Release Date: August 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Gross profit margin increased to 49% in Q2 2024, up from 43.7% in the same period last year.
- Achieved $13.1 million in revenue and profitability for the first six months of 2024.
- Expanded headquarters in Melville, New York, increasing space by nearly 40% with minimal impact on expenses.
- Secured significant contracts, including a seven-figure agreement with a major supplier of promotional products.
- International expansion with a new office in London and deployment of infrastructure in two UK data centers.
Negative Points
- Total revenue for Q2 2024 decreased by approximately $1 million or 17% compared to Q2 2023.
- Net loss attributable to common shareholders for Q2 2024 was $244,000, compared to net income of $226,000 in Q2 2023.
- Selling, general, and administrative expenses increased by 13% in Q2 2024 compared to Q2 2023.
- Adjusted EBITDA for Q2 2024 was $164,000, down from $350,000 in the same period last year.
- Dependence on lumpy equipment sales cycles, which can affect revenue stability.
Q & A Highlights
Q: Can you provide an update on the annual recurring revenue and the breakeven revenue needed to support recent investments?
A: Our recurring revenue is close to breakeven, considering the lumpiness of equipment sales. We are focusing on subscription revenue from disaster recovery, cloud infrastructure, and cybersecurity. The profitability increases significantly with equipment sales, despite their lower margins. We are also expanding into the UK to leverage opportunities between the USA, UK, and Canada.
Q: Can you give metrics on how the surge in inquiries has translated into requests for proposals and the current backlog?
A: Our remaining contract value as of June 30 is around $31.5 million, with a renewal rate of 82 clients since January. We have added six new partners and have a sales funnel of approximately $15 million in total contract value. We are actively seeking to expand our sales team to capitalize on these opportunities.
Q: What is the status of the UK expansion and any additional details?
A: We are moving aggressively with our UK expansion, visiting data centers and negotiating distributor agreements. We expect to deploy equipment in the fourth quarter and go live in January. This expansion will allow us to offer a unified support system across the USA, UK, and Canada, reducing expenses and enhancing service.
Q: How are you planning to grow the distribution network from channel to direct sales?
A: We are targeting experienced sales reps and expanding our channel partners. We aim to convert equipment sales into annuities for channel partners and are also focusing on IT automation. Our marketing efforts include SEO and organic advertising to reach potential partners and clients.
Q: What is the dollar value of your backlog awaiting implementation as of the end of the June quarter?
A: We do not have the exact number at the moment but will follow up with the details. Generally, our backlog remains strong, supported by a stable renewal rate and a growing sales funnel.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
