Q4 2019 Earnings Call
Ladies and gentlemen to see operator, your lunch I mean, I missed the cold until the converts begins I'd like to your patient.
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At this time all participants are in listen only mode. After the speakers presentation there'll be a question and answer his question to ask the question during the associated press Star one of your telephone. Please be advised todays conference is being recorded if you're quite a further systems. Please press star zero.
I'd like to hit the converts over to your speaker today, Brian older. Thank you. Please go ahead.
Afternoon, and welcome to Baritones fourth quarter and year end 2019 conference call I'm, Brian Alger Senior Vice President corporate development Investor Relations after market close today Veritone issued a press release announcing the results for the fourth quarter and your ended December 31st 2019. The press releases are available on the Investor section of our website joining.
Joining me for today's call are very close chairman and CEO, John Gilbert President, Brian Silver and see if all the cone following their remarks, well open up the call for questions. Please note that certain information discussed on the call. Today will include forward looking statements about future events Americas business strategy and future financial and operating performance, including its expected net revenues.
Non-GAAP net loss for the first quarter 2020.
Forward looking statements are subject to risks uncertainties and assumptions that may cause actual results to differ materially from those stated or implied by the statements certain of these risks and assumptions are discussing baritones SEC filings, including its annual report on form 10-K.
These forward looking statements are based upon assumptions as of today March sports 2020, converting undertakes no obligation to revise or update them.
During this call will present and discuss actual and forecasted nongaap financial measures, including non-GAAP operating expenses non-GAAP net loss and adjusted EBITDA.
Reconciliations of these measures to the corresponding GAAP measures are included in the press release, we issued today.
Also in 2019, we adopted ASCII six so six new revenue recognition accounting standard we determined that the impact of the adoption <unk> assay six so Texas was immaterial. So we did not record an adjustment to our opening balance sheet at the beginning of 2019, because we are in emerging growth company, we reported our quarterly results in 2019 years.
In the prior revenue recognition standards assay six apart.
Our 2019 annual financial statements are prepared using ASV six so six as the impact of adopting assay six six was immaterial. The combined net revenues from our four quarters end 2019 equal or annual net revenues.
Finally, I would like to remind everyone that this call is being recorded and what we made available for replay via link available on our Investor section of the company's website at Www dot baritone dot com.
Now I'd like to turn the call over to our chairman and CEO John Stilmar.
Chad.
Thank you Brian welcome everyone and thank you for joining US today I'm pleased to report than in 2019, very Chung grew revenues, 84% year over year to $49.6 million, reflecting both strong organic growth and the contributions from the three businesses. We acquired in Q3 2018 during 2019.
We launched multiple new products establish critical new channel partnerships and invested significantly in product development in November we discussed that with the development of our platform largely complete we have shifted our focus to take advantage of our amazing opportunity to accelerate revenue growth, while improving our path to profitability to capitalize.
On this we realigned our business and functional teams to maximize our speed efficiency and customer focus and implemented a number of enhancements to our AD where platform that we expected to deliver orders of magnitude improvements and scalability and compute utilization driving improved margins and enabling larger and more dynamic use cases I am pleased.
Report that we have made great progress in all of these areas.
Our business realignment is already accelerating our product development cycle and helping to drive increased engagement with our customers baritone finished 2019 with our best SaaS bookings quarter by far more than 82% sequentially.
Net revenues of $12.4 million in the fourth quarter. We're at the high end of our guidance range with both our AD where staff and advertising business at record levels and our south pipeline continues to grow.
Our focus on achieving profitability is already producing savings at the high end of the range. We had initially projected notably our recent at were upgrades are yielding significant cost savings, even with a higher number of processing hours from the peak in the third quarter, our average daily compute cost have been reduced by 35%.
As a result, our Q4 non-GAAP net loss was down $1.6 million sequentially to the lowest levels. We have recorded since the third quarter of 2017, and our Q4 adjusted EBITDA loss was significantly below our guidance range at $8.1 million our initiatives continue to delay.
Her great result, giving us confidence that we will continue to reduce our losses going forward.
Without question there Tony is on its strongest putting ever our SaaS business just had its strongest revenue quarters in history, and we have signed new and expanded multiyear agreements with M&A SaaS customers that we expect to increase our revenues from that market significantly in 2020 and beyond.
In addition to that growth the activity level and the opportunity pipeline in our government legal and compliance business are both expanding rapidly, giving us further confidence that our revenues from GLC will eventually equipped our M&A SaaS revenues, even as revenues in our MSP business continued to grow often strong base.
Finally, our advertising business continues to far outpaces its peers with double digit revenue gross and net commission margins two to three times. The industry average we have never been more bullish about baritones growth prospects than we are today now I would like to hand, the call over to Ryan our President and co founder to discuss our operational progress.
In greater detail right.
Thank you Chad as Chad mentioned, our efforts to accelerate our revenue growth and improve our bottom line are already seen signs of success on both fronts in each of our business units. We have seen more rapid product development in response to customer engagement and as a result, our go to market initiatives are gaining traction more immediately we have realize.
His considerable savings that we expect to deliver additional leverage as our revenue growth accelerates the strength in the December quarter was driven by both our advertising and SaaS business units, our advertising business built off its Q3 strength and delivered another record quarter sequentially, our advertising revenues grew 4% and SaaS revenues.
Grew 22%.
Strength in podcasts and digital Influencers continued to be the primary drivers for our advertising business with gross billings increased sequentially by 20% and 28% respectively. These two media channels accounted for 62% of gross billings in our advertising business. In Q4 are very AD network continued to show.
Actual as well highlighted by Influencer bridge in Q4, Influencer Bridge had over 2300 unique digital influencers that generate advertising performance. So far in Q1, we have already had over 8800 unique digital influencers sign up for the Influencer Bridge program with over 2100 already delivering advertising.
Performance, we expect to see Influencer bridge and all the Barry adds drive meaningful acceleration in our advertising revenue growth in 2020.
Our SaaS revenues grew to 2.9 million in the quarter the highest level in baritones history. As we had projected in November our SaaS bookings were exceptionally strong in the December quarter, our KBR table in our press release and SEC filings reflects only the non cancellable and non variable portions of our bookings given that.
Our SaaS customer churn is nearly zero I think it's worth noting that the total revenue potential of our Q4 bookings inclusive of the cancelable and variable portions with over $11 million.
Our land and expand strategy continues to drive both revenue growth and bookings strength in our SaaS business two years ago, Veritone began working with Iheartmedia on a limited basis over the years the number of stations and the level of engagement has continued to grow culminating in Q4 with its significant expansion and extension of our license agreement under this.
Expanded agreement there today will be ingesting processing and cognitively indexing content from a from nearly 900 iheart stations, helping iheart continue intelligent digital transformation efforts along the same line, we announced at the largest media company in Canada Bell Media had license at where for over 35 its radio.
On TV stations in a dozen different markets. This noteworthy contract is another example of our M&A SaaS business expanding into new markets. Bell has 30, TV station 109 radio stations and over 200 websites and operation, we intend to execute our land and expand strategy throughout bells portfolio as we deliver them positive.
ROI.
In addition to our success with networks and broadcasters, we're growing our SaaS business with professional sports teams, which use a outward to leverage their huge archives of content identifying and distributing relevant clips from both current and decades of historical content within minutes to enrich live game and social media in October we reported that the San Francisco giant.
Had licenses are powered rapid media discovery and workloads to further fan engagement I'm happy to say that this has led to increased interest from other teams as well. We're now engaged with over 2020 professional sports team in the U.S. and just last week, we close staff licensing deal with two additional prominent teams.
At the close of Q4, the activity level and opportunity pipeline in our government legal and compliance business has been expanding rapidly, giving us further competence in our growth prospects in this business our channel partners, which include Microsoft Deloitte PR I can exact data are driving increasingly larger contract into our sales funnel, although we do.
I would expect these to produce massive revenue growth in Q1, the sheer number of these contracts in the pipeline of business that our partners have registered provide meaningful validation that we at the right product fit for the markets we are addressing today.
We have executed 81, new SaaS contracts with GLC customers since the beginning of Q4 and our pipeline of new customer opportunities. In this market is growing rapidly. We have conducted over 219 customer demos and initiate 11 trial in this market. During the same period earlier today, we co hosted another webinars with our partner.
Right and our customer Lakes Stevens, Washington Police Department that has over 400 registered attendees.
On April 2nd Microsoft and Veritone will be co presenting what has to be the largest webinars to date, Microsoft is marketing the webinars to his extensive north American public safety customer base.
The federal side, we recognized our first revenues from the U.S. Department of Justice in the fourth quarter for our fed ramp certified eight where government platform and as our partners indicated on stage at CES government additional business, it's starting to flow through multiple vectors needless to say, we're very bullish on our sales funnel and opportunity pipeline NRG LLC.
The business and we look forward to providing more detail at our upcoming Investor day on March 18.
Our content licensing business delivered strong year on year growth of 21%. So as expenses expected it was down sequentially consistent with its normal seasonal pattern.
We expect this business to continue its year over year growth in 2020.
Recently, we co host an event in New York City with one of our license doors, CBS news, where more than 90 potential licensees came to discuss how to leverage CBS is vast library of content. Additionally, we have begun discussions with a number of leading pod casters and digital influencers to explore how they can further monetize their content through licensing.
Of course this is all additive to the various sports and entertainment customers. We currently represent.
Finally on our business realignment and initiatives to improve our path to profitability. We had originally communicated that we expected to achieve seven to 9 million of annualized savings. Our Q4 results show that we are at the high end of those projections as Chad mentioned earlier, we have significantly reduced our cloud compute caught in actual dollars even with a.
Meaningful increase in processing hours and associated SaaS revenues. These initiatives are still ongoing and we expect them to deliver further cost improvements in the future.
To summarize our bookings are at record levels, our pipeline of new business is growing at an accelerating rate and we have significantly reduced our casper.
He Collins will now review our financial results for the fourth quarter and full year of 2019 and provide details around our financial guidance Pete. Thanks.
Thank you Ryan and good afternoon, everyone.
Ill review, our financial results for the fourth quarter and full year 2019.
The revenue data I will be discussing our financial results today on a non-GAAP basis, a reconciliation of such non-GAAP results to the corresponding GAAP information is in the press release, we issued earlier today.
Our Q4 net revenues increased 14% year over year to $12.4 million, reflecting growth in all of our businesses.
All right, where SaaS business delivered its highest ever quarterly net revenues, increasing 18% year over year to $2.9 million.
This growth was driven primarily by our media and entertainment vertical which grew $303000 or 13% as we continue to land new customers and expand our business with existing customers are you aware Sop monthly recurring revenue or more are under agreements that affected the ended the fourth quarter increased 4% over the third quarter.
To $568000.
We are SaaS bookings in the fourth quarter increased 82% sequentially to an all time high of $2.5 million with the majority of the bookings in the media and entertainment vertical.
All right, where content licensing and media services net revenues grew 21% to $3.1 million.
And our advertising net revenues increased 9% to $6.5 million, reflecting growth in the digital influencer and podcast categories.
As discussed our fourth quarter net revenues increased 14% versus the prior year when comparing Q4 2019 net revenues to the prior year. It's important to note that Q4 2018 included $1.3 million from an advertising clients dispense zero in Q4 this year due to its regulatory issues.
Excluding the impact of this advertising clients in the prior year, our consolidated net revenues grew by 29% year over year.
Our total operating expenses decreased by 4% to $17.1 million, reflecting the immediate impact of our cost reduction initiatives, which are on track to reduce our annual expenses by over $8 million.
Our loss from operations in the fourth quarter was $8.1 million, a 1.3 million dollar proven compared to the fourth quarter 2018, our net loss was $8.1 million or 33 cents per share compared with $9.3 million or 48 cents per share for the prior year quarter.
Our Q4, adjusted Ebitdas loss of $8.1 million was significantly better than our expectations and a marked improvement compared with $9.6 million in Q3, 2019 and $9.3 million in Q4 2018.
As John noted this is the lowest loss we have recorded since the third quarter 2017.
Turning to our full year results. Please remember that in the third quarter 2018, we acquired three companies, while the digital performance bridge and machine box.
Our 2019 net revenues were $49.6 million, an increase of 80 or 84% compared to $27.0 million in 2018.
The company's we acquired at third quarter of 2018 contribute contributed $25.0 million net revenues in 2019, compared with $7.0 million in 2018.
On an organic basis, excluding the impact of the acquisitions and our SaaS net revenues increased by 47% in advertising net revenues were up 16%.
Our net loss of $36.2 million or $1.66 cents per share compared with $39.0 million or $2 in 22 cents per share to 2018.
Adjusted Ebitdas loss was $36.2 million down from $39.0 million in 2018.
2019, we funded our net cash used in operating activities, primarily through the issuance of common stock under our ATM facility.
We issued 5.2 million shares and generated net proceeds of $24.4 million.
We ended 2018 with cash and cash equivalents of $44.1 million, including prepayments for an advertising clients a $15.0 million.
In chats remarks, he highlighted a significant shift we made last fall implementing actions to accelerate our revenue growth and path to cash flow breakeven.
We intend to continue to reduce our adjusted Ebitdas loss each quarter and as we do so the amount of cash we need to raise will decrease significantly.
We believe that we have ample sources of capital available to us to reach profitability and as we evaluate these alternatives whenever objectives is to minimize the results and dilution to shareholders.
Turning to our guidance regarding the first quarter of 2020, we have seen some delays in advertising programs by a few clients that have experienced disruption and their supply chains due to the impact of the trend of Iris outbreak, which will likely push out some advertising revenue we had expected in the first quarter.
Due to the anticipated delays and other uncertainty surrounding the potential impact as the crown. The virus. We now expect our total net revenues for the first quarter 2020 to range from $12.5 million to $12.9 million. However, since we are at the high end of the range our cost saving initiatives, we expect our non.
GAAP net loss in the range of $7.6 million to $7.2 million.
We look forward to connecting directly with our investors and analysts at the rock annual conference on March 16, and our Investor day at various on headquarters and post to Mesa on March 18 to range meetings at these events foreign person encouraged institutional investors to reach out to their respective brokers or contact Brian Alger.
At this time, we would like to begin the Q and a session operator.
Thank you at this time I'd like to remind everyone in order to ask the question. Please press star one we'll pause for just a moment to compiled acuity roster.
Your first question comes from Pat Walravens with JMP Securities. Your line is open.
Oh, great. Thank you and congratulations you guys.
I guess.
Chad I guess, if we can start maybe with the.
Where upgrade and.
Sort of a simplified version of what you did and why that helps gross margin. So much that would be really helpful.
Yes, absolutely.
We just took a really fresh look at the technology platform. After building for three years, and we and we saw some optimizations.
That not only help ongoing operating costs in the cloud side, but in that re factoring it really enabled more of a CIO CD deployment process, which is a continuous integration and deployment, which really gives us access to new markets. So now we have the ability to do not only on prem deployed and almost a one quick deployment, which expands market.
Opportunities for customers, but we also now have the ability to start to do private cloud deployments, which is essentially a prerequisite for a lot of the government customer that we've been pursuing so all in all great great revenue.
Through our cost savings improvements in the platform, but also seen sizeable market dynamics shifting in our favor based upon some of the refactoring we've done.
Okay, Great and then.
I thought the comment about the SaaS revenue potential being greater than 11 million was really interesting can you explain like how do you 11 million.
Order a year what does that mean.
So that had its Pete so thats more overall potential within the contracts that were sign but remember that when we report our bookings it's based upon was.
Not cancelable and also it's fixed so anything that Scott.
Cancellation terms or is variable costs excluded from the bookings, but weve included that in the revenue potential based upon what we see over the life the contract.
All right so thats the total contract value.
Right.
And then last quarter you guys started talking about the relationship with Microsoft and some joint sales efforts can you update us on how thats going.
Yeah, it's going very well so.
Most of it to this point most of our co sale efforts with Microsoft has been with their field sales team, primarily going after and presenting to larger municipalities.
We talked a little bit about on the scripted call about talking about.
Large webinars thats coming up and why that's so important is this is really in Microsoft inviting on all of its municipality customers, which is thousands to participate in this webinars to learn more about veritone related products and services on issuer. So we're really excited about that.
That ultimately will lead to them I educating them and their inside sales team, which is 16000 people and larger hopefully from through a positive outcome of the Webinars, we will quickly be able to tap into that large sales base. So it's been a they've been a great supported partner, we're starting to see a lot there a lot of registered.
Sales coming in and we expect good things from that partnership going forward.
Okay last one from me.
And I know, there's a lot of uncertainty, but you mentioned the krona buyers, having some impact on the AD business.
How do you think it's likely to play out.
People working from home less travel some supply chain disruptions.
What are you keeping an eye on in your business.
As we.
Move through this this epidemic.
Yes, I think you touched on all the high points.
Essentially our advertising business, we've seen some push out of an AD campaigns already by clients, who have already suffered some supply chain disruptions due to the outbreak and we could experience more push outs from additional customers and the in the variance on one business on the SaaS side. However, we have far less direct exposure to the kind of iris, but we.
Could see some sales cycles extend as customers, particularly in the public safety you get distracted with obviously much higher priorities as epidemic that you and we fully worked their effort.
On the work from home component.
Definitely we're seeing companies testing with that we have a great.
Organization here that that operates already in three or four different.
You know offices and most of our sales and customer engagements is happening over the phone and video conferencing already so from an ongoing operation standpoint in terms of our employees and how we engage their customers I see very little impact in towards the business.
Okay, great. Thank you very much sure.
Your next question comes from Darren Aftahi with Roth Capital Partners. Your line is open.
Hey, guys. Thanks to my question.
First a follow up on the gross margin improvement it looks like it.
Went up four or 500 basis points I'm, just kind of curious.
As you progress on the top line, how does that kind of manifest itself into kind of continued improvement in what's kind of theoretical cap on all non-GAAP gross margins, we think about your business going forward.
Well I'd say there and this fee that you know the gross margin improvement is definitely sustainable going forward I mean, the things that Chad and the team has delivered from the platform cost perspective, we've realized a lot there and we're looking to.
Saves me that even larger amounts going forward.
One thing that you need to remember, though is just the gross margin is also a product at the revenue mix.
And so as the revenue mix shifts will see changes in the gross margin, but overall, we see opportunity, especially as we scale to be able to continue to improve on the overall gross margin for the business.
Dan This is Chad we've been able on an apples to apples basis. Since we began this initiative in Q4 actually late Q3.
We've been able to to bring our total compute cost improvements to about 35% today, but we expect that within 2019 by Q3 to get ended up 44% range in total until the reduction.
Versus versus Pete costs, Q3, 2020, 2020, yes. So I don't think we've even come close to tapping what the potential of in terms of cost savings, but more importantly, it's been really a complete overhaul in the system. Our reliability is up we're close to four nine to reliability, our customers are experiencing far better services through the products.
We deliver.
So all in all really positive results.
That's helpful. Thank you and then on your SaaS bookings.
You said that was.
The strong this quarter you've had.
But commentary so I want to.
I think apart from your comments first you said it skewed more on the M&A side, but then you made some comments a little bit later in the call or prior and said that basically your legal compliance and government.
All or building you don't expect to kind of Cnpad, maybe in Q1, so could you maybe drill down a little bit more on non emoney and just kind of visibility, you're seeing and where you're kind of getting excited maybe versus 90 days ago and the last fall.
Yes.
So for government legal and compliance, we know where we're definitely seeing a lot more sales activity, both direct and through our channel partners I'm includes though Deloitte, Microsoft and others.
Without going into much detail there are deals being registered through these strategic partners, which obviously puts us in sort of an opportunity phase, where we lead to proposals and ultimately undervalued contracts. So thats kind of the game plan. So if you kind of look at scale and volume of activity, we can't Weve Ram sort of represented that we had.
A term and a significant increase in the number of trials redact products, specifically has seen strong interest.
Where we've now had well over like 70 unique police agencies from inception, now test and use that product line that is one of the feature products that you're in a here about on the Microsoft Webinars on April 2nd and we encourage you or anybody else is interested to participate in that.
Is there is there any other questions I can answer answer for you as it relates to the GLC well, let me, let me step into that GLC for a second little more detail.
When you think about the contracts that we've been pursuing they go through multiple phases in terms of our ability to actually.
Get a deal across the finish line and translate that into revenue, but what we're hearing across the board is we have now been selected by by multiple large.
Municipalities at at both the federal and local level that we are the contract award winner, but for us in our conservative nature in terms, how report bookings as well as revenue.
We're basically what's holding that until we finally see the booking come across the door and the contract signature and our desk.
Okay. That's that's helpful. So last one for me on Pete's comments about the.
And a half million bookings.
As it compares as sort of the $11 million potential.
Is that upside in terms of contract value.
And then kind of over indexed towards Emoney or is it fairly spread across kind of all of your verticals. You're currently looking at trying to kind of.
I understand where that kind of upside potential could basically why beyond maybe the M&A vertical.
Well the majority of those bookings are associated with median entertainment.
The qualification of 11 million, it's not that the contracts have term limits they have termination clauses.
Based upon our historical performance and just to our the relation we have our customers. Our churn historically has been near zero. So we do not expect people to do early terminate those agreements. So don't think of it necessarily as upside the arc contracted opportunities, but but they are they do have the option at like annual term, they all very little bit differently.
To terminate we don't expect them to hence we expect to realize the potentially full $11 million plus over the total contract value of those agreements, but again the majority of those bookings and the majority of that the I will say opportunistic bookings of 11 million is majority early in the meeting entertainment space.
Great. Thank you.
Sure.
Your next question comes from Mike Latimore with Northland Capital markets. Your line is open.
Great. Thanks, a lot just on the 11 million is that sort of a three year horizon there roughly.
Yes.
Yes, there are few agreement that go out to three years. The I think the majority of them are in two year period.
Okay.
And then on the redaction customers.
I have my note 25, redaction customers last quarter.
On an apples to apples basis.
How many do you have this quarter.
70 number but I'm not sure that's the same metric.
Alright, so let's see customers.
I think we have 55 actives redact customers in this quarter as compared to 34 active in Q4, Q3, which represents a 61% growth.
Im over the active and those are active GLC customers.
Okay, great and I assume these that transparency laws are a big driver here so.
Yeah. It depends I mean, as you know each state a municipality is different but again, we use it as do our partners as a marketing tool to help continue to drive that.
But I think the ability to quickly bring that process automation to these police agencies.
It is a very attractive product offering that again is heightened because of the changes in legislation.
Mike. There's also some agencies that are outside of states that have the mandatory requirements that are also just more forward looking right who are pursuing.
That capability as well.
Okay great.
And then on.
You talked I think you mentioned in here that.
The GLC category to potentially be larger than the M&A category over time, I guess that would be guessing or revenue comment.
We started seeing.
Some of the GLP bookings exceeded the emoney booking.
I think we're in those phases that we are being awarded under contracts.
So we should start to see material bookings over the next few quarters.
Yes.
Okay. Thanks.
Your next question goes from Chad Bennett with Craig Hallum. Your line is open.
Pete in the revenue guide for the first quarter, how should we think about where SaaS revenue either on a sequential basis or year over year.
Yes, we don't really give guidance.
At that level, Chad, it's really more of the overall number of.
12% 12, non but I think that the the way to think about it is the SaaS business.
Continuing to do well and we're not expecting any any big disruption there.
Okay, and im trying to rhyme commentary on the AD business of.
Obviously, the near term headwinds.
From the drivers and kind of delayed spend here too.
I think it was commentary.
Celebration in the advertising revenue. This year can you help me out with that.
Yes.
The overall business and like the annual media plans that have been.
Shared with us from our advertising clients in a kind of back in the first say three to four weeks. The year showed really strong growth double digit growth on a year over year basis in the advertising agency, what we've seen in the last three weeks, though is the the.
The impact of the supply chain disruptions on a handful of our clients and so the way that we look at that is for this quarter, we're expecting that to be about a 300000 dollar reduction in revenues from what we had had originally expected due to that supply chain disruption. So there is the overall market the overall.
Services that were providing are trending very well as I said.
At a low double digit year over year increase in the annual spend plans for our clients.
And supporting that is the introduction in the continued expansion of our very adds product as well.
But then the more near term impact to.
Issues at our clients that we are projecting to be about a 300000 dollar topline hit.
And in Q1.
Okay, and then maybe last quick one for me Pete if the company was profitable what would be the fully diluted share count.
Uh huh.
[laughter] don't have that I've got my head it depends on where the stock price yesterday, the number the options our price sensitive most most of the options at this point or.
Underwater.
Okay.
Alright, thank you.
Yes.
So again, if you like to ask the question. Please press Star One. Your next question comes from Steve Banta with Banta asset management. Please go ahead.
Hey, guys.
Congratulations.
On a great fourth quarter and.
Great.
Full year.
Curious would you be able to provide a little more color on how you're viewing your path to profitability.
Number one number two.
You guys have any thoughts on on say.
Something like a potential credit facility in lieu of.
Additional drawn agency on that and alleviates some dilution concern.
Yes, I don't want to Pete take the second one first yes.
Starting on so what we've done a lot of different options available to us from a financing perspective, I mean first of all with the facilities. We've got we think we've got sufficient resources to get to profitability, but then it's a matter of which are the best options available to us. So we are pursuing opportunities that kind of span the range.
As a financing alternatives, obviously minimizing the dilution to our shareholders is posted on our outlook.
But we're also.
The looking and evaluating various alternatives, if you've got that with the.
Capabilities. We've got today, we think we can get the profitability with the resources we have.
Perfect.
With regards to our overall general path to profitability and the progress you've made in the in the past quarter and a half.
At the end of the day comes down to really three things. One is we have to continue to drive topline revenue growth by expanding the the customer base that are continuing to use a eyewear and their automated process automation solutions, both media entertainment as well as public safety I don't think we're going to have to move into any new verticals to achieve that profits.
Ability, there's plenty of pent up Tam.
This this heavy lift in sort of the improvement of the architecture and operating performance and then obviously, resulting in improved gross margin.
It's really a.
A systemic benefit that will that will perennially assist the company as we continued to drive topline revenue more of that will hit the bottom line. So the team has really come together I think the Bu reorganization that we did in the fourth quarter, while we anticipated the leadership team that that would have dramatic improvements in terms of customer focus and our ability to.
Again align people's personal interests with what we're trying to achieve in the market.
The results of that realignment across the board from staff level employees to executives has been I think surpassed all of our expectations. So I think employ realignment really focusing on on cost cutting where possible that's not going to impact any of our capabilities to address our customers' needs and desires. In fact, we're seeing the exact in.
First of what you'd expect when you typically Titan your belt like this we're seeing actually improved engineering cycles.
Faster turns it go to market more dedicated channel partner relationships that are creating a cheaper cost of sale. So across the board I think we're so leaner meaner organization with an eye on the prize of profitability.
As soon as we can possibly achieve it.
Great. Thanks, guys.
Thanks, There are no further questions at this time.
Thank you operator, and thanks, all for joining us on today's call very excited about the progress made in 2019, and we are continuing the momentum in 2020, if huge opportunities in our businesses and our teams are better positioned to capture them and they ever have been the coming months, we expect to see significant.
Revenue growth and diversification across product verticals and channels and we look forward to reporting to you on our progress good-bye aggregate debt.
This concludes today's conference you may now disconnect.
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