recovery. In terms of the revenue, kind of the non-booth revenue at an accelerated rate, Sally, any sense of -- what's been your experience there? And then within the context of that, what does the revenue look like on the non-booth versus booth? And does it change the seasonality of the business and/or the predictability as you start -- as that becomes a bigger percentage of the contribution? | So we're in the process of running pilots right now and in 2020. Those pilots will help us size the opportunity and help us see which of the various things we could pursue will be most effective at what shows because there will be some variability. So I think that the opportunity is considerable over time because for Emerald, overall, it's a smaller percentage of our revenue than it is for many trade show producers. Our booth revenue -- our pure booth revenues are about two-thirds of our revenues. And then some of the non-booth includes commissions and other things related to really the trade show. So the third or a little bit less than a third is what we have to work with in terms of kind of non-booth. | intermediate | [
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9eb746b2aafcbc3736fca496edee9d23 | And what would be a more traditional mix? | Hard to say because I'm not privy to the exact details. But certainly, my model from what it should look like in future years would be that we continue to grow our booth revenue, but decrease our dependence on it. So I could see us in a place where our booth revenue is 50% of our total revenue. And the other half comes from conferences, from education, from sponsorships, from content marketing, from a whole list of things that we can be doing given the fact that we have a digital presence that we're not offering today. | intermediate | [
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c6a6678abdec4fea5e7ef153c5eaeaeb | Got it. And then would you -- Sally, theoretically, would there be similar revenue growth contribution? And would you expect that non-booth obviously would grow faster? | It's really hard to predict at this point until our pilots are done. So if we do it right, there's -- obviously, we're in changing markets where things like education matter. And it's hard to predict how much growth we'll see where. But we're confident that it's there and that we can gather it over time. | intermediate | [
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2b604568625b94204fa984e7ed236024 | Thanks for taking my question. And Sally, best wishes for speedy recovery as well. Just a question on New York NOW, just -- if you can provide some color on the expectations for revenues, how much revenue could decline in -- for the Feb show? And when should we start to see the turnaround for the New York NOW? Is summer 2020 when we can start to see it turn around there? | It's Phil, I'll try this and then Sally, you can come in. I mean, we have a new leader over the show. So -- and as we said in the prepared remarks, we're really taking some time to look at what we've got and what we need to do. We believe in the long-term growth opportunities of this franchise. It's really difficult to say when that will come through. And certainly 2020 maybe a little bit soon for it to see that flow through. But there's a lot of initiatives going into the first show in February, new things happening. We're responding to the research and really detailed research and analysis. And so it's -- we're playing the long game on New York NOW, and we'll continue to move forward. But I think 2020 and summer 2020 which was your question maybe a little soon to expect it to stabilize. In general, we feel good about retail as we've seen with ASD, which is now returning to growth. So I want to be clear that we think our New York NOW issues are not related to retail as a category, but more to the fact that we haven't executed in as customer-focused way as we could have. | intermediate | [
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a40a791d56f7e7c7a73f5a286c31e7c4 | That's really helpful, Sally. And maybe -- again, thanks for providing the details on the strategic initiatives. My question was some of these including value-based pricing or integrated customer solution, does that require exhibitors -- may require exhibitors to spend more money and just some thoughts around that, just propensity for the exhibitors to spend more money, particularly in an environment where businesses seem to be slowing down their spend. So any thoughts on that front. | So I'm going to ask Brian to address that. My only remark is that it's all about ROI. Yes. And so it's really about, again, the value that the exhibitor gets in the package that that company purchases. We've seen in the past as we've rolled these out before in a variety of different sectors that as long as there's transparency, the expectation around what the customer will receive and the value for that is something that -- is well welcome because there -- again, there's transparency. There's a set of packages, not just in the space but other types of things, promotional opportunities that come along with that oftentimes, and that aggregate package and the value that it brings is something that customers tend to find very attractive when they are considering a value-based price model. | intermediate | [
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2a7e98db34c7a9f0ef76eadb249555c4 | Hey, good morning. This is Gunnar Hansen in for Seth. And again, best wishes to you, Sally, on your recovery. Brian, I guess, just with the value-based pricing to follow-on that, are there certain sectors or categories or even show sizes that are best suited and positioned to benefit from value-based pricing? Is it -- maybe give us some color on the success you've had among different categories or even size of shows? Is it easier to implement this sort of strategy in various types of shows, etc.? Or should it be a fairly beneficial across the portfolio? | It should be fairly beneficial across the portfolio. That said, there may be shows that are extremely small, mostly ones that are conference-led or educational-led, where there isn't a large trade show type of component to it, where a value-based pricing model wouldn't make a whole lot of sense, where we spend most of our time on the educational element, particularly in conference revenue. The expo floor plays a supportive role, but not a major role in the contribution of that kind of an event. | direct | [
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7afd6c00ff825b9c9bfa6fc6d246dd8d | OK. Fair enough. And I guess, is this going to require you guys to kind of retrain kind of your sales staff in some of the commission plans that you guys have in place? I mean, how easily or quickly can some of the existing salespeople kind of communicate a different, more dynamic message regarding the value-based pricing? | Yes. That's a good question. And that's part of the reason why it's not a light switch where you don't turn it on overnight. Right? There's the cyclicality of the events piece of it, which is one component. The other part is that the actual -- the design of the floor plan, the messaging around how to communicate value to customers that also takes time for the sales teams to be able to communicate effectively. And so while we're designing this and looking at pricing elasticity models, at the same time the sales team themselves are very involved in the process, and so they're seeing the kinds of packages and value delivery that these customers are going to receive. So they're becoming tuned to it even as the discussions are happening internally so that they're then able to deliver that message much more effectively, crisply and communicate that value to customers as the packages become available to them some months in the future. | direct | [
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09aaa4901c7a0cfa92317e61f9e0cae7 | Hi. Good morning. On RPO, you had a really nice improvement in backlog. I'm curious if you could just comment on what's driving that backlog.
And maybe as a follow-up for Shyam, just as you look at the go-to-market on commercial. Can you give us an update on the direct sales build-out and partnership opportunities there? | Hey, Brent. Thanks for the question. Great Q3, we're having a great year with our Q4 guide. We're expecting to do 40% revenue growth for the full year.
And this is driven by continued product innovation, also more efficiencies in distribution like account-based sales, distribution channels. And we're very excited about the progress of our account-based sales team. We've hired about 150 people so far this year. A lot of that has been focused in the US market, where we first started, and many are just getting started, but you can see some of the activity.
We mentioned we've more than doubled our commercial customer count this year, and those numbers are accelerating, growing our installation base is really great because we expand in places where we are. If you look at our top customers, average over $40 million a year of revenue. That's up 35% year over year. Our average revenue per customer was $8.8 million when excluding new customers.
So lot of room to expand as we expand our customer base. Another big driver, US commercial revenue, where we've seen acceleration, we mentioned up to 103% growth, doubling in Q3. Our forward indicators also really strong. Total deal value up 50% to $3.6 billion.
Total deal value in commercial doubled to $2.2 billion. Our third straight quarter of accelerating commercial revenue. And just to wrap up, commercial revenue up 21% sequentially quarter over quarter. | intermediate | [
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9ddf3df96429ab2f6245a81634542ef7 | Thank you for taking the questions. This is for Keith Weiss. There was a really nice performance across commercial and government was strong as well. And sort of with the new administration sort of taking in place in terms of the velocity of those deals and getting those deals signed, any change that you've seen thus far as the new administration versus the prior admin? | No meaningful change there. I mean the government is moving at pace. I think what's really out there is the near-peer threat, and that's become the real pace setter for not only the US but allied countries as well because there's a lot of focus, a lot of speed. We've worked under four administrations, and have seen consistent continuity across that. | direct | [
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7d4843f77c282d9cce2bf6c690066063 | Wonderful. Thanks so much for taking my questions, and nice to see continued strength on the commercial side. Just maybe high level, can you help us understand how the land and expand and go-to-market motion on the commercial side has differed from government in your experience and especially so far this year? And maybe can you talk a little bit about how involved you are at the pilot phase and beyond, and maybe what that time the value looks like. | Great, yes. We talked earlier about modules. That was a big thing a year ago that really changed how we went to market. The modules have been very successful.
Just this quarter, we discussed the carbon emissions management module and Foundry for Crypto. But if we go back a little bit, what we can see is the real success of software-defined data integration, SDDI, and ERP suite modules, where we've been able to really use these modules to meet our customers where they are, predictable price points. It also enables us to really scale channels and enable our partners to help us go to market. So predictable price points, clear problems to go after.
And in doing so, we, at this point, have developed enough success to see that after solving a single problem in an understandable way, it really sets us up to better expand and land the full proposition of Foundry and expand the contract over time there. So we really have a lot of faith in the module strategy, both as a direct sales force augmentation and channel partners in commercial. On the government side, we have seen similar success. We actually won a significant program on a module that is based on readiness.
And so we were able to compete for a multimillion-dollar program with less than a day worth of effort. Of course, we love how it transforms the economics of our business, but I think the speed to value for customers is really what sets it apart. | intermediate | [
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cfba19355319abfeddc3e9eb0f2dab53 | Hi. Good morning. Thanks for the question. I have a multipart one.
So you talked about the recently launched Foundry module around crypto, and I'm just wondering there wasn't really a press release around that. The modules kind of appeared. So finding new use case is great, but I was curious if you could talk about the size of the crypto opportunity. But then also the strategy of releasing modules.
Is it finding lead customers and commercializing it quietly, or really does it depend on the market size and the interest? | Thanks, Mark. Yes. The focus on module is to really meet the customer where they are. Where do we see repeatable challenges that we can create an offering that is very fast to deploy? Last quarter, I talked about how we deployed AML at the largest European retail bank in less than two days.
This gives you kind of an indicative sense of the performance. We're able to integrate with complicated ERP solutions and unlock that data for customers in hours. So we're -- we start with cutting-edge product. And then where we see the module, we invest in it because it gives us innovative distribution.
It enables us both from a direct sales force perspective, but also general partners, and to be really successful in penetrating the market. | intermediate | [
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70ac2fbd4523b41c571f0542d60a1fa6 | Hey, guys. This is Alex Zukin from Wolfe Research. I just had maybe two quick numbers, questions. Roughly, if we think about Q4 guidance, how much revenue do you expect to come from commercial contracts with investment arrangements in the quarter? And then if it is possible to get what percentage of the total RPO would be recognized over the next 12 months? | So on the investment program, we're really excited about the opportunity here. Just to repeat some numbers and get some context with our Q4 guide, we're expecting 40% revenue growth for the year in 2021. That's over one and a half billion for the year. We raised our cash flow guidance to an excess of $400 million.
We've invested about -- invested about $150 million through Q3. Total revenue from the program is about 2% of revenue for the year through Q3, and there's about $640 million of total revenue long term from this program at the end of the quarter. | intermediate | [
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8a91e4bd9417c39e921937fbadd3a361 | I had two questions on, I guess, recent Texas or not so recent Texas freeze. I was hoping first that you could walk you through the timing. Like if that impacts contingents, does that impact this year or next year? And the second question is, what you're seeing in response in terms to increased shopping, following what has to have been a huge number of claims? | Yes. I guess, first, on contingents, Meyer. This is Mark Colby. It's still really too early to tell. What we do know about the Texas storm is that it was considered a catastrophic event, which helps us with contingencies, but again, it's a little bit too early to tell. As far as the shopping experience for a lot of those clients, I can't really speak. I don't think we've seen like a noticeable uptick in that. I think given our go-to-market strategy of being home closings, not necessarily online shoppers. I think, for us, it was a little muted.
We've certainly seen heightened claims activity, and it's not the first time we've been through a major event. We've been through many major events in our -- in the course of business. So while that creates a certain level of taxation on the service team, we're well equipped to handle that, well equipped to deliver great experience. I mean, look, our Net Promoter Scores increased over the quarter from the year-end and retention held steady. So there's no indication that we've seen an increase in our clients shopping. The other thing I'll note there, Meyer, is that compared to a couple of years ago, in 2020, in the first quarter of 2021, Texas only makes up roughly 60% of our premium, which is way down from prior year. So as we get more and more diversified throughout the country, that certainly helps the contingencies as well.
And they were named catastrophic storms as well.
Which are typically excluded from contingency calculations. | intermediate | [
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94f2b25362c0744407e7ba8d58ef45cb | Okay. Perfect. No, I appreciate the clarification. One related question. I guess, when you've got that level of activity, does that impact the expenses associated with servicing claims? | No. No, it doesn't at all. We were able to, especially with our service center in Henderson, Nevada, we have a load balancing capability with our workforce management, and it's just a matter of how we're prioritizing service work. So it does not increase the cost of delivering service.
The clients seem to feel good about as their net promoter score went up. | direct | [
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3534401b35c022fe8ecbd2425b19a994 | I guess, in the course of your discussion, I think you made fairly clear that you're prepared to focus on growth, and you're investing heavily in the business at this point is understandable. I guess what I'm trying to get my arms around is, are you messaging that there will not, in fact, be any margin improvement this year that we should think about last year's margin as sort of the foreseeable run rate while you make these investments? Or do you think there's a degree to which there's enough leverage in the business that you can get some both? | Yes. I think, again, long term, we feel that margins can be over 40%. We don't guide to margins for a reason because we want to keep that flexibility, and again, 2020 was a record year for contingencies. So all that kind of has to keep in mind with how you look at us for 2021 and beyond. | intermediate | [
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47cb18e2943d3af42e0b4c08b1d8c0b8 | Okay. On the direct consumer product that you've been working on, is there any time line related to the rollout of that? Or is that still kind of work in progress? | Mark, this is Mike. Yes, as we said, it's a 3Q deliverable this year for us. And as I mentioned, we'll be scheduling a broadcasted demonstration of the product before launch. So excited for you all to see the new interface, the technology. There is truly nothing like it on the market. It is a effortless, transparent experience. It's a digital agent experience. | direct | [
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0d2416acba6ef6954a11a057a1e3397f | Apart from the cost, you've obviously been incurring to build and ramp. Will there be any particular incremental costs in the third quarter such as advertising or anything like that, that will be associated with the launch? | Yes. I think you're starting to see that already with the hiring of [Indecipherable] as our CMO, and as you mentioned, a lot of the developer time. So we've already started to make those investments. Really, I mean going to the SEO route, things like that, trying to compete with those $1 billion ad budgets is not our plan. Our plan is to be strategic in our investments and to invest in our terms. So we'll have some more detail about that when we release the product.
And we do think the market will create new channel opportunities for us, but initially, we look at it as a great tool to augment our existing channels, which is the real estate mortgage focused client acquisitions and customer referrals. We actually think there's a big opportunity to leverage this to make that referral process easier for existing customers who are saying, overwhelmingly, based on our Net Promoter scores that they're willing to refer for end of family members. So we want to take advantage of that, but we consider that low-hanging fruit. | intermediate | [
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0351e758ddcd5066d11eb15d73d14b5f | Okay. And then related to -- I mean, it sounds like -- I mean, you've continued to expand on the corporate channel. As you listed out the number of new or potential offices, it seems like a somewhat longer list than the last one I recall hearing. Is there is a roadmap in terms of how many kind of corporate offices or corporate hubs that you hope to eventually have? It's a pretty material expansion in the last two years really. | As we've said in the past, the corporate channel is -- we invest there to drive growth in the franchise channel to drive success with our franchise partners. So where we're strategically placing infrastructure is in markets where we're growing that agent footprint rapidly. We know that agents who are closer in proximity to a corporate facility perform better than agents who are further away. So this is an opportunity for us to put resources out in the regions where we're seeing franchise growth that -- where franchisees can leverage easy access to our corporate team who are performing at the highest level of the game and who have a very defined scope of work to transfer that knowledge, transfer that best practice to the franchise channel. | intermediate | [
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c4ddbda0034851b381a883e897d25113 | I'm hoping you can provide some additional color for us around franchise productivity. Tenured agents in Texas last year had productivity of about $120,000 of new business, which is impressive, being that it's almost close to the level of corporate agent productivity. However, we've noticed that the tenured corporate agent productivity topped out at around $125,000. Is there some kind of practical ceiling at that $125,000 level? Or do you think the average tenured agent productivity can grow to something even higher? | Yes. I mean, if you look at agents who are exclusively focused on sales activity, we have not seen a peak in productivity. In fact, our most tenured agent, 14-year corporate agent, has seen productivity increases over the recent years until we moved him into a franchise -- full-time franchise support capacity. So we have not seen the productivity capabilities peak. What you're seeing in the numbers is, again, a deliberate investment. We're making a deliberate trade-off to bring high-caliber talent in the corporate channel and make that talent available in the franchise channel to drive success through training, through lead sales leadership, coaching, mentorship, marketing support. It's very tangible and defined scope of work in a very deliberate investment that we're making. That's -- so when you think about the scope, their franchise support scope growing, you would naturally expect to see that manifest in the productivity numbers. And that's a trade-off that we're very willing to make, and we think it's clearly providing ROI for us when you look at franchise performance. | direct | [
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f17007b353b2cf5d03148bf804767dad | Got you. Got you. My next question is about mortgage originations. What's your best estimate of what your mortgage rate market share in Texas is? | I don't believe we disclosed that, do we?
I think we own, but we can -- I mean -- yes. I think we've said in the past, it's -- in any given year between 13% and 14%, and it's been holding steady at that rate for the past two years.
Yes. And not that we haven't been growing in the state of Texas, but the mortgage market is very strong. More importantly, though, nationally, it's less than 3%, I believe, last I checked.
So big runway.
Even in Texas. | direct | [
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b5c488192b7db4cee71ab411c9b900b2 | I think your credit facility comes due later this year. What are the thoughts there? Is the plan to put a new one in place, extend the existing one? Can you give us a little color on that? | Sure. I guess the main thing, Bryan, is to point out that we still have some flexibility. We do have two six-month extension options. So we have enough -- over a month to decide on whether to exercise those options or not. But as you can imagine, we have started talking to our banks about the facility, and we'll likely make a decision in the next few weeks. | intermediate | [
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6cc8ce523b9f07b7592d6dfe402ba2be | The thought process, I think, when you guys originally spun out was to have a couple of years go by and then maybe seek an investment-grade rating. But I think I recall Adam saying recently that the bond market is such that there's so much demand for just below investment-grade rating that it didn't seem as profoundly important as maybe a year or two ago. Are there any thoughts there at ILPT on seeking investment-grade rating next year? | Yes. I think shortly after the IPO, I think that was the direction we were headed, seeking to get investment-grade rating. But I think what we've seen is that there is a disconnect in valuation between the private and public markets and we've been able to raise fairly attractively priced equity capital through using JV partners, and that's something we'd likely continue with versus issuing shares at a substantial discount to NAV. And our thoughts on leverage are kind of similar. Last year, when we deconsolidated the joint venture, certain -- the private markets thought that the 60% of loan-to-value leverage that we had on those properties was conservative. But meanwhile, it was over 10 times debt to EBITDA, and we were under pressure in the public markets to reduce leverage. So it is interesting how the different markets are using leverage differently. So again, with our cost of equity capital, where it is, I think we are looking to utilize more debt. So I wholeheartedly agree with the strategy of using a little bit more debt and that's why you saw our leverage tick up ever so slightly this quarter. But we're going to continue to look to deploy capital accretively. | intermediate | [
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8d17d19460a4839e988a47613834ba0d | I believe the new acquisition you made in Memphis has 3.6 years left on those leases. When you acquired the property, I mean, what were the thoughts there with respect to renewing those? Do the current tenants -- are they planning to renew in place? Is the location so good, you're just not worried about it? Can you give us a little color on that thought process? | I think it's a little bit of a combination of all of those things. Two of the larger tenants both have below-market rents in relatively short remaining lease term. I think one of the larger tenants, their rents are about 13% below market. The second largest is about 6% below market. We also feel Memphis is a strong industrial market. The buildings are Class A construction. So even if they were to vacate, we feel like our opportunity to release these spaces would be relatively short. So I think it's a combination of all of those factors. | direct | [
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675ed2b0071a992d306cee941fd101c9 | I think John in the prepared remarks mentioned some potential disposition opportunities. I was just looking for some additional color around that, maybe what markets you guys would be interested in selling out of and what type of valuations you would expect. | I did stumble over a couple of words in the middle of my prepared remarks. But I think you may have misheard me. We're not currently looking at dispositions. We've -- we made the Memphis portfolio acquisition. We continue to look at a pretty good pipeline. So we're focused on growth. We sold the property earlier in the year that didn't really meet our investment criteria. But otherwise, we're generally happy with the portfolio we have, and it's very difficult to replace the yields that we get on the properties currently with better yields in the current investment market. So we're not actually looking to dispose of anything currently. | direct | [
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7802be891db59ea5d9bfd9664680564e | How should we think about funding? I know you guys do have some additional buffer here before you get to the low end of that leverage target. But if you guys are active making investments, how should we think about that more longer term? What are the types of sources of capital? And how comfortable would you be leverage tick up toward the higher end of the range? | I'll let Rick fill in behind me on this one. But I think we're comfortable with leverage ticking up, as Rick indicated earlier, and using a little bit more leverage than where we had brought it down to. We do have an off-balance sheet joint venture. Our joint venture partners, being sovereign wealth fund-type investors, move a little bit less quickly than publicly traded REITs move. And so they're evaluating the possibility of taking on some of the properties that we've recently acquired. So I think we have a plan there that may take some time to roll out. But where we would, I guess, going back, maybe the same goes back to your disposition question. To the extent we disposed of properties, we would sell them into our joint venture and retain the 22% interest. And so we would use the proceeds from that process to pay down our line and provide more bandwidth for executing on acquisitions. | direct | [
"direct",
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"fully_evasive"
] | A |
81992ffe62e6768c6cd72aecd34ca3a3 | So maybe if you could talk a little bit about -- I appreciate the color on growth by sort of major business as you think about '21. If you could maybe provide any similar color on runway for growth in the physician's office and what that looks like maybe in terms of round numbers or directionally magnitude of growth? And what's some of the other types of care or channels look like, just to sort of give us a sense of how this all comes together to deliver this 15% to 20%. And then I have one follow-up. | Thanks, Matt. Thanks for the question, and I appreciate your comments. So we don't really provide direct guidance on sales channel. Our stated goals for the office was to be at about 50% of our Advanced Wound Care revenue, and we're moving quite nicely toward that goal. But we do expect to see strong growth in the office. In the second half of the year, we do see some demand starting to reemerge in the outpatient setting. So that's also going to be helpful for us down the road where we'll have growth in HOPD and the office. And what was interesting and exciting in our Surgical & Sports Medicine business unit in Q4 and even for the year, but mostly in Q4, is the additional sales in the, what we call the extremity areas, which is more trauma, foot and ankle surgery, where more of our regenerative medicine technologies can be sold in that channel, quite frankly. Even more so than the spine area, which we also have a significant part of our revenue in the Surgical & Sports Medicine. So all of those areas right now are looking positive from a growth perspective. But the office will certainly be a strong component of our growth, particularly with the acquisition of CPN, which entrenches us a little more and gives us more access to more of those customers in that channel. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
09108bad05989fa27fe33a31b750958c | And I'm sure some other folks have a follow-up on those trends and topics you just mentioned, but I'll just ask one question, if I could, around EBITDA. And you sort of delivered, obviously, a very strong top line growth in the back half. And I'm sure that was a contributor to some of the very strong 23%, 24% second half EBITDA margins. You mentioned positive EBITDA in '21. Can you give us any other color as to how to think about that, either front-half, back-half or full-year expectations? | Yes. So we're not breaking it down by quarter. But I will say, you're absolutely right. What we saw in the back half of the year was very, very strong growth, 57%, Q3. 43% in the fourth quarter. So obviously, that growth has generated a lot of flow through. And so our expectation, we tried to give you some guidance on the key components that would go down to net income and EBITDA. And so hopefully, that will help build out your models. But we wanted to be sure that there was some indication there. There is -- it is a big step-up in growth investments for the year as well. So we are expecting to continue to invest in the commercial resources and have a big expectation around spend around clinical expenses as well. So we think there's long-term opportunity for that 20% EBITDA. But I think we got there a little faster than we anticipated just based on that growth in the back half. | intermediate | [
"direct",
"intermediate",
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] | B |
2dd627e249cfc5d2eaa0883b6077d3e2 | Is it -- if I could just ask, is that mean you sort of -- as you see continued strong growth here in the front half, maybe is it the right way to think about if expenses catch up, investment maybe catches up to some of the momentum here in the front half. And then as you mentioned, back half, you're facing tougher comps, maybe not quite as much, obviously, pop as we saw in the back half of next year. Is that the right way to think about sort of leverage and spend front half, back half? | Yes. Again, I mean, I think we don't want to be providing quarterly guidance at this point. But I would say that your expectations around growth are correct given the comps that we saw in the back half of last year versus the comps from the first half. | direct | [
"direct",
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"fully_evasive"
] | A |
d55ed60d07acec5a8128260ebbc717a0 | I guess the big question I think many are asking is around the guidance. And I appreciate all the color you gave, but particularly around PuraPly guidance and the expectation for that to grow kind of in the mid-single-digit range in spite of what you did in the fourth quarter. I mean when we think about kind of the line extensions and what you could do, maybe just get your thoughts, Gary, around kind of volume and unit growth this year in spite of the reimbursement changes that are taking place. | Well, sure. So I think our Q4 performance, which was really strong. And obviously, Q4 is our strongest quarter, generally. And PuraPly benefited from some of the disruption we had in our amnion manufacturing. So it's a tough comp. Going forward, we do expect unit growth for sure with PuraPly. We have three months of headwind relating to going into the bundle for our larger pieces. So there is some ASP headwinds there. So we've got to overcome those headwinds. We'll do it with additional volumes. We'll do it with our five new additional line extensions and new products. So the unit growth will help offset any sort of ASP decline that we would normally see coming off pass-through, and still overcome -- the fourth quarter of last year was very, very strong for us. So that would be a comp in there as well that we have to overcome. So we think collectively, keeping PuraPly flat to slightly down is good performance. But we -- it's early days with the four products we launched in Q4. Right now, they're trending nicely. If they continue to do well, we'll be pretty confident in that guidance. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
aa055003f4a0f9ba2b41d7cf3530782f | And as far as the enforcement discretion, will we hear about that potentially before that would go into effect? Or help us understand maybe what the range of outcomes could be. I appreciate the conservatism to take it out of guidance for 2021 particularly in the back half. But maybe just the range of potential outcomes that we could see as a result of that. | Yes. So number one, we will not take the product off the market unless directed. So that's the first, I think, important thing. I think the FDA, and though I'm not an expert in the FDA. But the FDA cannot give you authority directly to keep selling because they're requiring all of these products to have a BLA license so they can't -- I don't think there's a mechanism for them to actually say, yes, you can stay on the market. They can certainly tell you, you have to come off the market. That's certainly an action that they can take. So we think they're managing this through the enforcement and selective enforcement where they see risk. So I don't think anybody is going to get a letter that says you can stay on the market. I don't believe that authority exists with the FDA. I think the likelihood is, based on the risks of the product, which is the safety profile of the product and where you are in the BLA process or IND process, will dictate whether or not you'll fall under that enforcement arm. So unfortunately, there's not great clarity on, yes, you can stay on. Only, yes, you have to get off. And then it's just managing and monitoring the enforcement activity. Now we have requested a meeting from the FDA to try to get more clarity and more understanding of how they're viewing our products and, quite frankly, all products. And we haven't -- we don't have confirmation of when that meeting is. It's a type C meeting, I believe, which requires them to meet with us within 75 days. So hopefully, when we meet with them, we will get some more verbal clarity. But we won't leave there with a letter that says you can stay on. Hopefully that was clear. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
c2bb4da38cc3a49c92c98bfdfc7550a4 | ReNu, I understand, I appreciate the enforcement discretion impact from that. But bigger picture, where are we at in the process for ReNu? Remind us kind of where you are as it relates to a potential BLA. And when do you think you could have that on the market more broadly with the proper reimbursement in place. And potentially, could we hear some clinical data updates this year as well? | Sure. So we expect to complete the enrollment in the first half of 2022. We expect to complete the study in the first half of 2023. And then submit in 2023 our filing and then the FDA would have that probably for at least a year, which takes you out to 2024. And this obviously assumes that we're only having to do one trial. If we're -- if it's deemed that we have to do a second trial, it could extend that time out nine to 12 months. But it implies a 2024 approval with a 12-month FDA review based on our schedule right now. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
7b6ea0fc0d64717356edd90203d8d01e | Starting with Affinity, Gary, you've said in the past that demand has outstripped your ability to supply that product. Can you maybe just give us an update on where you are on capacity and manufacturing there. Are you able to satisfy all the demand that's in the marketplace as of this quarter? Or how should we be thinking about that moving through the year? | Sure. So the answer is we're not able to support all of the existing demand today. We did increase our capacity in Q4 last year. That capacity improvement didn't come until the end of December. We were hoping to get it earlier. So we are enjoying that additional capacity in Q1 this year. And we're in the process of getting to the next level of capacity. We probably won't see that until April, May time frame. So we'll start to see some improvement in capacity in the second quarter. Our goal is to get to two and a half times the capacity we had in 2020. We expect that to happen in the second half of the year. So we won't get there until the second half of the year. So that is our goal. We think at two and a half times the capacity, we'll start to make a strong dent in that demand. But as we continue to introduce the product around the country, we think that demand will continue to grow. And we believe we need to get even above the two and a half times going forward in 2022. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
649611ed61e183c90e9fd8887d39690a | Got it. And then on ReNu, I think you have said in the past that you're expecting a data readout for the 12-month Phase II trial. One, is that still on track? How will we hear about that? Will we hear about that and what form? | Yes. That 200-patient study was published -- if you're talking about the 200-patient study. | fully_evasive | [
"direct",
"intermediate",
"fully_evasive"
] | C |
5fc0ec424972b7d9b222bad4f75e757d | Yes. With the 12 months, is that going to -- OK. So that -- what data are we expecting in 2021 from the Phase II or any additional data? | Sure. So just recently, the 12-month data was published just recently. Obviously, as you know, the six-month data was already published though that 12-month data was just recently published. We expect, by the end of this year to getting close to completing our interim analysis of 50% of the patients. And we'd probably have a readout of the Phase III trial, the interim data in Q1 of next year. So those are the key dates at this point. The publication of the 12-month study of the 200-patient study, and then the readout of our 6-month interim data or 50% interim data in Q1 of next year of our pivotal study. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
cc5346c504127e7b56c36ccb26137cb3 | OK. That's helpful. And just on ReNu, can you help us size -- or help us think through the way you're thinking about the market opportunity. How, once available, you would potentially commercialize and what the target market would be and the opportunity there. | So we see the market, which is primarily hyaluronic acid today, of being about a $2.4 billion market. So our 200-patient study that we have completed, and as just mentioned, the 12-month data was just published, was a 3-arm study. One comparing it to one of the market leaders in hyaluronic acid. And obviously, we demonstrated superiority at six and 12 months to one of the market leaders. So we think that with approval and with reimbursement that we would have a significant share of that market. And we'd compete very well with some of the larger competitors in the space today in that hyaluronic acid space. So large market, large potential for the product, if approved, and subsequently, if reimbursed. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
d1ddb7d174140888222cee183699cf5e | I wanted to ask on the amnion business. The guidance for 2021 speaks for itself. I'm wondering what you are seeing competitively. How you're feeling relative to competitive efforts. And are we seeing just also a significant expansion, again, in the overall use of amnions in the marketplace, given the strong guide that you talked about today. | Well, we certainly see an expansion of amnion technology. It continues to be the largest growth technology in the skin subspace. We even see that same growth in the auto biologics space in our Surgical & Sports Medicine business. So amnions are clearly expanding the market and growing. Our product, Affinity, is the only living amnion in the space, so it's a bit unique. So from a competitive perspective, we don't see any product out there that's really challenging it from a technology perspective. And the efficacy that we're hearing from the field is very strong for the product as well. So we feel really good about that. I think just generally, you're seeing more activity from some of the competitive companies. And I think that will continue to expand the amniotic space as well. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
ab0a99ee65dacdf50bd17de248106cb5 | And then just as a follow-up for the pipeline. I apologize if I missed this. But on Novachor, can you talk a little bit more about expectations there and what that adds through your amnion portfolio? | It's a significant product for us. We believe it will be a significant product for us. Its impact this year will not be material. We're expecting to launch that product at the very end of this year. So the revenue impact won't be until 2022. And just to remind everyone that it's the same manufacturer that makes Affinity will make Novachor. That would be the most efficient way to make it because you're basically creating Novachor as part of the process of processing the amnion. But because we have capacity constraints with Affinity, we don't want to take any time or any capacity this year away from Affinity to create Novachor. So we have that issue from a manufacturing perspective. But we do expect to launch it at the end of the year. And it is unique. It will be the only living chorion product, and that's a product we might launch in multiple sites of care, which we think will also give it additional growth opportunities in addition to the product itself has different properties, which make it more useful. And in some ways, have a greater utility for certain types of wounds. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
8ce256964c350cd8e82c739ccad5c1fe | I guess, Scott, if we could go back to your discussions about the engagements with your customers and the delays or maybe it sounds like almost tabling of some of your efforts. I guess, how direct have those customers been, have they given you any quantification? Has it been just kind of an engineer to engineer thing is or are you having communications at the C-level or division level that is giving you pause as far as just their ability to split attention? | Yeah, Cody. So, far there has been no pausing or tabling of our efforts with customers. What's happened is, if we have a customer that we are in phase three with and we're running wafers with them and the wafers are already in the fab, typically this -- those are -- they haven't really changed in priority and will get those wafers out and begin testing. But some customers who we were starting -- we were planning to do new wafer starts, let's say in a few months, they've told us they're not sure they'll be able to start on time and we'll see about that. My guess is on most of those will probably start maybe with some delay and then move more slowly than we would have seen in the past. The bigger issue is for new engagements and new customers where they say, well, I think your technology is really interesting and we want to try it out in this area, but I can't get approval at the start of new R&D programs that will require wafers for some time into the future. So, summary is that for our existing customers, existing programs is not a huge program -- I mean, not a huge impact maybe some slight delays but for newer customers or even newer programs and existing customers it's a little bit harder right now. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
aff7a56c672f863b3131086e7974af0c | You had shifted your attention from new customer acquisition to monetization of your customer program, so are you seeing a material -- you said you're talking about slight impacts of your existing customers or are you counting on those customers to increase engagements and that maybe solidify their interest? | Yeah. The most important thing for us with existing customers is to get programs that we're working on now push to completion and get into production. Although it's great to start new programs with existing customers because generally you can get started faster, there's lower barriers, you don't have to go through all the formal contracts and so forth. But given a choice we'll try to push our existing programs to production as best as we can rather than starting new ones. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
8389e4168b5b3f75c0a391493afa6a65 | You said you put more on your blog about your MST developments, you've not mentioned a thinner layer. Can you expand on that at all here? | Sure. So, our MST is quite thin. I think we say in our annual report that it's on the order of 100 angstroms or less. That's quite small. 10 nanometers or less but now the new -- the newest process nodes are talking about coming along at three nanometers or some fraction of that. So, even though MST is very, very thin we had a question about whether it would be -- some people had questions about whether it'd be applicable at those levels because that those levels they have a really dire need for the type of benefits that MST brings. And so, recently we started some development work on films that are very, very thin and we found they still have a lot of -- they have very good effectiveness and this is information that just really came out internally in the last week or week and a half, so we haven't had a chance to really publicize it and start to get out to the new customers about it. But Robert wrote his blog and we're working on white papers and other information and then going up to the leading customers to talk about that. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
110f582ca09370d04c14937199266c93 | And then lastly for me, just the process, the recipe that you mentioned in the press release that you were able to deliver, knowing that every customer is different what has been the -- I guess, what have you learned from the delivery of that recipe that you can port to other customers or is that not a tailored process that's not necessarily applicable across the board? | No. In this case we're delivering our -- really in many ways the company's crown jewels is our recipe for how you actually build the film in an epi tool. Even if you look at all of our patents and they talk about how the film is constructed, it's very, very hard to build. There's a lot of know-how involved in it, so that's what we deliver to the customer. We've actually experimented in the past with delivering that to someone else to make sure we worked out the kinks and so this one went very smoothly so far. And I think we feel comfortable that we put together a process and a package to be able to deliver that to -- successfully to new customers in the future. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
c41fa3e35287854e2c991d1760365754 | Based on Cody's question, I'm probably going to broach what he was talking about a little bit here. But it sounds like you're seeing some limits to the pace of progress given that most of the fabs out there are so full that there is not much room to run any test wafers here, is that a fair description of what you're seeing here in this current environment? | Yeah, I was telling Cody that we are still able to run test wafers that were in progress but getting new wafers especially for new projects started is becoming more challenging. And I would say on my last update call, which was in early February, we were not seeing that. It's just been something that -- and we are watching for it because even at the beginning of the year the answer is heating up, but this is something we've just in the last couple of months. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
e4e02ca765f8f2d84903021ec054e514 | Are you able to run wafers on projects that have already been started and your customers are very interested like your phase four customer, as an example? Is there any limits to doing that or can you push those through on the original time frames that you're expecting? | So far, we haven't heard about any delays on any of those programs. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
f098b628c313600834cba9ac22582b78 | Are you worried about that, is that giving you some pause, or you feel pretty confident your customers are going to show your wafers to run on schedule? | Yeah, I mean, we've lived through this before. I think there were some delays but to the extent that we were able to make people excited about it is they continue pushing it forward with some delays. I think the fact is, we're not super focused on bringing on new customers right now and if we did then that would be a bigger issue because starting a new R&D program that requires wafers is challenging. But I think the bigger -- the more interesting thing is that a lot of the engineering management of our customers has now turned their attention to trying to figure out how to expand their capacity through innovative means help solve some of these capacity issues not right now -- I mean, not only right now, but also in the future. As you know, there have been a number of forecasts for the semiconductor industry that we're going to grow from about a 450 to $500 billion market today to about a $750 billion market in 2027. And that type of growth is going to come with demand for the same type of chips that are having capacity problems today. So, if the capacity problems don't get solved in the next six to nine months they still are going to have to be solved over the next few years and MST brings a lot of really strong tools to be able to do that for customers. So, I hope that during this capacity crunch it drives demand to us to start working with customers to understand how MST can be useful to them then designing experiments that will run when the capacity becomes available again. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
3739619b8b046e469fe9876605073bee | Anything that Atomera can do to make progress particularly at the customers who were far all along the pipe. I know that you've talked I think for this a couple of quarters about focusing more on those and less so on adding new customers at the early phases here, is anything else you can do or encourage your customers, anything you can do to kind of keep that pace going, especially for leading for the farthest along edge of customer base? | Yeah. One of the things that has been very helpful to us along those lines is our MST CAD. A lot of the phases that we talk about when we talk about working with customers are designed around physically processing wafers and moving wafers through toward production. But you can do a lot of that with MST CAD just through simulation and that's not something that we had available to us a few years ago. So, now even during a period when a customer says, well, we can't -- it's going to be a delay in running these wafers that's going to give us a few more months to just be running simulations that can find better and better solutions. So, when we do get the wafers, we'll have a higher probability of having success. So, yeah, that's definitely one way that we can continue working with customers even through capacity issues. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
8cc25fd1c75265a1d6915a661c6f6186 | With your phase four customer that is, as of today, is on announced in terms of name. Is there any thoughts on when this customer might be announced in terms of Phase or what Phase to enter getting to production or anything like that? Trying to get a sense of when we might figure out who they are. | This customer is extremely sensitive about confidentiality and I'm not sure when they would actually start to loosen some of that up considering the amount of focus that they've had on that. At some point when we do go to production, I think it will become intuitively obvious, but for now, I don't think they're going to want to say their name in the near term. And one of the things I should -- we never talk about specific customers and where they are in the development phase, all of them are sensitive to that type of thing. One thing I want to make clear about this JDA customer is, I've seen a lot of questions coming in about how fast they'll move in from phase four and into phase five but for a JDA customer like this, the work that we're doing is really a mixture of kind of phase three and phase four. They've installed in their fab, that's great. It means they can deposit MST in half an hour as opposed to a month if they have to send it to us for us to process but they still are going to be going into the phase three process of trying MST on a number of different applications and proving it out before they decide to make it available to the business units. So, they might be able to try it a little bit more and then take it into production. So, I know you didn't really exactly asked for that level of detail, which I'm just seeing there's a little confusion out there. I want to try to clear it up. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
a4f8748cbd05717bcaac75fe14aac53c | If MST CAD is gaining traction with the customers, and is it accelerating the conversation then moving customers along the pipeline? | Yeah. As a matter of fact, I'll tell you one of the interesting things that's happening is -- it used to be we would go to customers and we'd have our first conversations, we get into kind of deep discussions about physics and how MST works and how it can be integrated in their product. And then, we would start working on a plan to put it on the wafer, so they can test them and see how well it works in their fab. Today when we go to customers and we have those same type of discussion they instead of talking about building wafers right away we start talking about doing some MST CAD simulation. So, it's much lower barrier for customers to try out our technology and hopefully, we'll get them to make -- when they do they make their wafer runs some higher probability of having success right from the start. So, we've had really good luck with that. I think on almost every discussion we have with new customers or with our existing customers now, we're leading off talking what MST CAD and that's been very helpful for load time. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
5174c1ad8a1515dacc626c93ec41bd5b | We've had a number of questions on the Epi tool. Is it qualified, where is it, is it going to be used by your JDA partner and the timeline on that? | OK. So, our Epi tool is located at the Arizona State MacroTechnology Works center in Tempe, Arizona. It's a world-class semiconductor facility used to be owned by Motorola, who I believe transferred it to Arizona state years ago. Beautiful state-of-the-art facility. Now, why in Tempe, which is just outside of Phoenix? Phoenix is a little bit of a epitaxial center of excellence in the world. That's where there are a lot of engineering -- a lot of engineering town out there that does that. It's also a site of a number of fabs. And when you run Epi you need to have the infrastructure that you need for a semiconductor fab including very large hydrogen tanks and other chemical suppliers that are nearby. Our tool is set up. We are actually processing wafers in there and we're qualifying our film. All that being said, we haven't signed off a 100% on the full facility requirements yet. I know it's been a long time, it seems like we're always right around the corner. I just -- it's hard to understand -- yes, we have this -- there is the wafer processing capability and then there's a whole bunch of surrounding equipment that has to do with metrology and cleaning tools and air handling and a whole bunch of other things that have to all be qualified before we take possession -- official possession of the tool. And I feel like we're very, very close on that but isn't quite fulfilled yet. I guess the upside of that is that we haven't started hitting on our lease yet. The downside is that we don't feel comfortable delivering wafers to customers until we've taken -- until it's met all of those criteria. When we do have that met and I -- again, I do hope it's soon we will have the ability to run customer wafers there or even make -- well, we'll definitely be running our own internal R&D wafers there, and we will have the ability to build wafers ahead of time and seed them into the market and other things to try new business approaches. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
e8e38672f58b5c49247707984ffb3d4d | Do you see any federal government agencies that you're working with to help you advance your goal or is that not on the radar at this point? | Yes, we don't -- we haven't really approached government agencies regarding that. We are -- there's other reasons why we might be talking to government agencies about our technology for our use in various applications, but for -- to help solve the current capacity expansion that hasn't been something that we have done up to now. | direct | [
"direct",
"intermediate",
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7dcef22401d85c5c2ddeb18b646358a2 | Jim, I was hoping you could just talk about how you see the sort of macro outlook one quarter later into COVID. I don't want to put words in your mouth, but it sounds like you have a little bit better feel for how the business is going to fare under COVID. The software renewals sound like they're coming as expected. And the services part of the business sounds like it's down about what you expected. So just wanted you to sort of give us a sense of how you're looking at the world three months later than last quarter? And if it's if you feel like you have a little bit more visibility than you maybe had a quarter ago? | Yes, obviously, we're a quarter into this and probably through the worst of it. It's been eye-opening, right? We weren't really sure how things would proceed. For the most part, our customers are continuing to do their business. The engineers in R&D that we work with are continuing to be very productive, as you see in many of the articles that we're all reading. In our world, people are extremely productive, and our team is and so our customers. And I think we've been supporting them really well. I think that as you look at how things are proceeded globally, we saw things start in China and then moved to Korea, then in Italy and Spain and France and through Europe and then finally to the U.S. and South America. And in a lot of the world, I think things are really getting back much more to normal. Obviously, in the U.S., Brazil, things are still a little less normal, I would say. And then you've got uncertainty around second waves and all that. But as far as the business goes, I think we've even been surprised a bit at how solid all the recurring, all the renewals have been. There's been a tiny bit of more attrition than usual, as you might expect in some of the smaller accounts that are struggling. But in the lion's share of the business, it's very, very solid. Services are down, but that's primarily the software-related services. The revenues are down and on the client engineering services as well. But actually, the customers have held on to the people. And that's a real indication to us that they're just continuing to invest in R&D. So I think we've been we've tried to be conservative here with guide. We've learned things over the last couple of years, and I think we understand the importance of conservatism here. But we're feeling very, very positive, as you can, in the middle of something like this about sort of making our way through it and then coming out the other side much stronger. | direct | [
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01398363dd0d048ff8f6472a2f8128dc | And then wondering if you can talk a little bit about the Altair Units business model. Is that intended to facilitate kind of cloud-hosted usage of your products? And in general, are you seeing more hosted usage of your products during COVID? And if so, how does that affect the business model from a growth or profitability perspective? | So the Altair Units is intended to address a few different things. We've created, if you will, these suites with different price points. And so it gives us the ability to go into different accounts where they may not want access to all of the products, just a portion of the products and going a little more aggressive pricing that fits those markets because we're trying to target small, medium accounts. It lets us come into larger accounts and bring more value. If they want to have different pools, they can do that, as well as go to the enterprise solution or to the mechatronic solution and get what they might usually get, which is a large share of all the products. So for us, it's also allowing us to get the right revenue, if you will, against usage because I think we were tracking higher growth in usage than growth in revenue, and we want to bring that in line. But we think it's still a very high-value solution for customers. And then finally, for cloud, yes, we the units are primarily hosted. And now the customers have the ability to use the same units in the cloud. And we have, I think, a pretty innovative approach to that as well. We introduced Altair One, and that's going to come with the second release of that soon. As far as how much cloud hosting is growing, it's not huge, but it's growing. And I think it's sort of an exorable thing that's coming. And I think we are bringing the technology basically in front of the way that's coming, we think. And I think Altair clearly is best-in-class technology for cloud technology. | intermediate | [
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508ebe0388486562bf810939e5c2e7f7 | I want to touch a little bit on renewals. Last quarter, you mentioned some elongated sales cycles around auto and aero. I guess, first, how have these conversations progressed sort of June, July? Have you seen any improvement in sentiment? It feels like you have and I know I'm sort of echoing the previous question, but I really want to focus on auto, aero. And then just to talk about renewals alongside that. Have you seen customers taking longer to do the expansion? Like as they come up to renewal, are they obviously don't expand the rate that they did? But are you seeing those sort of conversations take longer? There's lot of pressure from procurement. That's what I'm trying to understand. | So on some of the larger deals where we see there's an expansion opportunity, we do see them going a tiny bit slower. We had one that actually should have gone in Q2, for example, pretty large one that we've already closed, and it's a very nice addition for us to the business. But it did delay a bit. So there is some of that. There's no doubt about it. I just want to say, for the most yes, for the most part, I think it's good. We're actually seeing customers who want to use more of our products. They're seeing the value of what Altair brings on both the value and the breadth of products. And we're getting more attention for that actually in this environment. But it does if you want to get your extra deal, you have to be a bit patient and we are. | direct | [
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1e2d41076b9b8e55045212368f9a8276 | You obviously have the simulation product, probably that is SIMSOLID or SOLIDSIM, I said, I would get wrong. But I was wondering how uptake of that product is going, given we're pretty excited about what it's going to do in the simulation-driven design space? Something you usually comment on that and you didn't comment on in the comments, that's why I was getting it. | Yes. So I mean SIMSOLID is continuing to drive usage for us. It also drives a lot of interest for us, which brings the opportunity to sell the other products as well. We integrated it inside of Inspire. The Inspire platform is our simulation-driven design platform. It got a lot of different simulation capabilities inside and the customers were really looking forward to it being in there. And we're continuing we just did the S&WISE deal, and that brings us to polyurethane foaming. We've got a whole suite of manufacturing simulation as part of Inspire. And a lot more stuff coming really fast. Actually, we're pretty excited. So yes, I mean, I think SIMSOLID is on fire. One interesting thing to note is we were looking at the footprint of if you use SIMSOLID versus traditional FEA, the footprint has been about 1/100th the amount of space, if you will, for all the data, all the files and the product. And the new version is now it's 1/400th. It's 4 times smaller than in the past. So that product is, I mean, it's a game changer. | direct | [
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8423d0db95ed1eb06af19a485c2c9643 | Jim, just a real quick question to follow up on Altair One. I caught that you said that will be out shortly. What kind of costs are associated with preparing for that launch? And I guess I just wanted to maybe get a better understanding of, particularly as you provide scalable computing resources for users on the platform, is that your infrastructure? Or would that be just you managing that access to third party infrastructure? | No. All of what we're doing is on third-party infrastructure. You may have seen a big deal that we announced with Oracle. And but we can move those workloads to any platform and if customers want to actually take the entire Altair One solution set, they're going to be able to run it within enterprise as well. All that technology is Altair technology, but we are running it on public clouds. | intermediate | [
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e8ee6ed1b9e17b28e1a0e55575a6a0a8 | Howard, just to follow up on you noted in your prepared remarks, progress with data analytics. Maybe could you provide an update with regard to Datawatch and the progress with that business, particularly with regard to migration over to unit-based pricing. Is that pretty much done? And have we kind of lapped the runoff there where this might be actually contributing to growth at this point? | Yes. No, terrific progress there in terms of the conversion of the business model away from what was legacy paid-up, perpetual type business. So I would say, by and large, lapped, there's still, I would say, a little bit to go over the balance of this year relative to the prior year. But the positioning of the product that you've seen, just a slew of announcements about the enhancements and such in the product suite is terrific. It's encompassed beautifully within our Altair Units released now to really enable our enterprise customers to access all of the technology. So it's there's no drag on that business at this point at all whatsoever. Just an awful lot of opportunity in this segment. | direct | [
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d2382d6041ae43aa63238e19e29d0ae5 | I just wanted to quickly touch base on the software renewal comments of how it's coming in as expected. I just wondered if you saw an increase in churn and how that may be a trend trended over the quarter end through June. And then separately, how did that new business essentially develop both new and existing customers? | So as far as churn, churn is really not I won't say it's not part of our vocabulary, but it's just really not fundamentally part of our business or our business model. As a reminder, our customers use on average something in the neighborhood of 20 different applications over the course of a cycle. So we typically don't see churn whatsoever. And this environment is really no different. There's immense value to what we offer. And as we continue to add into the portfolio, continue to drive more and more usage, I think we have spoken about the stretching of the sales cycle a little bit. And for us, that's certainly not overly challenging because typically, that's when we're talking about expansion opportunities within existing customers, which continues to drive greater opportunities for us. So nothing negative there.
One thing I could add there, I'm not sure if this was part of the question or not. I'm having some extra static here for some reason. But renewals are ahead of last year in a way, obviously, because we add in the prior year's new stuff. So renewals are coming in as expected. Expansion is almost consistent with prior years. Actually, it's a little bit down, but it's not hugely down. And the new is down more 35%, 40% or something. So that maybe gives you a little bit of a sense of what we're seeing. And generally, it's a pretty strong environment for us. We're feeling very positive about things. And as the business continues to evolve to more and more software as a percentage of the total and our recurring revenues are holding in there really strong, first half of this year, they are record levels actually. So we're feeling fine actually. Real solid. | intermediate | [
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6634a17a6c56286f586a8b618a1741cc | Howard, maybe on the guide for the year. I was just wondering how does what does this imply for Q3 and Q4 in terms of linearity? | So the movement in terms of the top line per se, when we reduce the top line, was really just our view on being conservative and in particular, on the services side of our business, which you can see the results in Q2 here with software-related services and CES. And the shift upward on our range on software products is really an indication of what we think is really the driver and, as Jim said, our recurring software license rate, the percentage of revenue as well that is software product is really quite strong. So when you look at our expectations for Q3, you're talking about software product revenue growing 3% to 5% from the third quarter of last year. So that's what we've guided to. We believe we're being pretty respectful and conservative of the environment. And we're we continue to see great nice opportunities to expand our customer penetration and attract new. | intermediate | [
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cdf8ef5b9f4472720afacf0c62c49a01 | Just a quick follow-up on the Altair Units model. I guess, first, do the suite still allow for tinkering with other tools outside of maybe just the products that are within that particular suite? And then second, has the suite centered around a physics discipline? Do you have a CFD suite? Or is it end markets like you have an aero suite or an auto suite? | So to answer the last question first. There's not an aero suite or an auto suite. That's not how we did it. We have basically, industrial designers, mechanical designers, concept engineers, mechanical engineers, mechatronics engineers, data analysts and enterprise and the enterprise suite. So that's how we've organized it. And each of those actually is additive to the solutions that are available on the previous. So that's how it goes. And that actually fits well within most of our customers. Obviously, we have customers that are pure data analytics customers, think of the financial services. We have added some products that such as composer, which makes sense because you can develop Python or hard technology and compose. But customers like our traditional manufacturing customer that might want to use data analytics tools both in the engineering solution engineering departments and in financial departments or marketing or other and then use the enterprise solution across the board. Does that make sense? Or had I lost you? | intermediate | [
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d1261222b7503a2b66482d94e5883be0 | A quick follow-up on a lot of discussion on renewals and net new, and it's great to hear that the renewals are holding up. I'm just curious, is it possible that renewals are also holding up at your competitors? And so that may be impacting your ability to take share because in August 2020 may not be the best time for an engineer to benchmark a new product, to test new tools at a competitor. And so you just they just say to themselves: I'm just going to make do with what I have right now and not add a part-time job on top of my full-time job. | So first of all, I always like to say that the market that we play in and that our competitors play in is actually a pretty darn good market. So I think all the ships are rising. Let me say it that way. And you're right that there are certain teams that are going to say: this is not the time for change. But we, frankly speaking, are also seeing a lot of teams that are feeling a lot of stress now in terms of their spend, and they're trying to evaluate which tools should they be using. And in some cases, in quite a few cases, they're deciding to make those moves. | intermediate | [
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cacb9b8cba3d3c907c8c30c349cd11f1 | Jim, I realize that your SMB business is relatively small at this stage. But it is something that is an initiative at the company. Are you seeing any more buying hesitation with smaller customers than you already with your larger customers in that market? | Probably, I have to admit that I'm not I maybe not as informed as I should be. We are more and more going indirect to the very small customers, much more so than we were doing before. And so for us, it's a new space. And so we're actually seeing probably more activity than we were seeing before because we've been somewhat aggressive there in terms of partnering and also some of the business development activities that we've done. But there's no doubt that smaller companies are more impacted by the current situation than some of the larger companies that can be more resilient to this. | direct | [
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bb0e0e71b53c1b16341ef25cd63e62c7 | And then with respect to what you saw in different geographies, could you just talk a little bit more about where you're seeing weakness and where you're seeing strength? | Yes. I was looking at the numbers this morning, just to because I thought somebody might ask this question. And actually, the growth or the flatness to the business is pretty consistent across the board actually, between the Americas, EMEA and APAC. So in general, I think we're seeing things somewhat equivalently. The Americas a little bit stronger I'm going to say, a touch stronger. And I'm not even quite sure why that is. But in general, it's fairly consistent across the board. And that might be looking backwards instead of looking forward, by the way, because I think things hit overseas harder earlier in the year, and then they come to the U.S. So I think it's going to sort of balance that out. | direct | [
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fe844a0be7c9ce5192a4d7573e4d7bec | Maybe I wanted to just start with one. I know, Steve, that you mentioned that the ARR decline in Q1 was slightly larger than expected. I'm wondering if you can maybe give us a view of linearity in the quarter. I know there's the differences between the seasoned cohorts and the first-time renewal cohorts. But as you look at January versus March and the macro environment, are there any differences that you can paint in terms of performance as the quarter progressed over the last three months? | Let me take that, and Steve can jump in. So from a linearity point of view, there are two parts of this. One is the new ARR, and second is the churn ARR. When you look at the churn, Arjun, I think what we had guided was that we saw rationalization from a handful of larger accounts early that hit us -- that was going to hit us early in the quarter, and that happened in line with expectations. And then the months gone better, as we had projected. So this overall gross retention was roughly in line with our expectation with the highest had been in January. In terms of new business, I think new business generally follows the linearity of January being slower than February and then March being a lot larger. What we saw was, we did not see as much of a pickup in March as we expected. We had several large deals that we saw that got paused and some got delayed and especially in EMEA. We are -- EMEA was an important growth vector for us last year. We had several large deals that were progressing there. I'll give you an example of a large chemical manufacturing company. We had a large six-figure deal that we were working there. And then as the material cost and the price of gas went up, they paused that deal. So that's what we saw. So from a linearity point of view, March was not as strong from a new business perspective. Yeah. And just to add a little flavor, we did actually go over the high end of our guide on revenue and did beat the bottom line. But as Sharat mentioned, they are -- they come in a little lighter than expected as EMEA was the largest contributor to that factor. A little flavor on EMEA. In 2021, EMEA was 18% of our revenue and was actually one of the faster growing parts of the business. I think in 2020, it was 16% of our total revenue. In Q1, EMEA was 17% of our revenue. So we definitely saw an impact from the macro issues that we're seeing out there in the world. Now as we mentioned, we do expect that Q1 will be the trough in the ARR, and we do expect to see improvements in the following quarters. We would expect to see better gross retention going forward. And additionally, with the launch of the new products, we would expect to see stronger expansion, upsell and new business. | direct | [
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ed98eb1f561c364957ea879042fecdbc | Just as we reopen here and folks return to in-person events and in-person meetings, can you just give us a sense of what your customers are asking for from in-person and hybrid solutions and maybe where you are in being able to deliver on that with some of your newer capabilities across the in-person and hybrid landscape? | Yeah. Let me answer that, Arjun. First of all, what we have seen on our platform is extremely telling. The attendee engagement on our platform as measured by the length of attendance and the engagement tool interactions reached a record high in Q1. I mean the longest attendee spend for people on the platform. So we didn't see really any digital fatigue on our platform. We just -- we saw more engagement from the attendees over there. Now I just want to be clear about one thing. Our virtual conference, which tends to be generally more one-off events, is less than 10% of our business. As we evolved our platform for the post-pandemic world, the two new products that we launched, ON24 Forums and ON24 for go live, our focus really is to build this sales and marketing, digital engagement platform that helps our customers capture first-party data, drive continued pipeline and engage with prospects. So whether they are doing a webinar series or they're doing customer advisory boards or they're doing roundtables or they're doing the hybrid virtual events or partner enablement, our focus is we have all the piece parts, we have all the interconnected experiences, but all of them drive first-party data. That's the solution based on hearing from our customers that we have provided for them. Our solutions, for the most part, are hybrid-enabled. | intermediate | [
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f460093e15dfef8c8db30ae145fbad2b | Great. This is John Godin on for Scott Berg. And thank you, guys, for taking my questions. First, just looking at the revenue guide, the operating loss guide, just curious where are you taking out from the current incremental cost in the model. Do you see it as more of a permanent reorientation of the cost structure or maybe some temporary reductions related to the macro headwind? Thanks. | Yeah, this is Steve. Let me talk about the puts and takes on the revenue guidance, which is -- and you were breaking up a little bit there, but I think that's what you were asking me. So the midpoint of the revised guidance, it is 195 -- I'm sorry, $193 million. That's compared to the midpoint of $202 million, which we provided previously. So it was a $9 million reduction on the top line. First, the macroeconomic backdrop in March did become more uncertain, especially in EMEA, and this may continue throughout the year. And at this point, we are assuming that it would all -- so as a result, we are expecting to see lower EMEA revenue this year. I made some comments earlier about EMEA as a percentage of revenue, but just to recap, in 2021, EMEA was 18% of our revenue, and it had been trending higher. In Q1, it would drop to 17%, and we're expecting softness in EMEA for the remainder of this year. So if it were to drop to, say, 16% of revenue this year from the 18% it had been 2021, that would equate to a 2% reduction in our revenue or approximately $4 million less in annual revenue on a $200 million run rate. With the overall lower revenue to attach services to and the commentary on services I provided in the prepared remarks, you can assume $2 million or so of the reduction in the revenue guide would come out of the services line. Now the remainder of the reduction would be from a more cautious outlook we are taking as we get more visibility into near-term post-pandemic digital budgets. And we're also factoring in a little bit of additional macro risk on the churn into the revenue guidance we're providing. John, let me add to the question, if I may. I think one of the things that you mentioned was is this transitory. We believe that what we are seeing is transitory. We've been preparing the company for post-pandemic normalization. We believe on the churn side, which has been a large part of our focus for the last four quarters that we have hit the trough, going forward, we expect that that will improve. The gross retention of our existing customer cohort, which is the largest it, has been in line. We had, had some down in there, but we believe that is under control. Similar to the first line, renewal cohort is smaller and we are seeing -- we expect to see better retention there. So as we look at our business, we look at it from a gross retention, net retention and new business point of view. So if gross retention improves with the new products, we expect net retention to improve and then, of course, new business. And finally, one other comment I want to make, we have -- ON24 has done well in good times and uncertain times because when the times get uncertain, companies are looking for a cost-effective way to drive pipeline and engagement. So that's why we believe that we are in a time that is transitory, and we -- our focus is to get back to pre-COVID levels of growth in due time. | direct | [
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8b3a469701d60bbd3778cb3b8ddb2be7 | Great. Thank you. And Sharat, you mentioned your customers are changing how they're using the platform a bit. I'm wondering if they can present a little bit more and maybe provide some color on how some of your new products are resonating here. Thank you. | Yeah. So for the longest time, we had the live experience with the Elite platform, the Engagement Hub that took all that content and made it always on and then we had the personalized product. Then we also had a managed services virtual conference product and everything feeding the first-person data. But as we listened to our customers during COVID, I mean, they loved our engagement. They love our first-person data that help them drive revenue, but they were calling us out for, hey, we need this -- we need all your branding. We need all the customization, all your engagement tools, all the compliance and others, but we also need a lot more collaboration in the platform. We need people talking to each other as opposed to them being more in control that's why we launched ON24 Forums. And the product has just come out of the oven, and we've had one of the fastest growth in pipeline for that product. Similarly, when we had the managed -- we had the virtual conference product, which was more managed services and required services, our customers are telling us, hey, Sharat, we need a simpler product, self-service for these virtual events that we can do roadshows and very simple self-service product. That's what we added with ON24 Go Live. And again, our focus is, John, is -- our focus is to consolidate all the different sales and marketing use cases for customers: webinar series, virtual events, customer advisory board, roundtables, partner enablement, one platform that a company can have with the right branding that drives their first-person engagement data. So again, based on hearing from our customers, that's why we have made those advancements. And VIBBIO on top of this will allow us to add a lot more video capability into our platform, and that's why we made that acquisition. | direct | [
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7086d449453af008e2103886df60c76d | Hey, thanks for taking my question, Sharat and Steve. Pardon me for my bad throat. It's a follow-up to the earlier questions. If possible, could you please break down the top line guide or just kind of parse it out a bit to elaborate on the underlying factors? I know in terms of relative impact, still provided a good level of detail regarding Europe and how much of it was due to rationalization with a significant portion of large deal renewals because kind of more in line. But can you also comment on the general lengthening of the enterprise sales cycle dynamic that you mentioned last time? Is it still something which is kind of playing a role here? | So I think you talk about two things. The sales cycle was the second question. The first question seems to be what we are seeing in terms of rationalization and others. So let me provide a high-level feedback. As we previously had talked about, I mean, we talked about Q1 being the trough. The rationalization from the handful of larger accounts was in line with our expectation, expectations, Shrenik, OK? Similarly, the gross retention was roughly in line with expectations. That's why we've -- and going forward, yes, there may be plus and minus, but I expect that gross retention should roughly be in line with what we are thinking about. We believe that we've seen the worst of that -- worst of that. Now when we talk about ARR was weaker, it was predominantly that we saw in March that some of these deals got paused, especially in EMEA, OK? Now we did expect post-pandemic budget normalization. We talked about this in the past. But the macro background became more uncertain, especially in EMEA. And the reason this is even more pertinent, EMEA was our fastest-growing area in 2021. If you will recall, we talked about investments that we're making in Germany and Southern Europe. We saw a good traction last year in technology, life sciences and manufacturing. So that's where we saw some deals paused. That being said, we are making significant improvements in our FY '22 initiative. We talked about improving our customer success function, the launch of new products and the partner enablement category. Now you asked another question in terms of sales cycle. I think sales cycle in Q1, Shrenik, was consistent with what we saw in Q4. I think Q4 -- Q3 is when we saw some lengthening of the sales cycle, I think Q4, it normalized. So I think we were happy with what we saw in terms of sales cycle. Three to six months, our sales cycle has gotten shorter. They're higher in the enterprise. We do expect that as we bring in more products, as we go higher in the organization, that the enterprise sales cycle may lengthen. But at least in Q1, we did not see that. But even if the sales cycle and the enterprise lengthens a little, it will be for larger deals, and those deals will have a higher retention profile. | direct | [
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b05d185657554a3a748c5aeabd13f8f9 | Got it. Got it. Thanks a lot, Sharat. Really helpful. Just one other quick follow-up. Sharat, on the multiproduct and new product adoption trends, I know it's early in the product life cycle. As you mentioned, you guys closed a number of these deals. Kind of seen one of the fastest rounds, as you said, regarding the new products pipeline. And a couple of examples that you share with the semis and the employee experience. Now you mentioned mid-30s multiproduct mix, compared to roughly, I think, 35% last quarter and an increase in mix going forward. So just like at a high level, where do you see this mix kind of growing to in the near term and then in the medium to long term with all these new product rollouts? | Shrenik, I just want to make one clarification. I think the multiproduct adoption was not mid-20s last quarter. It was -- it stayed about the same, approximately the same. I just wanted to make that clarification that I heard that right. I can't immediately comment on what it will be in the immediate term, but I am increasingly confident that as we consolidate the various sales and marketing engagement use cases, our target here is to get that number to 50% and greater, sooner the better. Because now we have six experiences that are feeding the first-party engagement data, Shrenik. And really, this also allows us an opportunity to experiment a lot more with price bundling within the enterprise, OK? So that's what we are very focused on right now. Our focus is to get that number to 50% as soon as we can. | direct | [
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8a0b5245df6497e802904efed0fca250 | Hi, guys. This is Hannah Rudoff on for Brent today. Thank you for taking my question. First one is just that glad that you're seeing that positive feedback on the new products you've introduced the last few quarters. I guess, how long until Forums and Go Live become meaningful drivers of revenue? And what does that path look like? | Yeah. So just to provide perspective, Forums was just launched, and it's currently in very -- we've got trials going on. And as you know, Go Live we launched at the end of last year to get into kind of enterprise level of quality, took us about 60 to 90 days. It's early that's why we have not factored in these new products in our forecast. But my expectation is that within the next 90 days or so, we should start seeing some level of lift from these products. It's a very important part of our institution. I think in about a couple of quarters, we should be able to really start seeing some impact, but I do expect some incremental impact in about a quarter or so. The other thing I also want to mention is it's not only these products, but what it does allow us to really now basically, listening from our customers, have run sales and marketing, digital engagement platform allows us to consolidate those sales and marketing use cases, allows us to elevate the conversation more to a CMO and CRO level even more so. And I think that's the thing that is even more exciting to me. | direct | [
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7daee24b454fd3ccb57afab7092de68f | Yeah, that's great. That makes a lot of sense. And then second question. We're now over a month into Q2. I guess can you talk about what you're seeing in terms of pipeline build and demand generation so far this quarter? | Yeah. We are seeing good additions to our pipeline, especially for the new products that we talked about that we've seen one of the fastest start. And personally, you asked, because ON24X, which is our flagship event, user conference is happening tomorrow, and thousands of customers and partners and prospects and partners have signed up for that. I invite you to join that. In Q1, I can't provide specifics, but we did see some softness in a couple of segments in our pipeline, and that's kind of reflected in our guidance. | direct | [
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63c728f18ce433c3466a4bfd24dad889 | Can you talk about the IPO? You referenced the conclusion to the elections. And at that point, you sit down and evaluate the pros and cons of hitting that. So that gets previously targeted end of your window. What are the puts and takes for you, one of the things that you're going to consider at that point? And then just one other question if I could. With respect to Yatra, you had made the offer, and I think you we're working through that due diligence process. I realize there's probably limits to what you can share, but any update there would be helpful as well. | So, I think, with respect to the IPO, as you know, India is the largest democracy in the world. And these are last elections and you have to get votes out of 1.3 billion people. So, as the elections come to a conclusion, we expect that whole process to get over by the beginning of June, depending on which, whether it's a stable government on an unstable government, I think that has some impact on our decision making. We -- having said that, I think India has always been a reasonably stable country, especially depending on which party comes to power. I think, the crux of it will be whether any of those parties can provide, is it in a coalition government or is it -- it's a one-party government or a multiple party government. As long as they're stable, coalition that works. So I think that's the extent of what we would be looking at from an election perspective. So, presently what it looks like. I think we are thinking that we probably want to target an IPO in the first quarter of 2020 right now. And however, we'll keep you informed as we go forward into it. At this minute, we are more focused on, we are in deep discussions with a few private equity groups in terms of a possible pre-IPO valuation benchmark in terms of them taking up a small position to some extent. And we'll keep you informed about that as we go forward.
With respect to Yatra, we have been deep in due diligence. I will -- I don't have anything negative to report as of now. I think our intent remains to possibly make this acquisition. That's the extent of what I can tell you. We are committed to trying to, if we make this acquisition, we're committed to doing this in an expeditious manner. Clearly Yatra shareholders would need approval from their own -- Yatra management would need approval from their own shareholders. That would be a process they would have to follow But we expect that either ways, that decision, if we are going to move forward with the Yatra, we will make our intent rather clear in the month of May itself. So I think that's the extent what I could answer about Yatra right now. | direct | [
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ab28f1f8eb91709176719af6197ce8e5 | The US business, you've said last quarter, you were looking for that 5% to 8% growth, and I think you took it a few steps forward -- further this quarter and said you expect growth there going forward in the coming quarters. Can you just take a second and talk about the third -- the TPA EHAE side of the business and the consulting business, the two areas you called off that were historical decliners, and want to maybe just a couple levels deeper, what gives you the conviction that they've now bottomed? | Look, I think, once the revenue decline has happened to a level that it becomes meaningless it does bottom out. That's how I look at it. But having said that, the consulting business has kind of bottomed out. When you look at the overall revenue numbers that we have, we have already seen the momentum. We're trying to -- there is a substantial shift in terms of what we are trying to do in both these businesses.
We've already secured some kind of engagements out of area of consulting and TPA area. So that's the extent that what I could go into detail right now. But having said that, basically we feel that at this minute, we feel we have fairly strong recurring opportunity that we can count on in both these areas. And anything new we at that would actually help our revenue growth in those areas. I would be very disappointed if I don't see revenue growing in both these areas from here onwards. And we are in the midst of a lot of such possible opportunities. What we have done a major change that we have made in the strategic consulting area is that we've integrated it rather tightly into everything we do for most our sales people and every facet of our business today are exploring strategic consulting opportunities. And it's a little bit more deeper in terms of integration today than it was earlier. So that had opened up a lot of new pipelines in terms of prospect base for us.
So that's what makes me feel, and also the numbers have come to a point where they're not as meaningful for us. And so, it means that any more declines are not going to have a meaningful impact on us. And we feel that we have enough other opportunities in any case out there that can outnumber any possible decline if it ever happened in any of these areas. So we feel good about all the areas we're pursuing in the US -- with the US and Canada. We look at Canada as a part of our US operation in a way because we actually deploy all our solutions in Canada from the US itself. So, I think we feel pretty good about where we are with respect to build businesses and we feel that from here onwards, we should start seeing some growth. | intermediate | [
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4dae74bcf71bdae60bddb75929ee6397 | Back to India for a second. The BOC relationship obviously was announced sometime back, and I realized it takes a lot of regulatory approvals with respect to insurance and the sort of go-to-market that you were proposing there. We haven't seen an announcement, maybe just an update on the BOC, how you expect that to play out going forward? | Thanks, Jeff. So just that's a very large opportunity, as you know. And what we're trying to do is, it's clearly an example of a paradigm shift. And when you try to do something which involved a paradigm shift, then you have to go to the regulators, you have to make sure that the regulators also have to think and rethink everything simply because if you're trying to do something dramatically different from what insurance markets have done in the past, then the regulators really have to see, they have to grant the license, so they need to evaluate the business proposition and understand that does it in any way undo anything that they set out to do with the regulator.
So, having said that, there has been a very deep dive by the regulators that do it, but we feel we are on the right path. We have -- besides Ebix, we have the backing of Bombay Stock Exchange, one of the most eminent and trusted institutions in the country. BSE is semi-government. They're owned by public institutions itself. So that gives us a lot of support anyways to our venture. So I feel very confident about getting that regulatory approval. We have already built all our technology. In a way it has given us a lot of good time. We needed the time to basically interface our solutions.
To give you an example, one of the things we have now built is because we had the time to do it. What we have done is today on our platforms, once this BOC big relationship happen, so if somebody owns a vehicle of already have insurance, they would be virtually be able to renew their insurance using our platform in a very non-aligned manner virtually in minutes or they can just tell us. As long as they tell us their policy number or what they have, we have created technologies whereby you could be working with ABC company today and we know that they give us a policy number of ABC Company, our technology is going to figure out the details on what it is and of the policy as long as they've given us -- the client have given us approval, and we will lay out all the other opportunities possible choices you have now from all the remaining players. And so, our goal is obviously to be the market maker in a non-aligned manner for that opportunity. Something like that is easier said than done today in the market. So it has given us, we've had to time to integrate, to interface, to work one on one with the insurance companies trying to interface this technology, talk to them about our other insurance technology efforts.
So that you can also create different ventures. One is on the front end side, distribute all the products and make money in that. But on the other side, we want to be powering the technology of the provider. Simply because we want to be non aligned, and we want to be providing all the Ebix range of products and services and charging those for wider for transactions . So, those are the -- it's given us time to do that. So we are basically awaiting the regulatory approval, so both BSE and Ebix are very excited about it. Very eager to go into the market with this. But clearly we'll have to wait for the regulatory approval. We -- the way the process goes, we have been in direct -- in continuous touch with the regulatory authority. We don't see a large stumbling block anywhere or anything like that, but we think that this is a process every company has to go through and we just need to be patient with the regulator and give them the time to make the right judgment. | intermediate | [
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f9703815811997f4c9cdbc5b144e9c42 | Can you remind us what borrowing capacity you still have remaining? | That's correct. It's just under $15 million under our current arrangement. We do have a capacity to extend the accordion to, I think, another $50 million over and above that.
It's a great question, purely because I got asked, are we feeling any pressure in terms of money and so on? And the answer to that is no. First of all, we believe we produce substantial cash flow. Secondly, we have who's who of the bank world lining up with us. We have the ability to do Term A's and Term B's and stuff like that. So all we could do of, convert if we ever want it. Now I will tell you, we don't have that intent to do a convert simply because there's really no such desperation or eagerness to do it. We also are fully aware that we are in the process of possible free IPO valuation round that could bring in pretty good substantial amount of money into the company depending on the valuation that we would like to get from private equity, that by itself could make us -- we may not need any more money from the banks. Let's look at it that way.
That is why we haven't really gone to the banks because we don't see we want to go about it in a very analytical step-by-step manner because we also have -- then after that, we also have a second event, which is the IPO where we believe we will raise pretty substantial amount of money because we believe in the sense of what we are built then leave its cash there and they say that they feel we believe can be pretty large.
So having said that, we don't want to -- we want to be patient and we want to do the right thing for the company and we believe if we get our money through one of the two means that I told you or both of the means that I told you about, that will be the cheapest way to raise money. And so we don't want to rush into it and raise money through a convert or through an enhanced Term A or Term B kind of a loan or a possible convert. So we have all those options available if we ever wanted. | direct | [
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0bd37c9a23be3a4741c7c0fa81a2dd00 | In terms of your aspirational goal of $800 million in quarterly annualized revenue by 4Q of 2019, could you give us a sense of what that number might be if no new acquisitions that haven't been announced yet were not included in it? | Well, look, I think, first of all, I've spent above $800 million, so this $800 million could be $850 million, could be $830 million, could be anything, right? I just said, above $800 million is an aspirational goal. Now having said that, at this point, I think we would be including at least one acquisition in this goal, and that number is included in it. But having -- in a possible aspirational numerical numbers that we have come up with. So, I feel that if you look at it from a perspective of, could I give you a break up of it, I think at this minute, I probably won't simply because the number is going to be because they didn't really define a hard number of $800 million today. All I wanted to say was that we would like to see a much higher number than $800 million by then -- by the time we finish Q4 in terms of quarterly annualized revenue. So this number could be $820 million, could be $850 million. It could be any of those numbers. So having said that, then depending on what that number is, whether it is $800 million or $850 million, then the revenue coming from a particular acquisition would accordingly be the same.
And so, the number -- you could possibly say that an acquisition number that if you wanted to look at possibly were counting on an acquisition number of around $120 million upwards, slightly above $120 million coming through acquisition, $30 million a quarter basically that we are counting on in terms of future acquisitions. | intermediate | [
"direct",
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cb4d2ed0eb7d51755841d4845464ce81 | Do you think you've done a very good job keeping your margins high? Is it -- do you think it's a good way to think of kind of maintaining them at around 30% for the next year or two is probably a reasonable way to look at things? | Look, I think what -- we need to be very careful with -- we need to be very pragmatic about our margin. I think, in the -- I clearly feel that the company needs to be focused on 30% or more in operating margin. At the same time, as we get in into some of these new adventures, we might have one-time costs associated with it. So what we will intend to do, part of the reason why we're giving all these non GAAP results now is to simply give you more detail into what's going on in the company, simply because we're taking one-time cost. And when you invest in new venture, whether organic or inorganic, you need to take one-time cost. So if I exclude those one-time costs, I feel very good about the fact that we would for sure do I'd like to believe that we can do 30% and above in operating margins, excluding the cost of any one-time cost that might happen in a particular quarter depending on what our newer actions are.
So I think that's kind of a safe harbor kind of statement that I'm making, simply to give you a flavor into our thinking, because what we're trying to do, we're trying to do both. On one side, we want to create -- we want to convert Ebix into a very high growth company, and that's what our focus has been over the last 18 months. And as we are doing that, we're also trying to keep our margins intact but to balance that off, we need to make sure that we're not hurting our business. Because there might be certain things we might have to do, which make ensure our 30%-plus margin ultimately. And so, I think our job would be to be very tough parent with our investors and walking our investors through what is the one time cost that we are incurring and kind of laid out from that perspective and then give people an idea of where we are. So I feel if you exclude that one-time cost, our target would be per share to be above 30% and hopefully going forward in this quarter. | direct | [
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2e2ed0eec62b2014575a3bc3abfc53c0 | First of all, you took a lot of cost out of the business obviously last year. And you retroactively increased the salaries, I guess, and the bonuses, and that was all in the fourth quarter, so that was like a true-up? Or I'm just trying to get a sense of how much of the reinstatement of the salaries, what would that mean for the full-year cost increases this year? And if you can just tell us when you will lap the significant part of the cost cuts this year. | Hey, Michael. Yes, that was a true-up payment. So what we did was everyone who took a pay cut back on April 15, we went back in December and did the math on how much they had given up and we turned around and cut them a check for the difference in December. That was a total onetime payment of approximately $2 million.
And then what you -- what you're trying to do is just restore a run rate expense bank for your model. And what you basically need to do is take -- I would take our third-quarter expense, that's the last then kind of clean look without the moving parts there on the salary front, and then you would add around $250,000 a quarter for TV and corporates each and then another call it $200,000 for radio expense. That will take you as to where you should be. | direct | [
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420b28efe18ee6b4f141994bda5fb890 | And then can you just kind of give me a sense of what did Cisneros do in revenues year over year and the quarter on a stand-alone basis? So what was the rate of growth that they experienced? And then embedded in your Q1 pacings, could you just kind of give us a sense of how much Cisneros is growing? And then, I guess, finally, on that front, what are the prospects that Cisneros grows beyond the Facebook, Spotify and LinkedIn? Are there -- is there another platform, Twitter or anything else, that you could see in terms of the prospect of growth there? Or can you just kind of give us a sense of where you're seeing the growth? | Sure. Well, I'll cover the numbers and maybe Walter will chime in on the other platforms. So this -- at fourth quarter of 2019, Cisneros did about $42.8 million of revenue. And in 2020, just remember, we acquired them on October 13.
So you've got a stub period of 12 days that's not on our books. But just a portion that was on our books, that was $89.2 million. So you've got a growth there of call it 110%.
Oh, if you factor in that same logic there for first quarter, it's probably another 100%. Same growth trajectory consistent with what we did in the fourth quarter.
Well, it's the three -- there are three primary platforms, are really the drivers of that business. And really if you had to kind of cycle through the 3, it's really Facebook. The Facebook business in the emerging markets where Cisneros operates is just performing really, really well and that's really the primary driver. | direct | [
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b2db4dcdddb65567189885d7ea0cd97f | And then what's -- in terms of -- I haven't done the math here, Chris. But if you factored out Cisneros in the first quarter, what would be -- what would your digital revenues be then in terms of pacing? | I don't have that broken out. You know what, I'll -- let me come up with that number and get back to you on that. | fully_evasive | [
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53ccdfa3f991c491f4d3819f2f6c62c7 | And then maybe if you could just talk a little bit about the M&A environment right now. I know that it sounds like you would love to be able to make more digital acquisitions. Walter, in the past, you've made some comments about what you would like to see in terms of the contributions from digital in terms of the total company.
Maybe -- I wanted to see if you wanted to update that -- those -- that expectation or maybe give us some guidance on what your thought with how this company might look in the next three to five years. | Well, I'll just make a couple of comments, Michael. And thank you for your questions. Our total digital revenue was about 60% of total revenue in Q4, and we expect that trend to continue in 2021. We also are looking to grow our digital portfolio and then identify, I'll call it, accretive, complementary assets to our digital businesses.
And so that is something that we are actively involved in. We're looking at opportunities all the time and then -- and doing whatever analysis we need to do and trying to find the right fit just like we did with Cisneros Interactive. | intermediate | [
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d668cb79c90db9757740ea7137ef498e | And Walter, do you have any thoughts in terms of what you would like to see your digital contributions be in terms of total company revenues in the next couple of years? | I won't make a comment on that more than what I've said already. I mean it's already 60% of total revenue. We expect that to continue this year in 2021. As we add more digital businesses to the portfolio, it will increase.
But to what level, I don't know. But we're certainly -- one of the great, I'll call it, benefits of building our digital portfolio is the talent that comes with it. We've got some great talent around the world working in our digital businesses. And it just makes everything better and not only our global digital business, but also our U.S.
digital business. And we're -- we continue to integrate digital assets and talent into our U.S. digital business and expand our offering to -- particularly expand our offering to advertisers that want to reach the Hispanic market and using digital solutions to do that. So we complement our broadcast business with our digital, our U.S.
local digital business. | intermediate | [
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d69ef142904aba85c47c4d79fe6cc34d | Regarding M&A coming up in 2021, are we likely to -- how -- is it more likely to see small acquisitions, a number of small acquisitions, or do you think you might be making another large one? What's the environment out there? What kind of assets are available? | Well Lisa, we continue to look for like I said assets that are complementary and assets that are accretive, so -- to the business. We're just constantly looking for opportunities that might be -- might help the business grow. Certainly, growth has been one of our No. 1 goals, to not only to achieve the growth we have today, but to continue to grow going forward.
So I can't really give you an answer on the size of the business. I mean it just depends on what we run across and how it pencils out in terms of is it a business that's strategic to our growth, does it fit our current portfolio, is the culture of the business that we're buying, the talent that we're buying, do they fit the needs of our businesses, and then finally, what's -- is it accretive to our stock. | intermediate | [
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205f0357d439bda4bf8ce7af9e6cbc7b | OK, thank you. And my next question concerns the dividend. What factors would have to fall into place for a restoration of the dividend to the former level? | Well, it's tough to define the factors per se. It's an issue that's going to be looked at by the board accordingly for the balance of the year. And all I can say to that is stay tuned. | fully_evasive | [
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49a7c9ffd69373d4a2db18b28b22f0f1 | Thank you. Just a couple of quick follow-ups. On the TV side of the business, a 1% retransmission revenue growth is kind of anemic, it seems, relative to the industry. I was wondering if you could give some thoughts about what we're likely to see in 2021.
And then in terms of your core pacing down -- being down 4%, it seems a little lighter than the rest of the industry. The rest of the industry is indicating that Q1 core is up which is a little surprising I guess. And I was wondering what factors might be going into your core pacing data, if you can just kind of give us some color there. | Sure, Michael. On the retrans front, our deal with Univision is basically locked in at high single-digit rate increases year over year. I think we're at $0.27 for 2021. $0.26? $0.26, I just got corrected.
But the problem therein is that the subscriber counts keep offsetting those rate increases. So we saw subs decline by around a little more than 2% in the last quarter. And it's just where the industry is headed right now. So you take one step forward with the rate increase, but then another step backwards with the sub count.
So until those sub counts start to normalize, so that's the pattern that we're going to be up against. I would say retrans for the Spanish language side of the business is going to be maybe flat to maybe up 1% or 2% for the balance of the year. And then the retrans, however, on the English language side should be growing in the. If not, 10% to 15% range for the balance of the year as well.
So that's a separate -- that's a completely separate retransmission process. That's a negotiation that takes place with us directly with the cable companies as opposed to Univision representing us on the Spanish language side.
We do not. For Univision, no, there's no OTT arrangement between Univision and ourselves. It's been talked about from time to time, but we've never really hunkered down and gotten a deal done. So we do have an OTT arrangement with NBC, our Palm Springs affiliate, but that's the only one at this time.
And Fox -- sorry, Fox as well. And then the core business being down 4%, what we're seeing is that's actually been improving pretty significantly over the past several weeks. So that would have been a very different answer maybe four or five weeks ago. So vis-Ã -vis the industry, auto as a category for TV is still kind of pacing in the minus 7%, minus 8% range and that's our No.
two category. What's been offsetting that is the legal services category, which has really been growing nicely, close to double digits. Restaurants or -- for the first time, restaurant advertising spend with us is flat. We haven't seen that since pre-COVID.
So that's a sign of better things to come as well as the vaccine takes hold. But the minus 4%, we're not so concerned about. It's the trends that we're focused on, and the trends tell us that we may end up a little better than minus four and a quarter once the quarter is all done. | direct | [
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ea60c5a56d66493f59e3be46ae3ba089 | Could you please characterize the current near-term demand environment for your vehicles? These are obviously unusual times. I think back in Q1, you had indicated record backlog, I guess, at the beginning of this past quarter.
I haven't seen any specific comments about new orders or backlog in the release today. So can you give us some color? | Demand is not a problem, definitely not. We do have some production supply chain challenges we're trying to slow right now. For example, the Model Y, we're body casting, obviously, because it's new technology. It's been tricky to maintain rates and keep growing the rate for Model Y casting, which is -- it's a two-piece casting with a bunch -- and there's about half a dozen other parts that are added on that will transition to a one-piece casting.
In fact, I'm super excited about this. We're going to have a -- the world's biggest casting press is getting assembled right now, actually, in Fremont for the Model Y rear body casting. It's enormous and looks awesome. So it's -- look, the things that are troubling us right now are not demand, that they are just a bunch of firefighting on supply chain and production issues.
Sorry. Yes, don't worry about demand. That's not the issue.
Yes. It's not true at demand. It's really just a production issue. It's been pretty hard when you've got like a global supply chain, and it's kind of whatever the most effective part of supply chain is that sets your rate.
I mean, the number of rabbits do know how to pull out of a hat for supply chain is insane. Team has done an amazing job. So I think also some of our costs were related to having to use a lot of airplanes to get parts around because of part shortages, so we'll hopefully use fewer airplanes. That will improve our costs, but demand exceeds supply right now.
That's where we are now. | direct | [
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efeff8c5e4cffbe33d2093da15eca72b | As Teekay Corp. continues this transition, right, you've done the TGP IDR buyout, it's basically just a holding company with daughter shares and two FPSOs on their way out like we saw some slides on that in the presentation. Along those notes, we asked last quarter, but just to check up again, what is the G&A that's not reimbursed? Like what is the core parent G&A and how can we consider that on an annual basis? I realize it fluctuates quarter to quarter, but what is sort of the only the parent company overhead that we still have to deal with? | Hi, J. This is Vince. Yes, the second-quarter G&A of the parent was higher than normal because of some onetime factors. We had some fees related to the IDR transaction that was completed in May, and we also had stock-based grants that were issued in June.
So if you look at the first half G&A for the parent on a more normalized basis, excluding those items, we're looking at about -- probably around $5 million. But we also had other income that offset that. That totaled about $5.5 million for the first half. So looking at the first half, our net G&A was actually pretty much zero.
Now the other income in the first half was probably higher than normal. So if I'd normalize that on a full-year basis, I would expect our net G&A for the full year would be about $6 million to $7 million on a net basis. That's sort of the run rate. | direct | [
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d6097149fd04fccac93e19dff6478f27 | OK. Thanks, Vince. That's very helpful. So $6 million to $7 million annualized.
And is that reasonable to say that would be going forward for '21 and beyond or is that a little bit elevated because of the FPSOs? | No. The G&A related to the FPSO is separate in the FPSO line item. So the $6 million to $7 million is good in terms of the corporate level. | direct | [
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24b435aacaca00aae1d5b372c6e6cb15 | OK. Thanks, Vince. Turning to the FPSOs, you talked about the Banff, it has a $44 million asset retirement obligation that's been disclosed for a while. I realize you've kind of -- you accounted for that in the income statement.
The first part of that is, how does that impact your cash balances? How much of that is already kind of reserved in separate accounts? And how much of that would pull directly from Teekay Parent's cash balance? And then the second part of that is, of course, you noted there might be some additional opex and recycling fees associated. What do you anticipate that net cost to be for the recycling? I understand green recycling is a little more expensive in addition to that 44%. So how much above that 44% are we going to go? | Yes. We have a -- first of all, we have a fairly strong liquidity position at the parent. It was about $170 million as of June 30th. And when we complete the refinancing of the existing revolver, that should go up to close to $200 million.
So we have a good strong liquidity position at the parent. As you mentioned, the net ARO, or asset retirement obligation at June 30th was about $44 million. We expect roughly half of that to be incurred in this year and then the second -- and then the rest of it in the summer of 2021. In terms of other operating expenses, we're estimating that to be roughly about $20 million on top of that in the third quarter.
And that's mainly related to the decommissioning of the FPSO and the FSO unit. We might then -- in looking at the fourth quarter, in terms of recycling costs, we don't have a good number yet on that. We're still getting some estimates and scoping out what's required for that. So, that's likely to be incurred in the fourth quarter.
I would expect it to be probably in the sort of a few million dollars or so. | intermediate | [
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] | B |
989d854db452c9a2470a4033bf47dfa5 | OK. We'll have to check in next quarter and see where that goes. And along those lines, you have a very sufficient liquidity balance, as you mentioned. You have the revolver rolled.
You have a very high cost of debt remaining on the company outside of that revolver, right? You have the 9.25% secured bonds and you also have a convertible bond that's only 5%, but it trades on the open market at about a 13% yield to maturity. I mean, this is at a time where the majority -- even your shipping peers, even the higher-risk peers are borrowing from banks at 4% to 5% to 6%, so definitely some outliers here. Are there any sort of avenues you can take in 2020 to maybe refinance some of this debt or start to chip away at it or is that something we need to wait until next year to address? | Yes. As you know, in the past few years, we have been chipping away at that and reduced our expense of debt considerably over the past few years, and that's -- that continues to be our goal. We recognize that we need to reduce our cost of capital over the long term, and so that is our goal. We have the maturity on these securities starting to mature in late 2022 and in early 2023.
So we have some time to address that. And in the meantime, we are continuing to increase our free cash flows to build asset coverage with the daughter equities. And as part of that, we want to improve the cost of capital and credit profile of the parent along with the daughter companies. | intermediate | [
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"fully_evasive"
] | B |
a8abe5cd029e88e7e411d00c8e5d80c1 | Hi. Good morning, everyone. Maybe just to follow up on the previous question about the debt obligations at the parent. Maybe can you just talk big picture, is your goal for the parent to be a -- like, a debt-free type entity or -- by monetizing some of the asset value you have in the company or do you see yourself still having some debt obligations up there, which would more come about through a refinancing of the bonds and convert at some point down the road? | Yes, it's Kenneth. It's, obviously, a stated target for us to reduce our debt obs there. I don't think we have a stated target per se of reducing it to zero. I think what we are, as we touched on, on the previous questions, what we're focused on right now is that with the significant and growing asset coverage that we have, and how do we make sure that we bring down both the overall debt, but also very importantly, the overall debt cost.
So I think as a company, we're definitely looking forward to have that flexibility, where we have more investment flexibility, and that's what we've been really focused on over the past three years to recreate at Teekay. So that doesn't mean that we don't carry any debt at all, but it means that we basically have the flexibility to also allocate capital to great long-term value. And that, of course, from time to time would mean that we would carry some debt. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
6a1031b3e1335a9a99b80ce522842e6b | OK. And just one last one from me. The revolver, good news that you were able to extend that for two years. When the time comes for the potential refinancing of debt at the parent, are you allowed to borrow under the revolver and use those proceeds to refinance the current debt obligations or is that only for general corporate purposes, like the decommissioning costs and other expenses that arise? | No, we're allowed to use those funds. So we can draw on the revolver for refinancing purposes as well. As you know, right now, that entire revolver is undrawn, and we're sitting on about $70 million of cash, so we don't really need to draw on the revolver in the near term but it is available for other reasons. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
7ea1d8c9820215b3e9853ffe6df25c56 | Hey, good afternoon, this is Thomas Kelliher, on for Sean. Thanks for taking the questions. So starting off on bookings and congrats to the commercial team on another strong quarter. It still doesn't appear that you are being materially impacted by a slowdown in biotech funding. Is this an accurate assessment? Or have you seen any changes in selling activity or time lines or anything like that since the close of the quarter? | This is Matt. I'll take that. We're seeing a little bit of a blip in the summer, but I think the positive around that is it's actually a higher rate of issuance versus prior year. So I guess, to answer the question in a typical summer slowdown, but improved performance over prior years. I think, we're encouraged really in the last few months, issuance has consistently been strong both in count as well as dollars. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
06ddbf81610a8b6db281678a9731cbec | OK. That's helpful. And then, can you guys talk a little bit about the visibility you have on the fiscal 2023 guidance? I know you reiterated the revenue. Have there been any changes in terms of quarterly cadence or maybe mix of revenue coming out of backlog versus your initial outlook? | Yeah, I think, backlog, frankly, is the -- sorry, the outlook for the full year remains pretty much where we were last quarter or at the beginning of this financial year. Obviously, we've had a good start to the year, which is not totally uncommon. We've seen, I think, as I just heard Matt a good uptick in comparison with last year in terms of the same period, in terms of the proposals. And obviously, we've seen an increase in backlog over both the last quarter and quite a significant one over the prior year. So all of those remain on track for affirming the guidance that we had. I think, as I mentioned at the beginning of the year, obviously, there's a lot of turmoil in the world. And we've, obviously, seen reduced investment into biotech and the like. And that always provides some degree of concern for the whole year. But what we -- what we've seen so far is that at least in the case of Avid, the value proposition seems to be maintaining its attraction to the marketplace and continuing the interest. As I mentioned, obviously, during the -- during my prepared remarks, we do have the shutdown coming up this year -- this next quarter, which, obviously, means our capacity is lower for the quarter, which typically, we end up with a lower revenue in the second quarter and then, obviously, pick our way back up to complete the full year in Quarter 3 and 4. But at the moment, no reason to have any concerns of where we feel the year will end up as we were from three months ago. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
c0afdf4748de2a83823cb3be8e79f24e | Maybe a question on the cell and gene therapy side. With the PD lab there now online, when you started thinking about the CGMP manufacturing coming online next year, kind of maybe -- one kind of latest thoughts on business development trends, now that the PD lab is open. And number two, kind of any thoughts around the business model here? Are customers coming to you already looking to book suites? Would you be interested in suite reservation fees or something like that? Just kind of thoughts around the business model for cell and gene therapy and business development trends there. | Yeah, Jacob, it's, obviously, a brand-new business for us. And we literally brought on the AD and PD capacity, literally a few weeks ago. And I am delighted to say that we actually have already signed our first client. So that's -- I think, in any new business, finding your first client is always the hardest. And we've already completed that one. So hats off to the team in achieving that. And again, that kind of -- we are in numerous discussions with other parties. I think, as I mentioned again last quarter, it's always good to have the facility there, even if it's not all of it to actually be able to showcase what we've got and obviously, the people that are employed in delivering those services. So our reservation fees, I mean, our business always has a form of reservation fees in the structure of our agreement. So yes, we will be looking to design new business and sort of want of a better word reservation fees or deposits against that and start building some analytical and process development capabilities ahead of bringing the GMP suites on at the middle of the next calendar year. | direct | [
"direct",
"intermediate",
"fully_evasive"
] | A |
b1841da3de3f44253a8788adadb30788 | Got it. Thanks, Nick. And then, just to follow up, on the expense side of things, Nick, you mentioned you're continuing to hire and continuing to add to headcount. Yeah, as we think about that, certainly, some of that headcount is going to go to the actual manufacturing facilities, and I think, impact gross margins. But maybe kind of comments on increasing head count as it relates to gross margin impact and then also on the SG&A side of things. | Yeah, I mean, I'll hand it over to Dan in a second but -- if he wants to add anything. But I mean, very simply, we're bringing on quite a significant amount of capacity, the analytical development and process development we just talked about in gene cell therapy. Obviously, in order to attract the client, having an empty building is not going to cut it. So we, obviously, brought on the staffing that we're able to win that business and obviously, are in discussions and preparing proposals for other business. So those are some of the costs that come online. And equally, in the mammalian business, we've got a significant bolus of capacity coming online in January or Quarter 1 rather of calendar '23. And we've got to start staffing up to ensure that we can utilize that capacity. Again, very encouraging signs with quarter-over-quarter backlog, up 40%. I think, it was with -- that Matt alluded to. And I think, in terms of the -- no surprise to anybody, I don't think that the margins are tighter as a result of bringing that cost of capability online and the people to run it. What was very encouraging was the comment that Dan had made, I think, which is that if you take off the capacity fees from last year and the cost associated with that, then our margins are continuing to remain pretty much on a path. So that as we've always felt, I think, the business model we approved last year and the year before, quite clearly works. But you can't build new capacity and not staff it without spending some money. And that's exactly what we've done. We built it because we thought we could find new customers. And again, our backlog is ahead of, but significantly from where it was last year. So again, all in line with what we were hoping to see. | intermediate | [
"direct",
"intermediate",
"fully_evasive"
] | B |
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