Q1 2020 Earnings Call
Good day and welcome to the Mitek systems first quarter fiscal 2020 financial results Conference call. Today's conference is being recorded at this time I'd like to turn the conference over to talk Curly MK. Our group. Please go ahead Sir.
Thank you operator, good afternoon, and welcome to my checks first quarter fiscal 2020 earnings conference call.
For me on todays call or Miteks, CEO , Max Cornacchia, and CFO , Jeff Davis.
Before I turn the call over to Maxim, Jeff I'd like to cover a few quick items.
Afternoon, Mitek issued a press release announcing its first quarter fiscal 2020 financial results that releases are available on the company's website at Mitek systems Dot com.
This call is being broadcast live over the Internet for all interested parties and the webcast will be archived on the Investor Relations page of the company's website.
I want to remind everyone that on todays call management will discuss certain factors that are likely to unless the business going forward.
Many factors discussed today that are not historical facts, particularly comments regarding our long term prospects and market opportunities should be considered forward looking statements. These forward looking statements may include comments about the company's plans and expectations of future performance.
Forward looking statements are subject to a number of risks and uncertainties, which could cause actual results could differ materially we encourage all of our listeners to review our FCC filings, including our most recent 10-K in 10- Q4 complete description of these risks.
Our statements on this call or maybe that as of today January 2020.
And the company undertakes no obligation to revise or update publicly any of the forward looking statements contained herein [noise], whether as a result of new information future events changes in expectations or otherwise [noise].
Additionally throughout this call will be discussing certain non-GAAP financial measures today's earnings release and the related current report on form 8-K described the differences between our non-GAAP and GAAP reporting and present a reconciliation between the two for the period as reported in the release with that said, that's all older Miteks CEO Max.
Thanks, Todd and good afternoon, everyone. Thank you for joining us today jumping right in we delivered another record quarter with first quarter revenue of $22.1 million representing growth of 25% year over year. We also generated non-GAAP net income of $5 million or 12 cents per diluted share up 300.
Only 7% year over year and cash flow from operations, a $5.2 million, we're energized by the ongoing momentum in the N. identity verification market as we continue to expand partnerships with our existing customers as well is growing adoption with new customers, particularly in the financial services gig economy.
Okay and marketplace segments.
We also continue experienced growth from are highly profitable deposits product line as its adoption and utilization continues to increase.
Before I tell you about some of the key initiatives. This quarter. We said we would keep you up to date on the patent litigation surrounding USAA, but there's a lot of detail that is somewhat complex. So please pay close attention.
Let me start with the first case USAA pursued wells Fargo for patent infringement based on for Pat is that all relate to an image auto capture feature on a mobile device for the trial Wells Fargo requested that the U.S. patent office perform an additional review of all four patents so.
Sequentially USAA dropped two of the four patents from their lawsuit.
At trial, a jury in the Eastern District of Texas found that Wells Fargo infringed at least one of the two remaining patents, but did not specify which wells Fargo will likely appealed the decision that process could take 18 months for more.
Following the jury verdict in November the U.S. patent office agreed to review three of the four pads. It is important to understand that the standard the U.S. patent office users in determining to review patents is that they must believed that there is a reasonable likelihood that at least one of the claims in that patent is invalid. So the patent office believes that Lee.
Just one of the claims in each of the three patents. They will review is invalid.
Patent office must complete their review within 12 months patent office rejected wells Fargo's request to review the fourth patent the rejection does not however, prohibit mitek or any other party other than wells Fargo from requesting a review of this patent with additional information if the patent office invalidates. The two patent said issue.
For the end of the Appeals process, then wells Fargo would not have infringed as the patents would be invalid.
Alternatively, if one or some of the claims are invalidated the federal Appeals court could decide to <unk> remanded the case for retrial since the jury did not specify which claim or claims of the two patents was infringed of course, none of this matters. If the appeals court overturns the entire judgment on appeal.
Separately Mitek filed an action against USAA on the same four patents in California, seeking a declaratory judgment from the court that Miteks products do not infringed those pads mitek invented all of its core technology and our products do not infringe on any USAA patents we.
We view the DJ action as an important step to provide certainty to our customers concerning the use of our technology and we intend to vigorously defend their use of our product the DJ process could take 18 months or more to complete.
Lastly, USAA filed the second lawsuit against Wells Fargo, which originally involved five USAA patents related to remote deposit solutions in that litigation USAA dropped two of the patents and the judge in the case found that one of the remaining three patents was invalid USAA Wanna jury verdict in January .
Sorry on the remaining two patents it is our understanding that no mitek product was accused of infringing either of the two patents in question as litigation involved broad banking processes and not Miteks specific mobile deposit features we believe that wells Fargo will likely appealed the January verdict as well.
Now onto the main focus of our call, which is our outstanding first quarter performance in the first quarter, our identity verification solutions continue to gain traction with our transactional SaaS revenue and transactions, both growing 39% year over year mobile verify our industry, leading product continues to be adopted.
By partners and customers of all sizes around the world our customers globally represent hundreds of the world's best known brands and banks are continued customer acquisition as well as our expansion with our existing customers underscores the significant need for identity verification and it's essential use case, which is to enable businesses to on.
Board more good customers faster a value proposition that mitek centers around.
One of our newest customers is HSBC USA HSBC has corporate partnerships with large multinational firms and therefore needs to enable banking for foreign nationals living in the U.S. working for these companies their current new account Onboarding process is highly manual often requiring a video chat within HSBC.
Customer service representative or in in branch visit applicants are also required he signed in the count agreement to complete the process HSBC will be streamlining in automating this process by leveraging miteks mobile verify with face compare applicants can now capture their supported dock identity documents at the time.
I'm a V signature along with a selfie image for identity verification customers low longer required to go to a physical branch, we're thrilled to work with our partners to enable more use cases just like this.
Also in the quarter, we secured a far reaching partnership with one of the largest banks in the EU to supply high confidence identity verification in multiple use cases for new account opening and account re verification. The rollout will begin in 2020 with long term goal of providing this capability to over a dozen countries in Europe .
Identity verification is an essential step to establishing trust in the digital world where customers relationships are being created without ever physically meeting Mitek is the only enterprise class provider in the identity category and our standards of service remain unchallenged, our relentless quest for customer success is validated through.
[music] expanded partnerships and use cases and delivered through high touch customer engagements.
We continue to innovate in fiscal 2020 with ongoing investments to deliver the world's leading most accurate and most stable identity verification solution.
Mobile verify delivers against all measurements of performance acceptance availability speed and assurance and our professional services are best in class as such our proven track record of success continues to grow as we look to further expand our reach into this early but fast.
Growing market.
Switching to our deposit solutions, we remain the clear market leader with over 6500 financial institutions using the deposit products.
Excuse me retail banks are investing significant resources to drive customers to this digital channel and as they do mobile check deposits continues to increase.
Recently, we partnered with cornerstone advisors to release, the 2020 mobile deposit benchmark report, which ranks the top 20 us banks on their mobile deposit use experience.
The report validates that positing a check is one of the most important mobile banking features available more than half of mobile banking customers use their mobile banking app for check deposit in the past year and mobile is the most prevalent deposit method for millennials and Gen. X.ers two thirds of respondents between the ages.
18, and 24 said that mobile deposit is that preferred method of depositing checks.
We're proud of how mobile deposit has changed financial services and become woven into the fabric of mobile banking and we're excited about the significant opportunities ahead, as we work to expand adoption into new verticals and add capabilities for existing customers.
In closing, we're pleased with our results which include record revenue and significantly improved profitability. The mitek workforce should take pride in how we deliver differentiated value to our customers. We have the teams the vision the technology and a market need of a solution that mitek is uniquely positioned to deliver.
Together this amounts to a significant opportunity for all miteks employees and shareholders now I'll turn the call over to Jeff to discuss financial results in more detail. Following Jeff's remarks, we'll open the call for questions over to you Jeff.
Thanks, Max and thank you everyone for joining us this afternoon.
Let's start with the Q1 revenue and operating results.
For the first quarter fiscal 2020, Mitek generated record Q1 revenue of 22.1 million, a 25% increase year over year [noise].
Software and hardware revenue was 11.5 million an increase of 15% year over year due primarily to continued growth in deposits rather.
We delivered strong software and hardware gross margins of 93% for the quarter.
[noise] services and other revenue, which includes transactional revenue made consulting services.
Was 10.6 billion for the quarter, an increase of 37% over Q1 last year.
This increase is due to growth and transactional SaaS revenue, which increased 39% year over year to 6.1 million and growth and maintenance revenue for deposits solutions.
For Q1, 2020 deposits revenue increased 23% to 14.7 million.
And revenue for identity verification increased 28% to 7.4 million.
Gross margin on services and other revenue was 80% for the quarter up from 74% in Q1 last year.
Combined gross margin for the quarter was 87% up from 84% in Q1 last year.
Total GAAP operating expenses, including cost of revenue were 21.8 million compared to 22.2 million in Q1 last year.
This decrease in total expenses is primarily due to lower expenses and our Paris operations. As a result result of the restructuring announced in July of 2019, and a decline in stock based compensation and acquisition related costs as well as expenses related to the strategic process an executive transition.
Which did not recur in 2020.
These decreases were largely offset by increased expenses for investments in operations to grow our business and increased litigation costs.
As a reminder, in June 2019, we recorded restructuring charge of 3.2 million related related to a reduction of 25 personnel in Paris.
We estimated this reduction to be approximately 2.5 million of annualized expense.
We are realizing the benefits of this restructuring action, which has allowed us to make investments for our identity business and improved profitability.
Sales and marketing expenses for the quarter were 7.3 million compared to 7.2 million a year ago.
R&D expenses were 4.6 million compared to 4.5 million last year, and our DNA expenses were 5.3 million compared to 5.8 billion a year ago.
The decrease in DNA expenses is primarily due to the previously mentioned items.
GAAP net income for the quarter was 560000 or one cents per diluted share.
Our diluted share count was 41.8 million shares compared to 38.2 million shares a year ago.
As a reminder, our earnings release includes a reconciliation between GAAP and non-GAAP net income.
We believe non-GAAP net income provides useful measure of the company's operating results by excluding acquisition related costs and expenses.
Comp expense litigation expenses and the related tax impacts of these items.
non-GAAP net income for Q1 increased to 5 million or 12 cents per diluted share compared to 1 million or three cents a year ago.
In Q1, our non-GAAP adjustments included 2.3 million of stock comp expense.
6 million of acquisition related costs expenses, and 473000 of litigation expenses.
Turning to the balance sheet.
We generated 5.2 million in cash flow from operations during the quarter, bringing our total cash and investments to 39.9 million at December 31st 29 key.
Our accounts receivable balance of 20.9 million represents a dsos were 58 days.
Now moving to guidance for the remainder of fiscal 2020.
We are reiterating our previously provided full year revenue guidance for fiscal year ending September Thirtyth 2020.
We expect full year total revenue to be between 98 to 102 million.
Which would represent revenue growth of approximately 16% to 21% year over year.
We continue to expect our non-GAAP operating margin in fiscal 2020 to be between 2022 %.
For Q2 of fiscal 2020, we expect total revenue of between 23 and 23.5 million.
Representing growth of between 15% to 18% year over year.
We expect total expenses, including cost of revenue for Q2, and excluding our non-GAAP adjustments to be between 18 and 18.5 million.
We expect acquisition related cost and expenses for Q2 view approximately 1.6 million.
Stock comp expense to be approximately 2.6 billion.
Operator that concludes our prepared remarks, please open the lines for questions.
Thank you if you would like to ask the question, we signaled by pressing star one of your telephone keypad. If you are using a speaker phone. Please make sure. Your mute function has turned off to allow your signal to reach our equipment again press star one to ask a question well pause for just a moment to allow everyone an opportunity.
<unk>.
The first question will come from Mike Grondahl with Northland Securities. Please go ahead with your question.
Hey, Thanks, guys and congratulations on the progress.
We saw the U.S. bank kind to do a promotion on mobile deposit in December and January .
Hasn't had any effect driving new business or is that anything we see through through too.
Yeah, Hey, Mike Thanks for the thanks the shadow.
We see a lot of the banks not just the big banks, but really many of the institutions running programs to try to drive more of that check traffic to the mobile.
Mobile channel.
And the obvious reasons, our there's a tremendous cost savings for them right. So theres a hard dollar expense savings, but Theres. Then also the reputation all element of becoming more modern irrelevant as a digital institution.
Back to your question those things happen on an ongoing basis, and there's not a direct cause and effect that would happen in quarter or maybe even within a year or just the way that consumption happens with the transactions.
In that side of our business.
Got it and then any updated thoughts on.
Pricing for mobile check deposit or or any success you've had there recently.
Yes, I want to be a little careful here, how we have we advertise this but I think in many of these calls we've been forthright in identifying that we believe that we.
Have a dominant market position, we have a unique offering that provides value to our customers that they can't get elsewhere for depositing checks using a mobile device and that historically, maybe we have not been standing a strong in tall behind that value as we should.
Over the course of the last year, we've taken steps to start to move that our pricing power and move those prices in the north were direction.
Some of those conversations have been.
Difficult and challenging, but we havent back down and so I think you'll start to you probably already starting to see some of that in our results and I.
I don't think you'll see anything radical it's not a doubling or tripling of the price, but you'll definitely see us continue to want to establish fair value for what we're delivering.
Good Yeah, I would encourage you to do that for sure I think you deserve it thanks guys.
Thank you. The next question will come from Bahar three with William Blair. Please go ahead with your question.
Hey, guys. This Camille meal chart on for bond sorry.
Congrats on solid growth on a quarter.
I want to ask if you're seeing anything any changes on the competitor front, specifically have you seen any changes in win rates since November Wells Fargo ruling and are you seeing any has it tends to buy given this new January ruling as well thanks.
So can I assume your question is down the deposit side of the business is that where that's coming from that's right.
Yes.
So no I don't think we've seen any change in competitive dynamic on that side of our business whatsoever.
The the DJ action that we spoke of earlier in the prepared remarks here and that we've talked about.
Going all the way back to the beginning of November .
I think it's being [noise], it's being interpreted by the banking industry. The way we intended in wanted it to be which is you know it's the shield and the sword, we are out there.
Yes actively very actively protecting and demonstrating to our customers that we invented this technology that we own these patents and that we will defend and put our money where our mouth is when it comes to that and I believe generally what we're hearing back from customers. Both those large banking core service providers as well as the banks themselves is.
They recognize that this is an industry wide issue and it's not a mitek issue and that we are we're out there with the short the sort in the shield for the industry itself no change in the no change in the competitive dynamic there.
All right, it's great to hear thank you had if I could just follow up.
In the past you've talked about there being dozens of use cases for your products that some financial institution customers can you provide some color around what does the typical size of the initial contract and.
A follow on growth rates at these customers. Thanks.
Yes, I try to take that on its it's difficult I don't think Theres, a one size fits all answer it does depend on the institution it depends on.
Geographically.
Who the regulators are it depends on how they can actually absorbs but generally what happens is there's a there's an implementation period and it takes some time for them not just implement our solution, but to get it within the flow of if we use case of a new account opening are at an onboarding journey for a new customer.
That's a months to quarters kind of experience and towards the tail end of that when they've got you know unit testing in system testing underway, there typically doing a.
A controlled environment that may only be friends and family. It may only be their own their own employees, where the volumes are typically very low and then they're rolling that out whether it's you know into different geographies in the United States that may be a region by region state by State thing we watch those we typically watch those transaction volumes in the relating revenue start to grow.
So in step so it's a it's a gradual that building kind of experience I don't know, Jeff if you've had anything to that no. I think it's just a reminder, the you know since this is so early stage, it's early stage with our customers.
So you know opportunities often start proof of concept pilot and then grow from there. So you know really estimating an initial deal size, but they all start small and overtime get much much bigger yeah.
Thank you that's great. Thanks, guys.
Thank you pick the next question from Mark Schappel with benchmark. Please go ahead your question.
Hi, Thank you for taking my question and a nice job on the quarter.
Matched starting off for a couple of questions on near the jury award with respect to that do those rulings have any impact on the continued use of your mobile deposit offering.
Hi does not so the only parties affected so far have been wells Fargo and USA.
Nobody else no other banks have been involved in that.
And have you seen any change in your customers buying behavior on the I'd sort of your business as a result, the jury award.
Not at all Theres been no bleed over you know we've spent a good amount of time.
You guys with our shareholders, obviously with customers and our partners.
Make NR employees of course, making sure that we're creating as much clarity as possible in a situation that's pretty complicated as you heard the prepared remarks.
But that's.
The noise level on the identity side of the business has been close to zero.
Okay. Thanks, and then.
You came in a particular strong quarter granted its Q1 not raising your guidance was that just because it's so earlier and just trying to be conservative.
[noise], let's say.
Yeah, a little bit of both you know it's early on in the year.
You know, what's a good strong quarter, its 25% Theres still a lot for us to do.
Over the next three quarters to get into the range. We're in so by no means are we looking at a slam dunk gear for that guidance. We we set a you know a good ambitious number there and we're determined to go head it but no point in raising it right now.
Okay, Great and then Jeff.
Recently, the company put in place a buyback program.
Any update there.
[noise] yeah. So if you actually looked at the timing that buyback, we announced a right as we were heading into a blackout from an insider trading perspective so.
The board approved that December 17th I think and you know we have a good insider rules that we follow and so we can actually executed on it up today so far.
Obviously, we'll report in our quarterly queues any activity that occurs under the buyback.
Great. Thanks, that's all for me.
Mark.
Thank you for the question. The next question will come from Allen Klee with National Securities Corp. Please go ahead.
Hi, just following up on the a patent legal side and.
This is I'm not a lawyer, but can you help me understand if you're trying to get a judgment that your patents are not in printing.
Is there any issue that the court could say that you're basically asking for the same thing that that's being handled in another core. So you can't get tried for like the same type of thing I'm it'd be saying it wrong, but I think you know what I'm kind of thing.
Yeah that the declaratory relief action office, we're referring to it in short hand is as a DJ action is basically us asking a federal court in this case in the state of California to to provide a judgment regarding rights.
Relative to these patents without ordering any damages or actions rates would just clears the deck and and creates clarity for our customers around their their rights to use and that our patents or prior art.
I'm not a lawyer either and so I don't think I'm in a physician to turn around and answer your question with any.
Any confidence on a hold off not too.
Okay. Thank you and then if if I look to see identity segment.
[laughter] if that was more like Standalone, how do you think about what revenue quarterly revenue run rate. It turns profitable and have maybe what revenue run rate you get to kind of whats your target margins are operating margins for the segment and what would those margins be.
Yes, I mean, I'm going to let Jeff answer the specifics there have been Alan just to put a top cap on it you know all of what you're asking is very controllable today, we are making very conscious and very intentional investments in the identity business.
It's it's a cash consumer and we're making those investments because this market is very big very fast growing you very valuable it's an intractable problems for customers in its very early stages and so we want to you know we want to be a leader that we believe we're a leader already but we wanted to be a leader two to three years from now when the market is really big.
I'll, let Jeff talked to what our models indicate where the square. This should go talk to are not talk to us we don't really give a lot of guidance.
Our product line forecasting.
Alan.
You know I Echo exactly Woodmac said right, we're making investments that at any time, you can always pull that back as we look at that product group you know I look forward, if you're you're thinking we can continue to grow which we hope to grow at rates. You know there were growing out over the next few years and as you play that forward. The only thing we'd really shared as a way.
We.
We anticipate we can see that product group.
Turned the corner to profitability somewhere out there probably around the added 2021.
And so you know you go out and model those <unk> revenue growth rates similar to what we're seeing I think you get an idea of kind of the size of the business that we would be at then.
And you know the picture is overtime, you're going to see gradual improvements in the gross margin line as you're able to leverage the SaaS model the cloud model.
Cost model.
And then are you know we perform agent services will continue to perform agent review services.
Overtime, though more and more transactions will be able to be handled via the auto systems. So that'll improve overtime as well and then the you know the cost benefit you get below is really getting leverage out of your selling teams or go to market and less investment in.
You know DNA and scale leverage and sketch to scale.
So hopefully that helps you with your question.
That's great. Thank you very much and then maybe just finally there.
When we think about the identity identities segment too.
It should we be thinking of it's similar to the kind of mobile deposit where you have this large defensible mode something that's protecting you or or is it just that it's a very large market. That's earlier I knew you have a good solution that's out there but.
Is there were a barrier to others, you know coming up you know it being becoming much more competitive.
Well take that gave here it doesn't have a barrier like we have on the mobile deposit I mean mobile deposit.
No its the characteristics of the market are completely different right. Your first off you're dealing with checks which are declining over a year. So the population of the addressable population is declining so that's completely different.
And we work through a network of processors.
We have long term relationships with and we have happens so there's a pretty good there, whereas you go to the identity space, that's an emerging market theres not a lot of IP that is protected out there there are some but not a lot of IP. This protected.
You know what everybody's figuring it out so that markets you know completely different with no I don't know that theres about there it's about.
Being the most stable company.
Being a leader in the space being first with the features and then actually you know delivering to your customers and earning their repeat business, which is where I think we focus our efforts and try to win I don't know if you have more on FX.
Alan who do you like in the Super Bowl This Sunday [laughter].
[laughter] hi.
[laughter] I'm wrong person sorry [laughter].
Okay well. Thanks. Thank you so much I appreciate it.
Got it out.
Thank you as a quick reminder, if you do have a question at this time, please delstar want to enter the Q.
The next question will come from their off tie with Roth Capital Partners. Please go ahead with your question.
Hey, guys. Thanks for taking my questions couple if I may.
First on the.
Paul.
Thanks, giving that detail Jeff I think you said the revenue was 14.7 line grew 23% is that correct.
Yes.
Would you care involved what unit growth was relative to that revenue growth.
Yes, we don't share that because that's not exactly how it lines up. So you know the revenue growth remember those transactions are blocks that are sold upfront. So it's really not associated with the unit used in the period, what I can tell you about what was used in the period as it's pretty consistent to what we've been seeing.
It's in the you know the teams.
Got it okay. That's helpful.
On your transactional SAS.
Just one before that wanted to clarify did you say idea was 7.4 million revenue and that was what was a percentage in the year on year.
That one with it was 7.4 and I think it's 28%.
Got it okay I want to make sure my math scripts.
On the transactional SAS grew 39%, but on a dollar basis I think sequentially that.
Yep down a little bit in Q1, and I know looking back a that was down maybe a couple of years ago little bit.
Anything seasonal in nature with any particular clients or at anything you would kind of call out as to why that that will step down Glenn I feel like it's been continuously growing the last probably eight or nine quarters.
Yeah. So there was a slight step down there a couple of hundred thousand dollars from the last quarter.
The thing to keep in mind with that is its transactional so it's always subject to a fluctuation based on whatever's going on in the customer base. So obviously seasonality can impact that which it did in the quarter. We had some customers with seasonality there was down we actually had a couple customers.
Through some Spanish partners, so that'd be a couple of Latin American I believe it or Latin America customers that actually turn I'm not significant but small enough that you know I noticed it.
And then you know you've just got a different customers that for one reason or another their seasonally up are seasonally down and that could be due to.
The volume in their business or you know the volume that their directing to mobile verification. So a you know they maybe turning on different sectors are turning off different sectors, which I think we've talked with you before in the past.
You know geographies and such like that so that's basically what's going on there overall you know we look for that number to continue to grow.
More enthused about the identity business and you know everything we're doing now in the cloud, which were thrilled with except for Spain of course, and you know the thing about that businesses.
We are adding customers you know, they're going live they're getting benefit from this and then there's always going to be a little bit of this movement in the asking the network. So.
Hope that explains it.
Yes, Greg just two quick ones for me lastly.
[music].
Profit margin I think was 22% in order. This is typically your seasonally weakest quarter I'm. Just historically it has been I'm just kind of kind of curious like kept that 20% to 22%.
Guidance and if you do keeping that like Where's the marginal effects and the come from.
Kind of where you sit today.
[noise]. Thank for the quarter were actually rose, 21% or the guidance is 20 to 22.
And you know we've invested in the first quarter and so you know as I look throughout the rest of the year, it's probably going to GB right around there you know up or down slightly each quarter through the answer to your.
Probably Q4 will be the strongest but.
You know the the reduction today too I, a really did let us make some investments in the identity group and then you know if you look back last year and look at those non-GAAP adjustments that we had you know the on and I don't want to call on non sense, but all the things we have to spend money on the trend.
Process last year in that there was quite on operating elements. So no.
No not having those has been very helpful. Too. So you know I'm really happy with where the margins came out for the quarter and I think that we'll see something similar up or down a few points each quarter. The rest of your that'll help us get to that guidance range [laughter]. The thing and then the slot.
It's not our intention to go exceed that significantly because we think we knew need to invest in I'd business, which is what we see opportunities.
Okay.
Got it and then just lastly on the rationalization on the I'd platforms kind of where are you relative to kind of last quarter.
Well you sort of.
Three months. Moreover, it's going to take another six to nine months fourth is all complaint.
Yeah. So maybe this is makes just to remind everybody. So back in July we said, we were going to accelerate the rationalization to some of the legacy systems both on premise in.
In the cloud that we had inherited through acquisition and some that were here natively.
And so we we kicked off that acceleration from a from a just to disclaim here, we said the stuff from Spain, and I car, it's going to take longer. So that's not incorporated in what we talked about back in July .
We have subsequently accelerated and end of life and end of sales and Sunset. It was three or four systems since July .
The overwhelming majority of revenue is now behind us from those systems and maybe you want to quantify that if there's anything to quantify yeah. I think the hardware and software revenue mine they've seen now is probably close to you know plus or minus.
Where it's going to gland until the Spanish stuff goes to the cloud which is.
Couple of years away.
The rest of the I'd business.
Think it's safe to say now all of the on premise is done and so that in one of our cloud solutions.
So we've got a few cloud solutions for I'd, that's where the revenue should go and then over time will be end of life being one of those and getting down to one one cloud solution for revenue perspective, like I think we're really at the tail end there yeah pretty much done before I, let you go who do you like in the Superbowl Sunday.
[laughter] I wouldn't know how do you like back [laughter] Con man has you know I don't want to it.
Alienate any color, obviously, I think being in California, We Gotta go with diners.
Yeah, I was hoping that San Diego alloy, whatever sitting there and chargers and make it but apparently I talk a lot in the cards is this this is lifetime [laughter].
No just trying to add a little little humanity door, calling here.
Thanks, guys.
Alright. Thanks.
I'll turn it back to the speakers now for closing remarks.
And then it.
Thank you operator, and thank you everyone for joining US today, we look forward to updating it again next quarter or coal has concluded have a wonderful day.
Thank you ladies and gentlemen. This concludes today's event you may now disconnect your lines.
[noise].