Q4 2020 Earnings Call

So at this time, all participants' lines Arnold listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During this session you'll need to press star one on your telephone. Please be advised that today's conference is being recorded if you require any further assistance press star zero.

I would now like the hand, the conference over to your Speaker Mr., Matt Robison. Please go ahead Sir.

Good day, everyone and welcome to the fourth quarter fiscal year 2020 earnings calls.

That's all I mentioned my name is Matt Robison him as director of IR and corporate development with me here today, our room as CEO, Eric sang and CFO Ravi Narula.

After the merger closed today issued a press release to be a globe newswire. The release is also available on the company's website <unk> Dot com. That's called thing webcast laden is accessible for link on the events page of the Investor Relations section of our website.

It's like will be active for replay of this call for at least one year telephonic replay will also be available for weeks starting to see make about eight PM Eastern time selling information forward is included in todays earnings press release.

During today's presentation are exactly this will make forward looking statements within the meaning of the federal securities laws.

Looking statements generally relate to future events for future financial or operating performance.

Expectations and beliefs regarding these matters may not materialize and actual results and financial periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected.

These risks include those set forth in the press release, we issued earlier today as well those more fully described in our filings with the Securities and Exchange Commission.

The forward looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward looking statements, except as required by law.

Please note that other than revenue or otherwise stated the financial measures to be disclosed on this call will be on a non-GAAP basis. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with cap.

A discussion of why we present non-GAAP financial measures a reconciliation of the non-GAAP financial measures discussed in this call to the most directly comparable GAAP financial measures are included in our earnings press release, which is available on our website.

On this call will give guidance for first quarter and full year fiscal 2021 on a non-GAAP basis. Also in addition to our press release, an 8-K filing the events and presentations page and investors section as well, it's a quarterly results page of the financial information section of our website includes links to cost and expenses not included in our non-GAAP values.

The key metrics of our core subscription businesses. These are titled supplemental financial disclosure, one supplemental financial disclosure to Additionally, our investor presentation slides include GAAP to non-GAAP reconciliation, but also provides resolution of GAAP expenses that are excluded from non-GAAP metrics now I will hand, the call over to him a CEO irks thing.

Thanks, Matt.

Hi, everyone and welcome to <unk> Q4, 420 earnings call I'm very pleased to talk with you today.

Since this is our fiscal yearend I'd like spoke to reach up or overall progress enough White 20, that's provided strategic looks at the new year ahead.

Before I do so I'd like to review briefly our strong Q4 results.

Well Q4 quarter just ended Houma generated revenue of 40.6 billion and net income of 1 billion both above our guidance ranges.

Q4 revenue grew 17% year over year.

We believe we actually fytwenty at a strong position with 143 million of annual recurring revenue and 100% <unk> dollar subscription revenue retention right.

I'm, particularly pleased to announce that during Q4.

Largest customer for a little business grew to be now over 20000 users.

I'm also pleased to announce that our spirits partnership deepen and the backlogs, but see opportunities we see from this partnership expanded several fold.

And I also want to announce that with the Q4 launch of an expanded feature set for the office, which is a new service tier we called office pro our solution is attractive to more businesses and larger businesses than ever before.

Overall, we are excited because we believe our success in Q4 positions us well for a flight 21, we have winning solutions for the market and we see tremendous opportunity ahead.

It's interesting to look back just one year to the start about fytwenty and observe the progress through my has made.

And just the last 12 months.

Hi has partnered with spreads and enabled spread to resell offers through their sales teams branded spread omni.

We have demonstrated superiority of our business solution versus others that are very large multinational corporation and skilled at to over 20000 users with this customer.

We've introduced the office pro feature set to expand the market opportunity of whom office and increase revenue per user.

Weve integrated Ooma office and human enterprise into one solution for businesses that need a best in class solution for small business environments combined with the power of a full you counts offering.

We built a strong enterprise go to market team and expanded sales through reseller partners, including by acquiring the Broadsmart business team and their reseller relationships.

We brought to market important new features for our residential customers, including our Fourg backup Internet solution.

We've taken a turtle actions to enhance our ability to drive the growth of boom boom of business and improve overall profitability.

And perhaps most importantly, we've achieved growth rates for both our business revenues in our residential revenues that we believe exceed others.

I'm proud of the ultimate team for executing well Fytwenty and I believe these culp instruments give us important momentum as we go into a flight 21.

Some of that momentum can be seen by the kinds of customers who are adopting them up.

One example is a new customer in Florida, where we will ultimately enable more than 200 users.

This company performance marketing for other businesses and shows the enterprise in part because we enabled them to my data from their use of our solution through some custom H.T.I.s.

You'll recall that the flexibility and ease of customization of boom enterprise is our core strength and differentiator.

This customer also runs a call center in enterprise was the perfect choice for them to power it.

Another example is a new customer of ours for whom office, who switching away from an in house PBX.

This customer is a law firm with two locations totaling about 30 users.

Recall that simplicity ease of use and great value of the core strengths of whom office.

As lawyers, who are focused on serving their clients who was attributes are very attractive pirates of the launch of boom office Pro we could not have served this customer because they require call recording and voicemail transcriptions for record keeping.

Now with more office pro available, we can fully meet their needs and capture this opportunity.

These are just too simple examples of how houma is winning in the marketplace I.

I think at the core they demonstrate luminous uniqueness in the market.

They also demonstrate our strategic view that small business in enterprise are two different market segments with different needs.

Today, we believe Eva is the clear industry leader conserving small businesses.

And we believe that when it comes to enterprise Ucas.

Look unsatisfied larger customers that value customization to meet their special needs.

Now looking forward to the that's why 21 year ahead.

We have many drivers trading opportunity for growth.

First and foremost is that we have great solutions out in the market today, and it's up to us more than ever before to enable growth through sales and marketing execution.

To this and we will continue to strengthen and expand our sales and marketing activities.

This will happen on all fronts, but we will emphasize expanding our sales through reseller partners and targeting our marketing to vertical segments.

From a product and feature perspective.

We will implement three major advances this year.

The first as we will add a desktop and other functionality to more office pro.

To further expand the market reach of this solution.

The second because we will complete our modernization of the enterprise user experience. This effort will encompass user portals mobile apps and collaboration capabilities.

And thirdly.

We will launch a groundbreaking new products, we called limit to that.

We will connect will consist of a new more powerful office space station.

Combined with a separate adapter housing and LT advanced radio and eight integrated in tenants.

This solution is already in beta as some boomer customers and we couldn't be more excited about the feedback we are hearing.

Many customers tell us they want backup internet into their businesses.

In some customers, particularly those limited to DSL or even satellite Internet access told us they want to switch to a faster and more reliable solution.

We intend to launch we will conduct by the end of this fiscal quarter.

Regarding our largest customer opportunities and key partnerships.

We will capitalize further on the momentum we initiated and that's why 20.

With our largest business customer we are currently engaged in a proof of concept, which we hope will lead to significant further growth in a new market area in the back half of this year.

Meanwhile, we also expect to drive moderate expansion of our users with this customer in the regions, we already serve them.

With sprint, we see an abundance of opportunities to capitalize on the partnership we've established.

One simple goal is to continue to train the spirits sales teams and enable more and more spread salespeople to sell sprint omni.

Beyond that spirit is our partner to enable the wireless connectivity Illumina connect and we expect sprint will also sell our new connect solution under the omni brand.

Finally, we are mindful that the merger with T mobile is they'll likely to occur.

We are waiting to see how this merger can open up further opportunity for us.

In this regard, we're particularly looking forward to interconnect taking advantage of the expanded network coverage between spreads and T mobile.

Altogether as we look to apply 21 and the year ahead.

We see the core drivers of our business being.

Strong sales and marketing execution on all fronts.

Successful launch, we will conduct both by us and by sprint.

Expansion into a new market area with our largest business customer.

Serving larger customers will do more office at a higher revenue per user driven by leveraging the office pro.

Adding new reseller and bar relationships, and then IND, enabling them to succeed.

And securing new large customers, possibly even very large customers who value the unique customization, we can bring within the enterprise.

As you can see we have significant exciting opportunities ahead.

Now before I turn the call over to Robby I'd like to make two special comments.

First concerns the worldwide health crisis, and how it affects them up.

We currently expect impact on Zuma two minor.

And our residents residential sales to be more effective than our business sales.

To date lack of supply availability of some accessories on the residential side of our business has caused us to delay some retail promotions.

Into occur some added costs, despite expediting product to us.

On the business front, we have not been impacted thus far.

Other than the crisis is causing the delay currently in our ability to bring product inventory to support the launch of Boomer connect.

The second comment I'd like to make is to announce some wonderful news.

The voted then and the is once again the number one rate solution for business voice. According to the readers of PC magazine.

This represents the seventh year in a row Houma has one PC magazine's voice business Choice Award.

Needless to say, we couldn't couldn't be more pleased to hear from customers that we are their top choice.

This is another validation that our strategy is working and we bring fundamental differentiation to the market.

I'll now turn the call over to Robbie to discuss our results and outlook in more detail and then returned with some closing remarks.

Thank you Eric and good afternoon, everyone I'll start with a review of our fourth quarter fiscal 20 financial results.

And provide our outlook for the fourth quarter and fully in fiscal 2011.

We had strong financial performance in Q4, achieving $40.6 million in revenue above the high end up our previously issued guidance range of $39.6 million to $40.3 million.

On a yearly basis quarter revenue grew 17% driven by madly, but well my business.

Well my business accounted for 42% of better revenue as compared to 30% in the prior year quarter.

On a fully bases Bernard revenue for fiscal <unk>, 2100, $51.6 million compared $229.2 million for fiscal 19, achieving 17% growth year over year.

Revenue from Broadsmart, which was acquired in May 2019 added five percentage points of growth due to you.

And importantly, net income for the fourth quarter was $1 million significantly better than our previously issued net income guidance range of breakeven to $400000.

This performance was driven by higher subscription revenue and expense management, while continuing our focus on growth.

Net loss for full year fiscal 20 was $670000 compared to a net loss of $3 million fiscal 19.

I'll now add additional going after the Q4 revenue.

My business subscription and services revenue in Q4 grew 61% on a year over year bases and 38% year over year after excluding revenue from Broadsmart.

In the fourth quarter, we added new users in North America from the large customer we had mentioned in other previous earnings calls.

And excited about the continued sales momentum, but this customer and as Eric mentioned earlier get engaged on multiple fronts.

Including conducting a proof of concept in a new market.

Going forward, we expect for the expansion from this opportunity and will provide progress updates in future earnings calls.

Well my residential subscription and services revenue in the fourth quarter grew 3% year over year and that combined subscription and services revenue from both well my business and residential grew 22% on a year over year basis.

Total subscription and services revenue as a percentage of total revenue for the fourth quarter was 92% up from 89% last year.

Product revenue for the fourth quarter was $3.2 million compared to $3.8 million in the prior year quarter.

As a reminder, fourth quarter revenue for fiscal 19 included $1 million, a smart camera revenue they treat discontinued in October 2019.

So adjusting for smart camera other product revenue grew $400000 yet only it.

Now some details on other key customer metrics, we had 1.048 million users at the end of fiscal 20 up from 976000 users at the end of the prior fiscal year Big 22% effect orders users now being business users.

Our clarity we do you find a use it as well my business users audited residential customer.

Our blended average monthly subscription and services revenue, but use that ought ARPU increased 12% to $11 in 38 cents up from $10 in 17 cents in the prior year quarter as he added higher ARPU customers, including a number of office pro customers.

We expect attitude to continue trending upwards as well my business continues to grow.

Annualized exit recurring revenue was $143 million growing 20% year over year.

Driven by the strong performance of Houma business and stable customer churn, we achieved net dollar subscription retention rate up 100% compared to 99% for the prior year Inflectra.

Moving to gross margins subscription and services gross margins for the fourth quarter of fiscal 20, what 70% and in line with our prior outlook.

Product another gross margins were negative 36% for the fourth quarter fiscal 20 compatible to the prior year quarters' product margins.

During the fourth quarter to minimize the impact of put on a virus on other business, we expedited some product shipments from China as Eddie mentioned, we are working closely with our contract manufacturers to mitigate potential supply chain issues.

We will continue to monitor and assess the potentially at risk to our business.

To the best afford knowledge you have reflected the potential impact of this midas and other financial guidance.

Overall gross margins in the fourth quarter increased to 61% from 58% in the prior year quarter.

Madly due to growth in subscription and services revenue off my business.

Oh, some commentary on operating expenses for the quarter fourth quarter fiscal 20, daughter operating expenses were $24.2 million up $3.1 million, what a 14% yet only it in fees.

Sales and marketing expenses were $12.3 million or 30% of quarter revenue up 21% year over year.

This increase was driven by growth in sales headcount and increasing marketing programs to grow well my business.

Research and development expenses was $7.5 million, a 19% of total revenue up 2% year over year.

As a result up our discontinuing the smart gamma product and focusing our development effort onto my business.

We are pleased to report that we achieved our R&D expense target of sub 20% of total revenue in Q4.

DNA expenses by $4.3 million or 11% of quarter revenue compared to $3.6 million for the prior year quarter.

Included in fourth quarter fiscal 20 expenses, but approximately $400000 of nonrecurring expenses, including final expenses relating to a certain litigation claim.

In the absence of these onetime expenses DNA expenses would have been <unk> refu flat the preceding quarter.

During Q4, we achieved net income of $1 million, a four cents diluted EPS compared to a three cents loss per share in the prior year quarter.

This increase profitability was due to continued growth in revenue and expense management.

Now on to EBITDA and balance sheet metrics for the fourth quarter.

For the fourth quarter fiscal 20, adjusted EBITDA profit improved significantly to $1.4 million, what's is a negative EBITDA of $450000 or the prior year quarter.

We ended the fiscal year, the total cash and investments of $26.1 million cash used in operations for the fourth quarter fiscal 20 was approximately $800000 compared to $2.1 million for the same p. did last year.

This fourth quarter operating cash usage included payment off $1.5 million, but restructuring charges undertaken in October.

We ended the fiscal year with more than 800 employees and contractors up from approximately 700 at the end of the prior year.

I'll now provide guidance for the first quarter and full year fiscal 21.

Again, our guidance is non gap and has been adjusted expenses, such as stock based compensation and amortization of intangibles.

Fourth quarter fiscal 21 guidance after taking into account the current macro environment. We expect order revenue for the first quarter fiscal 21 to be in the range of $40 million took $40.5 million.

We expect non-GAAP net income to range between $500000 to $1 million.

Non-GAAP diluted EPS is expected to be between do sense and four cents.

We have assumed 22.9 million weighted average diluted shares outstanding for Q1.

For full year fiscal 21 delivered revenue for fiscal 21 is expected to be in the range of $167 million $270 million.

This guidance includes you literally years subscription and services growth rate of approximately 30% Houma business and around 2% to 3% for residential.

We expect non-GAAP net income for fiscal 2001 to be in the range of $2 million to $4 million.

Non-GAAP diluted EPS is expected to be in the range of nine cents to 17 cents.

We have assumed approximately 23.5 million weighted average diluted shares outstanding for fiscal 2001.

From a cash flow perspective, we expect a general breakeven to positive cash from operations during fiscal 2001 subject to seasonal puts and takes the seasonality can cause cash flows to fluctuate throughout the year.

The first quarter, typically requiring higher cash usage given timing of annual payment.

In closing we had a strong fiscal 20, both in terms of financial performance and execution given that we added new customers and integrated broadsmart into our business I believe this performance positions us well a strong execution going forward with that I'll pass it back that it for some closing remarks Eric.

Thanks Robbie.

To recap Houma made great strides in that Fytwenty.

Our increased focus on business combined with new customer and partnership opportunities positions us well in our view for the upcoming fiscal year.

The market opportunity, we serve as fast we have exciting new developments plan and strong focus on sales and marketing execution.

I'm proud of UBIT team and thanks, everyone of them for their hard work and dedication to make this possible I.

I also think our shareholders and our other stakeholders for their support every one of whom is 100% committed to driving future success.

With that let me turn it back the operator, so we can take questions.

Thank you as a reminder, if he would like to ask a question Press Star then one on your telephone keypad again that star one on your telephone keypad.

Our first question is going to come from the line of Mike Latimore Northland capital.

Great. Thanks, Yeah, great quarter and.

Your next.

I guess.

In terms of the.

This this large customer.

What I guess, how quickly did you get that supply that's pretty quick to get 20000 seats deployed how fast will present the one.

Hi, Mike This is Eric.

We started that Lee.

Q2 of last year, so really in the six months back half of last year last fiscal year.

We did that and yes. It took a lot of work you're right.

In terms of the new opportunities there does that have similar size, the what's already been deployed or some variation that.

Yeah, I think the opportunities that this customer our extensive over an extended.

Outlook I do believe we have the potential.

To.

This year's C.

Growth similar to what we achieved last year, but we're going have to get through this proof of concepts and <unk> and then expand from there.

In terms of the channel work that you've been doing.

You know what kind of pipeline are you seeing through the channel I guess separate from sprint.

Yeah.

Yeah armed with the prospered acquisition, we strengthened our our channel relationships and we've also built up a team for this effort that took some time to put in place, but we go this fiscal year with that team solidly in place and I think pretty good momentum.

[noise] weird.

No, we're adding tens of reseller partners and agents every every quarter and you know is he takes a long time to help those partners and agents gets there for sale, but then if things go well with you and you become a a good partner to work with them. Then you can build from there.

We also have a a specific strategy as we've talked previously around.

Securing white label partners partners, who wants a wider gray label our solutions since our enterprise solutions. So customizable, it's easy for White label partners to make it look and feel their own.

And that is made.

Good progress of late as well simply because.

It took us most of last year to put the systems in place to kind of worked with partners in that way.

But that is also part of our plans for growth. This year, we though I'm not sure we'd given any further metrics just how much we do in Chandler and reseller activities, but it's I think relative to the industry were lights on it were heavy on our direct sales activities and so we see potential to get a little more.

Growth out of the reseller side of the business.

No.

In terms of first quarter guidance.

Is there any seasonality there are like on there on the product side or residential side to think about.

Hey, Mike well makers Robby.

But Oh go ahead Robbie its fun.

I would just like to say generally speaking if we look at.

For from a residential perspective this small seasonality in January February.

Residential as pretty generally speaking holiday beat it is heavy and then genfive is slightly lower but given the size of our business given the scanner, there's not much seasonality overall.

Dr. Don't has made us might small seasonality also january's that'd be same thing with cpms, but overall, we do not see any major seasonality in the business in Q1.

Okay very last one do you talked about adding I think collaboration this year.

Can you elaborate on that there's a lot of different sort of definitions of collaboration.

Sure and what I was actually speaking to was modernizing the user experience for the things we have today we offer.

Video collaboration we offer or the other things I mentioned in mice in my opening remarks, but they but user interfaces and user experience is an ideal as ideal as we'd like it so we've been investing.

In that we've we brought out a new desktop Alphaliner enterprise solution already.

We're soon to bring out new mobile app user experience and the new AD mid portal user experience and the last thing we will get to will be on revamping our video collaboration experience but.

Yeah. So.

Great.

Thanks, a lot you forget resulted.

Thank you.

Thank you. Our next question will come from the line that the voluntary William Blair.

Hey, guys or let me Echo my.

That's a nice quarter there I.

I guess, let me touch a little bit first person on the on the customer too.

Eric I'd love to understand sort of the competitive environment, there who did you see how did you compete again.

To the you know what drove that selection process.

Oh, Yeah, I can add a lot of color beyond what we think we've talked in the past about from on this is a customer that's a large multinational company they've used a variety of solutions in their business in different places in for different reasons.

It's a competitive environment, we have had to beat out some well known competitors at that at the customer to move forward. The way we have but you know we were able to bring to things that that really fit this customer's need well one was a very simple easy to use.

Good value solution in the home office for much of their needs combined with a very sophisticated enterprise solution that we could customized and make it do some things that are.

They are.

They weren't getting generally from the industry and it is interesting to think about this as more of a trend we see customers who have PBX solutions in house PBF solutions, whether customize them quite extensively and and they don't want to give up those capabilities yet they want to move to the.

Cloud and and I think we're well positioned to be able to work with a customer and you know.

Even improve upon what they've had in the past so where we win with an enterprise customers often when we exit I won't say how does your business work how can we enable you better.

And based on that that's how we won this customer and that's how we hope to win other large customers as we go forward.

Got it and then I wanted to touch on spreads a little bit.

Got it up.

But love to understand sort of you know the dynamics terms of growth there it all adds [laughter].

Jeff sort of it it's overall contribution of the business.

More importantly, sort of as you give color what types of customers are you seeing coming through that channel.

Is there a pattern from size or geography, or vertical or something like that.

Yeah, I can I can answer that a couple different ways first of all sprint has an extensive business sales force and it's not just one way to market they work with.

Channel partners, they have larger customer team smaller customer teams.

And we're slowly working towards working with all the members of their of their Salesforce I would say on average for.

They're probably bring in a little bit larger sized customers and what we would bring it on her own but it's it's not a big difference I will say this though they do have some very large customer relationships. The I think with connect no I'm coming up.

We'll be another point of leverage to potentially also help US you know through them really let them.

Sure some very large customers that we might not normally.

Be reaching out to so I think it's a it's a.

Great opportunity. It everything takes time Theres Salesforce does so lots of things and Ah Fortunately the the the sales that we've made system. So far have gone well and I think it would be fair to say the people within sprint at the front lines are pleased and talking positively about the experience.

Which as you know the momentum you need to encourage the salesforce to get behind something Oh, Yeah. We've said our goal and it's a goal we set rather randomly so bear with me on this but our goal is that you know by the time, we'd mature this relationship 10% of our new years, new users that were out.

In a period will be through the through the spread channel.

Got it probably got it that's that's helpful.

I'll ask the quick one on the channel itself overall.

It's just sort of that the the direct piece and that does sort of be embedded piece sort to speak the white label piece. The co branding I'll just about sort of how those two pieces are progressing sort of you see more traction for the co branding or the white labeling.

How those conversations.

Discussions going in terms of those types of arrangement.

[noise] I think we're seeing good traction with talking to resellers and getting them to understand.

Uniqueness that we can bring to them and how we can work with them and support them.

Our customization as a big differentiator a second differentiator is our ability to handle an end to end deployments.

With whatever needs arise that's capability that the broadsmart team brought to us in and in some customer situation can be quite meaningful I would say four last fiscal year. Our progress was relatively slow and I think what gotten away a little bit was this big new customer that we added in the back half of the.

A year and all the work we did for them and the customization, we did for them to enable them.

That delayed some of our other plans on on on with enterprise, but I think it's really coming together today and we have much bigger goals for this year than last year and.

You know the chill was quite extensive.

We have our own.

Unique capabilities for it some of which I just mentioned and I think we're going to find are niche in that in and that's going to be successful.

For us and take as much farther than where we are would stay with it.

Oh, well nice job guys looks at the quarter end of things taking my questions countries are they coupon appreciate it.

Once again to ask a question press Star one of our next question will come from the line item on.

Who lani B. Riley.

Hey, guys. Thanks for taking my question in a congrats on a another great quarter. So I wanted to talk about sprint partnerships more obviously its.

Progressing pretty smoothly.

Get a sense for the visibility.

In terms of when you think that might ramp and do you think your visibility will improve once the merger is complete.

I'm not quite sure I know, what you mean by MS visibility. If you mean, our ability to give you visibility about it yeah ability in terms of ramping I cannot win.

Sales team might be a no marketing omni to their customers a aggressively.

Yep.

We.

We think you know we increased our sales in Q4 versus Q3, we built our backlog and by the way, we don't see all instruments backlog, but they do share some of it with us where we can help them with it you know that through several fold.

And I would venture to say that a significant number of the people in their sales team have not yet.

Made a significant stuck with us in terms of for instance, only a customer or quoting or things like that so I think there's plenty of room to develop.

And it's a and I can tell you spreads been great to work with they are solidly behind what we're doing together and with with our new connect solution powered by spreads. It's a two way partnership and I I think it's it's on US. This is this goes into our bucket.

Sales and marketing execution for this year that that we just need to do.

Got it. Thank you and you are you looking to maybe possibly like secure another wireless carrier.

Well they wouldn't similar like white label solution.

Wolfgang be cheeky for a moment, we're hoping T mobile we'd be will be come part of the [laughter] part of the.

Partnership, but no I mean that at this point, we are focused on on on what we're doing with sprint now spread is the partnership primarily for the United States. So in other market offered areas, we might do something but I think in the U.S. were pretty I'm focused on sprint.

Got it Okay. I just last question for me I, just wanted to get a sense for how Ah Ah Houma off probably is tracking and then how are the new features are sort of being received by the market.

Yeah.

We're not gonna give numbers every quarter on this but since we launched a couple of months ago. I think we have 2500 users on it something like that and that was really came from customers that were explicitly waiting for it and.

We are.

We have been training our sales team on it and.

You know, we I don't have a good perspective on what percentage of customer base is going to adopt it but I know that it isn't uncommon in our industry to get some advanced features find out you liked them and then choose to choose to keep using them and that'll be part of the model as we go forward.

Got it thank you I'll pass it on.

Thank you. Our next question is when it comes from the line of Pat Walravens JMP Securities.

Hi, This is Joe good.

Thank you so much for taking the questions and congrats on the quarter.

Just curious looking out the business subscription revenue growth line excluding broadsmart.

Now down to 38% as we lap that acquisition.

Level revenue growth do you expect that.

Subscription line to kind of stabilize out or how should we think about that in the model going forward. Thank you.

Hey, Joe This is Ravi that couple of things on high like London in my prepared remarks, I did say my guidance as June.

Right around 30% year over year growth on business subscription in fiscal 21 compared to fiscal company. That's one aspect I did I have actually saying it will be 30% probably high and hopefully second aspect is if you look at Q4, you ramped that large customer implementation.

The online late last year, and glad you're looking at B or C. For this year and a new market I do feel there is some opportunity for growth in because of either this large customer or other large customers opportunities if it could come up and I do believe those things will help us in the longer term where that growth rate. So.

I do feel 30% is something I feel very comfortable with but obviously if you have to execute on those and then the opportunities behind that and then as Eric mentioned earlier office Pro if larger customers start adopting office, probably we'll see some up uptick on that one houma connect is going to be launched later this quarter. So.

Those could potentially also has increased our subscription services. So that lots of levers we have larger customers. This large customer appeal see a bunch of successful and be ready to deploy and then these new solutions can help us grow out ARPU and subscription growth it.

Great. Thanks, I'll add 101 comment there just to get a little more drill down on Houma connect.

20 over 20% of our.

Business user base today runs on a DSL line.

And if you look at the speeds of connectivity they get in what they pay for it I believe Houma connects Ken can be a better solution all around for those customers. So we're we're pretty excited about the potential for whom we connect in that way.

And it's going to take time with any new product I'm sure there'll be some.

Some working out and refinement, but.

We see a lot of potential for this new solution also when you get to the small business environment Austin, we're competing with <unk>.

<unk> cable type Internet solution and that can mean, a double play from someone else and now it affects we have our own double play.

So I think it's going to the also strengthen us on all around US we as we go to market its been a big effort on our part on the New Houma base station is a significant step forward and this this antenna is a in module adapter is is a very custom design.

The it takes advantage of the latest technology with advanced LT too.

Good good signal strength, even at a pretty remote location. So.

I think we've got a lot of potential which can take a little time to prove these things and then we'll be able to get better guidance on them, but that's that's that's how we're viewing.

Thank you for the additional color.

Yeah. Thanks.

And we have time for one final question. Our last question for that they will come from the line of Andrew King Dougherty and company.

Hi, there. Thanks for taking my question. So I just wanted to get better better idea, where you're seeing are confident that you'll be able to hit this 30% year over year growth.

Quite a lot of your competitors are predicting a slowdown in spending as a result of Ur Cobot 19.

[noise] [noise], well I'm not aware of what my competitors or or specifically I'm projecting be used to be cope with 19.

I I can tell you that so far our business has not been affected.

By it on the business side of the company and a you know we are.

We have channels to market and in routes to market that I think can be strong even even if people are traveling so to speak so.

I suppose we don't know what cobot 19 is going to turn into I know, there's been a lot of lot of concerned about it you know, but I think we've given a forecasted that we believe in with the knowledge. We have at this time Robbie do you want to add anything.

I would just one other thing over the last couple of years, Andrew we have built they diversified.

Sales channels.

But its resellers bars our channel.

Afterward spent on these other opportunities. So that also gives us confidence that heavy have they diversified challenged doesn't depend upon one specific thing.

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We have done.

Detailed analysis on as part of a planning for fiscal 21, and see how weekend, how we can and how we can look at and feel comfortable about our 30% guidance range. We looked at our supply chain also so we have looked at number of places and feel that we are.

Given the tenants we are well positioned for this growth rate.

Okay, and if you don't mind me if you can't quick follow up how many quarters did you build into your guidance of any cobot 19 impacted the justice next quarter or are you seeing it farther out than not.

It's a good question, we don't know much what can happen in long term, but we have looked at the next three to six months off where the supply chain issues could come in there could be big situations, but we have looked at our supply position for the next three to six months.

Great. Thank you all the all in Oh out a little bit to that I actually did talk with a leading infectious disease dr. about this.

Last week.

I think everyone expectation most people have is that that between now and the end of April it's going to be that the strongest and then the summer is going to be lighter and then you can see it come back next next winter next fall winter and.

I think also if you.

No I'm, sorry, I'm just going on here, but you know U.S. is not done much testing of this virus and it's not easy to get tested for the virus and so the virus could be a lot more places already that than we know.

But oh I think it's it's I think you have to assume that it's going to spread that most people get it are going to have mild symptoms.

And we're.

Just gonna have to wait and see on how much of it slows down or an economy that such a lot of our products do ship out preconfigured for the customer through an inside sales process. So that process can can <unk> is not likely be largely affected by something like this and also.

So RC ends in Asia are for the most part back to work they've been through the quarantine process and the in such and particularly the larger Cmes people are back producing so I think.

We think we're going to get through it. The next couple of months, it's going to die down through the summer and then we'll be doing with again next fall, but I think the U.S. will be a lot better position to deal with it when that comes.

My two cents.

Thank you I would now like could turn the call over to Eric for closing comments.

Well. Thank you everybody. Appreciate your as you are taking time listen to our call today as you know as I said in my last remarks, everyone to do it was a 100% focused on driving results for this year and we look forward to the next time, we can talk with you. Thank you very much.

Once again, we'd like to thank you. Thank you for your participation on today's conference call you may now disconnect.

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