Q4 2020 Earnings Call
Good afternoon, and welcome to see change fiscal.
Fourth quarter and full year 2020, <unk> earnings call for the period ended January 31st 2020.
My name is Diego and I'll be your operator this afternoon.
Joining me for today's call is the Companys Chief Executive Officer, you'll see alone.
Chief commercial officer chat Hasler.
Chief Financial Officer, Michael print.
After the market close todays sea change issued its financial results for the fiscal fourth quarter and full year 2020 in the press release.
Copy of which is available in the Investor section of the company's website at <unk> investors Dot Sea change Dot com.
[music].
Two accompanies todays call. The company has made available his prepared remarks, along with the supplemental slide deck, both of which are posted in the investor section of see changes web site management encourages you to download the slide deck. If you haven't already done so.
Before we begin todays call I'd like to I'd like every once a please take note of the Safe Harbor paragraph that is included at the end of today's press release.
This paragraph emphasizes the major uncertainties and risks inherent in the forward looking statements that management will be making today.
As we have indicated forward looking statements are based on management's current expectations and are subject to a number of risks and uncertainties that may cause actual results to differ materially from expectations.
These risks and uncertainties are also outlined in the company's FCC filings.
Including its annual report on form 10-K, and quarterly reports on form 10-Q.
Any forward looking statements should be considered in light of these factors.
Additionally, this presentation contains certain non-GAAP financial measures.
That term as defined by the FCC and regulation G. non-GAAP financial measures should not be considered considered in isolation from or as a substitute for financial information presented in compliance with gap.
Accordingly Sea change that's provided the brick and reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures in the Companys earnings release issued today.
I would like to remind everyone that this call is being recorded and will be made available for replay the link available in the Investor Relations section of see changes web site.
Now I'd like to turn the call over to see changes CEO Mr., you'll see a lonnie.
Thanks, operator, and good afternoon, everyone.
We're pleased to announce the transformational company, which began in late Q1 is completed.
To date CEE countries, the new company.
Nine month, we agreed to no one is predictable if in your executive team you sales and marketing organization in a stronger and more efficient R&D organization.
He twentytwenty, we launched a claim will go to market strategy.
Integrating go de excellence each interested in all product equally seguin, winning socal solution, we try to based engagement.
The initial results I'm just curious.
During the last nine months physical Twentytwenty, we won't know quantify in teaching is wrong, but we'll just take many of.
This week and even though the devivo book It didn't go basically you know legacy revenues.
Well go one physical Twentytwenty was a positive beautiful seachange, we achieved the total revenue of 67.2 media.
This amount.
Engagements or 55% well, we'll talk to live with you.
We believe there was no smoking 65% into secunda physical Twentytwenty will most revenues came from Fremaux engagements. Our gross margin was almost 70% we generated 4.8 million in non-GAAP operating income.
More than 12 million annualized cost savings and this is just beginning.
We consolidated our R&D operations were single location, increasing government officials.
In the enabling additional meaningful savings well physical 2021.
We cleaned up well legacy customer commitments, many of which generated negative why.
Yes, the neighbors additional savings physical 2021.
As we exited Q4, he tried to the profitable growing nutrition company and we're positioned to benefit we've made teaming up on to meet your statement.
The current operating environment, we scoping 19.
Well look to customizable knowing.
Since you took one of the need to adoption in a timely manner.
We maintain bought with high quality customizable and whatnot development base.
To my engagement.
We know what customers are looking for will therefore this is slowing some of our engagement.
We continue to push food and we expect continued close business.
So do you perceive me.
Finally, being the only solution that can reduce the with customers video quality operating expenses.
50%.
Speak to see a significant.
Well a business we didn't very few months.
Give me a.
Oh facing two challenges these days.
Increasing operating expenses and declining revenues.
When demand for video in cases before why did expenses.
Yes.
Many TV providing.
Being moved yet.
Hi, there.
Thank you see missing simple and making immediate network investments when he was certainly seem to going.
In addition, why did you provide.
Operating expenses is increasing.
I think I've been you and video ARPU Oh go ahead.
Decreasing operating expenses, we declining revenues as we enter is fishing is a perfect storm.
People fighters.
Oh swing is the best doing the industry logistic challenges.
Well sites using overwhelming based engagement, where did you somewhat customers operating expenses.
Well the total cost of one of them.
The framework is almost feel.
Despite the weak it's impossible to consummate the signal.
Well picking on with public market.
In many cases, our customers use the video delivery operating expenses by 50%.
On the revenue side, if I woke enables the TV everywhere I go to also with like advertising booked like it won't be on TV, which enable Dan Dickson increase some of the result, I think revenues.
No one vendor indeed, indeed, well since you have cost one solution will make disclaimer.
This amazing combination will enable us to scale our business.
We believe.
We didn't very few months physical 2021 will be a great deal featured.
Before we discuss our outlook and strategic initiative.
Consequently, 51, I'll turn the call available C O Chuck will provide details on a same queen.
So Michael will see Oh, well, so often interest before John.
Thanks, Yossi and good afternoon, everyone. It's great to speak with you again today, we finished the fiscal year with an exceptionally strong way rate by securing 11 significant framework deals in Q4, which was up approximately 30% over the prior quarter.
The 11 framework wins in the quarter brought the total number of wins for the year to 26, which exceeded our annual target of 2025.
And then just you mentioned we achieved this all in less than a year, it's really impressive feet on its own.
The 26 wins, we secured reflects the increasing demand we're seeing across the industry for versatile cloud base for localize the video delivery solution.
Framework enables content owners service providers and broadcasters to offer and that looks like service for both like channels and video on demand using existing cable networks and or over the top.
This helps his organization stay competitive and generate new revenue streams by offering unique services and content to me all their customers hearing AIDS.
It's not just the sheer number of when that's noteworthy. It's also the healthy mix of new and existing logos, we secured during the year, including significant wins in which we successfully replaced a competing legacy solution.
For the top telecommunication companies in the U.S., two leading regional service providers globally, the common denominator.
Organizations are selecting the framework to enhance the user experience significantly reduce operating costs more effectively monetize our installed base.
An integral part of our successes thanks to the go to market strategy. We implemented last April if you had the opportunity to here. Yes, you were I talk about the strategy in any detail you. All know it was inspired by simplicity we.
We started by introducing a framework, where we had truly that's components.
This includes the best user interface and the best back office and instead of being sold at Standalone component, which is how the company previously so we began selling it as a fully integrated solution.
So we're looking for a plug and play solution, but just work not multiple components that they had to assemble the builder solution.
Well, we've had great success selling framework. Following this proven strategy, we're not resting on our laurels and are actively pursuing additional approaches and channels to drive greater adoption in revenue streams for CJ.
Later this year, we plan to introduce the framework plug in store.
Which will be designed to help our customers do more with a framework through both free and premium delegates, providing them with further avenues to monetize their installed base.
Additionally, the framework technology enables us to change the way TV ads are saw which in turn will allow our customers to recoup some of the AD revenue. The TV industry has lost to the web over the past decade.
In fact, we have several ongoing customer engagements and should be able to announce the initial customer deployments in the coming months.
Overall, we're really encouraged by the sales traction we achieved in fiscal 2020, we've entered the new year, where they grow English the framework customers very recurring revenues through multiyear agreements industry, leading technology.
Along with a robust pipeline of new opportunities as well distributed across our geographic regions.
We're confident these factors have positioned us well.
Can you success in fiscal 2021 and beyond.
With that I'll turn the call over to Mike to walk us through our financial performance for fiscal Q4, and the full year of 2020.
Right.
Thanks, Chad and good afternoon, everyone.
Turning to our financial results for the fourth quarter ended January 31st 2020.
We entered the fourth quarter fiscal 2020 with 22.2 million in total backlog.
Excluding maintenance and legacy support.
We booked new business of 17.4 million during the fourth quarter and ended the quarter with backlog of 21.8 million.
Total revenue increased 14% to 19.3 million from 17 million in the same year ago period.
The increase in total revenue was driven by a 13 million dollar increase in framework revenue compared to no framework revenue in the same year adult area.
Offset by 10.7 million dollar decrease in legacy revenue.
Product revenue increased 16% to 13.2 million or 69% of total revenue from 7.8 million or 46% of revenue in the same year they'll period.
The increase in product revenue was driven by 12.4 million dollar increase in framework revenue.
Service revenue decreased 33% to 6.1 million or 31% of total revenue from 9.1 million or 54% of total revenue in the same year ago period.
The decrease in service revenue was due to lower revenue from both professional services and support revenue for customers related to our legacy products.
As we mentioned that Q3 call. These declines are consistent with our expectations as we transition to legacy customers to new framework arrangements and transition to our professional services organization to our customer engineering organization as we completed legacy professional services projects.
Revenue from our international markets was 11 million or 57% total revenue, which compares to 12.4 million or 73% of total revenue in the same year ago Perry.
The decrease in international revenue was due to a large project for a significant international customer.
The fourth quarter of last year.
Revenue in our U.S. market was 8.2 million or 43% of total revenue, which was up from 4.6 million or 27% of total revenue in the same year ago period.
The increase in revenue from the U.S. was due to our framework offering being introduced in fiscal 2020.
In terms of customer concentration, we had to customers that accounted for 16% and 12% of our total revenue compared to one customer in Q4 of last year that accounted for 42% of our total revenue.
Looking at our margins gross profit increased 14 million.
Or 73% of total revenue.
From 10.9 million or 64% of total revenue in the same year ago period.
The increase in gross profit was due to a shift in sales to our framework product starting in Q2 fiscal 2020.
73% gross margin, we achieved in the quarter exceeded our annual guidance target of 60% for the fiscal year.
Product gross margin was 87% compared to 88% in Q4 of last year.
Service gross margin was 42% compared to 43% in Q4 of last year.
Looking at our expenses non-GAAP operating expenses decreased to 25% to 9.2 million from 12.3 million in Q4 of last year.
The improvement reflects the continued cost savings initiatives related to the reduction of third party costs and elimination of non essential internal cost throughout the organization.
In Q4, we eliminated all resources related to legacy professional services and support arrangements as we completed the remaining legacy projects we had underway.
Our success reduced reducing opex enabled us to realize three consecutive quarters of non-GAAP operating income as wells three consecutive quarters of non-GAAP net income.
GAAP income from operations totaled 3.6 million an improvement from a loss of 19.9 million in the same year, though period.
As a percent of total revenue GAAP income from operations for the fourth quarter fiscal 2020 was 19%, which compares to a negative percentage in the year they'll Kerry.
Non-GAAP income from operations totaled 4.8 million or 13 cents per diluted share improvement from a loss of 1.2 million or three cents per basic share in the senior though period.
As a percentage of total revenue non-GAAP income from operations was 25% compared to negative 7% in Q4 of last year.
GAAP net loss totaled 43000 or zero cents per basic share a significant improvement from a loss of 19.6 million or 55 cents per basic share in the same year, though period.
Non-GAAP net income totaled 1.2 million or three cents per diluted share. This was an improvement from a loss of 946000 or three cents per basic share in Q4 of last year.
As a percentage of total revenue non-GAAP net income was 6% compared to negative 6% in Q4 of last year.
Turning to the balance sheet, we ended the year with 13.9 million in cash and cash equivalents in marketable securities.
No doubt.
Cash position was up 169000 from prior quarter, So pleased with that progress for the quarter as in prior quarters in prior years, we've had significant cash Brian.
Deferred revenue at quarter end was 6.2 million, which compares to 7.8 million at the end of the prior quarter and 10.7 million at the end of Q4 last year.
The sequential and year over year decrease was primarily due to the decrease in legacy revenue and the timing of revenue recognized and renewal of post warranty maintenance and support agreements during the quarter.
Yeah. So excluding Unbilled receivables was 66 days at the end of the fourth quarter of this fiscal year compared to 88 days in the fourth quarter of last fiscal year.
Unbilled receivables were 23 point, Threemillion, which compares to 16.7 million in the prior quarter and 5.4 million in Q4 last year.
The sequential and year over year increase was the result of the timing of billings from our framework deals due to the payment terms on those deals compared to the revenue recognition for the framework deals.
Now turning to our fiscal year 2020 results total revenue increased 8% to 67.2 million from 62.4 million in fiscal 2019.
The increase in total revenue was driven by $36.8 million, increasing framework revenue compared to no framing revenue in fiscal 2019.
Offset by 51% decrease in legacy revenue 30.4 million compared to 62.4 million in fiscal 2019.
We fell slightly short of the lower end of our guidance range, primarily because of a few framework deals that pushed out of the quarter.
Looking at a revenue buckets product revenue increased 93% 39.9 million or 59% of total revenue from 20.7 million.
Our 33% of total revenue in fiscal 2019.
The increase in product revenue was driven by an 18.3 million dollar increase in framework revenue.
Service revenue decreased 35%.
27.2 million or 41% of total revenue.
41.7 million or 67% of total revenue in fiscal 2019.
The decrease in service revenue was driven by $6.1 million decrease in installation and customize development services as a result results of our framework products out of the box functionality.
As well as a $7 million decrease in maintenance associated with decommissioned legacy products.
Revenue from our international markets was 35.4 million or 53% of total revenue, which compares to 38.8 million or 62% of total revenue in fiscal 2019.
Revenue in our U.S. market was 31.7 million or 47% of total revenue, which was up from 23.6 million or 38% of total revenue in fiscal 2019.
In terms of customer concentration, we had no customers accounting for more than 10% each of our total revenue in the fiscal year compared to two customers, who represented 24% an 11% each in fiscal 2019.
Looking at our margins gross profit increased to 43.5 million or 65% of total revenue from 37.3 million or 60% of total revenue in fiscal 2019.
As I mentioned earlier the increase in gross profit was due to a new go to market strategy of our framework product starting Q2 fiscal 2020.
The 65% gross margin, we achieved exceeded our annual guidance target, 60% for the fiscal year.
Product gross margin was 85% compared to 83% in fiscal 2019.
The improvement was due to an increase in higher margin framework revenue in fiscal 2020.
Service gross margin was 36% compared to 48% fiscal 2019, the decline was due to fix costs related to de commissioning of our legacy products in fiscal 2020.
Looking at our expenses non-GAAP operating expenses decreased 20% or 9.8 million. It's a 40 million from 49.7 million in fiscal 2019.
As I mentioned earlier the improvement reflects the continued cost savings initiatives related to the reduction of third party costs and elimination of non essential internal cost throughout the organization.
Turning to our profitability measures GAAP loss from operations totaled 3.5 million a significant improvement from a loss of 35.8 million in fiscal 2019.
Non-GAAP income from operations totaled 3.6 million or 10 cents per diluted share an improvement from a loss of 11.7 million or 33 cents per basic share in fiscal 2019.
As a percentage of total revenue non-GAAP income from operations was 5%, which compares to a negative percentage in fiscal 2019.
GAAP net loss for the year totaled 8.9 million or 24 cents per basic share a significant improvement from a loss of 38 million or dollar six per basic share in fiscal 2019.
Included in the net loss for fiscal 2020, what's a onetime noncash charge of 5.4 million related to the loss on the sale of our prior headquarters in active.
And finally, non-GAAP net loss improved by 12 million to a loss of 1.9 million or five cents per basic share.
From a loss of 13.9 million or 39 cents per basic share in fiscal 2019.
Before I hand, the call over Yossi I wanted to discuss guidance for fiscal 2021.
Prior to the onset of covert 19, we were prepared to provide guidance representing meaningful revenue growth in fiscal 2021.
Based on our pipeline, we believe revenue guidance of 80 million to 90 million fiscal 2021 with operating metrics consistent with our previous guidance was achievable.
We're working to better understand the impact of coking 19, and will provide our formal fiscal 2021 guidance as covance impact on our business becomes clear.
This completes my financial summary for more detailed analysis of our financial results. Please refer to today's earnings release as well as our 10-K, what's your plan to file by April 15th.
You'll see.
Thanks, Mike.
We successfully completed Btwenty, one well if you move into India bid pipeline, we have visited.
As Mike mentioned.
Got you can indeed, we plan to guide for ways to my immediate physical commented when do you want.
We expect to better understand the Shilton coordinating impact during the next 90 days.
We believe did we have device goes back to being due the next few months and need to complete me using a little value based engagement and unique value proposition.
There isn't one probably would like and I'd like to mention recently, we had to new module to display war, which we changed the way the TV industry. I also want to utilize did an amazing inventory you monetize. We're currently working we couldn't constant real and we try to enter new future.
We did did we done before moving to do you want me to begin acuity.
Great.
Thank you.
Ladies and gentlemen at this time, we will conduct our question and answer session.
If you would like to ask a question. Please press star one on your telephone keypad. That's the Starkey followed by the one key on your telephone keypad.
Confirmation Toma indicate that your line is in the question Q.
To remove yourself from the Q press the star Keith followed by the number two.
Once again to ask a question press star one on your telephone keypad.
Sure on the Speakerphone, please pick up your handset for pressing the star.
[laughter].
My first question comes from Steven Frankel of Dougherty. Please state your question.
Good afternoon, so you'll see you talked about.
Several deals that you hope to close in Q4 that slipped out I Wonder if you might.
Tell us.
Approximately how many deals slipped out of the quarter what was their value and have any of those deals close thus far in Q1.
Thanks, Steve.
So these I'll hold deals.
Home the international market.
We did not lose annual scheme, we expect to close on that Jim.
Closing be full D will give the navy south.
To significantly exceed that will have any target.
Well I'm fortunate to you will need to.
Complete yeah, beginning in the tiny menu.
Instant booking to multi shooting.
Great I will nishal, including Beach.
Full jeez, if you can see deal looks awesome seemingly show how well we know you shuffle last year was quite distinct.
He calls over 75%.
Also for each.
Full game, it's got pushed out could you give me Jim.
And we're also stocking we get full give people mental so overall yields JV.
Bullish on the future telephone company.
Okay, and let's talk about.
Solving the cash problem, yes, you did generate some cash in.
Q4, but it was relatively minor amount I assume you're play internal plan was for something higher than that.
What kind of cash burn might we expect in the next couple of quarters Intel business picks up.
Yeah, Yeah, it's Mike I can take that so you know again during the first three during the first three quarters. The year. You know we did burn 17 million, we had kind of they all cash neutral regenerate a little bit of cash in Q4.
Grand It was a small increase but I think it was significant in comparison to the cash burn in prior quarters in prior years.
2000, and a 20 was a transition year for us. So we're focused on optimizing our cost structure a building a business. That's you know consistently generating cash and then I think just in terms of stability you know we've got a an accounts receivable in Unbilled base and if we ever at some point in the future decided we want.
To put something in place I think that would be kind of the a logical next step.
But you will.
Burn material cash in the next couple of quarters right. That's just your business cycle. That's been the company's history or is there something different that says if business recovers in Q2, you generate cash.
So.
Mike.
Before you answered to Steve. This is one where I can get you need to looping.
You will see the I've PV topix I'm, just trying to ensure we did not feel.
We had some negative commitment very meaningfully changed.
The impact can be seen legacy commitments was booking de support organization and the LNG organization.
Now I'll be told if these legacy.
Commitment from done in completed with negative Hawaii.
Obviously in Q1 of them all in cost structure is much better.
Deal flow is really significant impact on because we need.
Mike equally.
No I think that makes sense I think the only thing I'll I'll just add is you know, yes, we may see.
A little bit of the you know a cash burn, especially maybe quarter to quarter, well give maybe some longer term outlook when we give you.
No additional guidance, but I think like I mentioned, the compared to kind of legacy Sea change, we don't expect that type of significant burn in 2021.
Okay, and and just a follow up on a press release you had maybe was last week, where you talked about the increase in streaming and I understand that's obviously, what's going on in the market, but is there any component of framework today, where you derive incremental revenue.
New as customer activity.
Increases.
Steve Let me take can you component.
Thanks gains when customers activities increasing.
Many will follow a favorable customers, obviously JV acquiring some more cloud services.
Well, we have a decent gross margin.
In summary, Dan requiring based on the metrics as well.
Different before you.
Oh so.
Sure I mean, you.
Places when we are going to take will really be education.
Obviously, well they data will be meaningfully increase.
Okay. So these are things that potentially can come into play in that in over the next year Where's the head count today and and given the covert 19 situation are you.
Contemplating further shrinking account.
Yeah. So right now we're at about you know 275 globally, we have made.
Some changes or and I think we just continue going to continue to evaluate it you don't want to kind of a monthly and quarterly basis I feel like we made a lot of changes at.
The end of our fiscal 20, you know in Q3 in Q4, and so we kind of feel like we are you know lean inefficient and you know can leverage that and we'll continue to monitor that going forward.
Okay and and.
And then Big picture question, if you've done 26 framework deals remind us how large your legacy installed bases. So even if you didn't move outside of that universe.
How many potential customers could you convert.
So the legacy installed base he could ball towns getting 20 customers.
It's important to won't get too many many many of the favorable Queens Oh from new customers in a new functionality.
If youre looking at those targets market.
So obviously, we all know somebody said we've seen.
The legacy customers did she didn't used to say these its nothing to get Ki bin solution. The vast majority of to frame will pass two meals OLTP solution.
Now when you think about guilty to domain.
So for cable providers out there and we continue to stay at least in global business well get.
Thank you I'm, sorry content providers in corn controls.
And.
If you think about Clinton formulas for instance, I looked suggesting that men babies the customary.
Thank you Bloomberg music, when Tony and Bloomberg Mgcs public information, we'll look at restocking in over the tool and it's going to mid Seventys.
This is Nick can be confusing when big chunky.
So this is another type of question.
I'm just curious if you if you think about it.
Let me its customers that we are facing especially these days.
So.
He couldn't going down any significant thing point, though same dipping.
There was a very meaningful opportunity to do much more.
And just looking to buy thing to create going into Q1.
In spite play means they do reason opportunity duties budget and we outperformed timing, it's what we call it by like.
Its the best I can we offensive it I'm just mediate so are we going to close it won't be she'll no.
Uh huh.
We don't even if you need to do meet 50% will follow reshuffle BCU.
To meet that targets will be.
So we feel confident is the next few months, we'll next few weeks I'm going to be challenging maybe we continue to engage.
We see.
He's DC is gonna be great yes.
Okay.
And then maybe you candidates op ex expense.
Savings in Q1, maybe give us an idea of what kind a year over year decline in Opex, we might see in Q1.
[noise], yes, or non-GAAP operating expenses were 9.2 million for Q4, and I think you know would generally going to be around that run rate for you know the next couple of quarters or for fiscal 21.
And that's that's obviously Oh yeah.
Definitely better than in prior quarters prior years.
Okay, Great. That's very helpful. Thank you [noise].
Well, let somebody else asked some questions.
Thank you just to remind her to ask a question press star one on your telephone keypad through remove yourself from the Q Press star too.
Can I ask a question press star one on your telephone keypad.
Our next question comes from Jason Smith with Lake Street. Please state your question.
Hi, guys. Thanks for taking my questions, all food, recognizing and sort of the cobot 19 situation makes it a bit difficult. Just curious if you could comment on your confidence that a customer spending is border being pushed and not being produced at this time.
So.
She thinks any question some customarily I'm going to pushing back just absolutely.
But looking to buy side.
Almost E cig nave, he TV equal if I do want to Chladni.
It's just like to tell them to make they relates to help you might feel okay.
Well she is going to fulfill do.
Hey solution that can you may begin to reduce the olympics by up to 50%.
Does no.
Looking at on D., I mean, when do they look to many of the game, but you haven't into the top selling multiple conforming.
Well, if you do delivery platform.
They have a very long and complex spikes lease which has nothing to do we didn't Vince we do you want to meet their needs and deal predict it won't be challenging.
Okay.
We are there will be engagement its unique.
So are we going to see some cost and those that I'm gonna do they feel budget. Yes, you are we going to see many many customers.
We will fold.
Very fast you don't want people like the Olympics.
I think we're going to see more those.
I think it's good to see you say that we already see similar goals or maybe.
Okay. That's helpful.
And I know you mentioned, a pretty impressive waiting right, but just curious what tends to be the primary pushback from customers today with not going with a framework Dale.
So.
We posted 26 weeks and they said, it's a win april's over 75%.
Well, so maybe slightly more than that.
So we will get you gotta she'll be community into 25% did we didn't look me and I won't say, including full abuse deterrent fish DCIO.
So we looked really very few opportunities.
Yeah.
I felt the same you'll still fuel so in each one is on recent for moving east and leaving he's not only to.
Nothing a vendor in some cases, leaving.
I mean, it we initiated engagement and we've got multiple to convince the customer.
Engagement, we didn't do you.
Okay. That's fair then yeah, Okay Yep <unk> and then just a quick question on the framework plug in store is this really targeted at a different segment of the market or is this a viewed more as additive for a customer.
Already has gone with a more kind of broad based framework Dale.
So you should think about the same won't get based on how did you probably Egypt foam.
So she can do you see it wouldn't be skates from for me I'm like if you follow back in volume and we think all these components and now we're extending the best in class.
Each and every one is.
<unk>.
We have access to be upsell Burger kings.
So this is something because he's going to be.
Meaningful.
Do each and every single customer.
And we didn't nine months, we've been able to win 26 customers.
The leaving the vast majority of didn't get baskets material that you did.
I think we shouldn't be able to win a more meaningful number these people.
And then once these decent nothing formal customers we live boxes.
To the formal upsell older plugging excuse me.
We would see so <unk> contribution to little bit as well.
Okay. That's helpful. Thanks, a lot guys.
Thanks, Jason you Jason.
Our next question comes from George Marima with Pareto Ventures. Please state your question.
Afternoon, you'll see.
Hey, Josh.
So on the.
Can you eliminate a little bit on the 120 legacy installed base.
What sort of revenue opportunities in fiscal 2021 does that represent to us.
[noise].
So.
Well, we conclude.
Simultaneous installed base into flame woke up so young isn't 20.
These are custom all the time using if you change from full game download using a single department JJ demo eating once you get a component.
We continue having components full.
Several data.
In Gainesville value, probably as much volume dish or because I think installed base, you ever which framework value.
He is about three to 4 million.
You use out of the vast majority of them. These I'll keep my goal so base a little daily life loyal.
But can you get called me thinking impacting the market indicating segment.
We shouldn't you begin to position well, maybe just kicking off do you yeah wins to be able to convey commend you didn't get smoke.
You should think about having providing.
Similar to 2008.
Oh, even wolfcamp.
He asked me investment teams in April even to smaller waiting.
To continuing support the growing demand, hoping we.
So there won't be phone, peaking.
And then teamed up to 2000 can they do you all who is going to go down.
The only btds people you out.
He's going down so.
So we have a little bit confusing sold it for many keeping I think so we see this is also what it shouldnt we do.
And you would see lifting it probably continue probably in a month, so so when baby publishing folk.
So the Olympics is increasing bill revenues, though decreasing.
I wouldn't be able to accumulate converging well some of the installed base seem to fool.
Okay.
And then are you is it true that although maybe some people are sort of a freezing their budget for the moment for the next few weeks to see what happens arch. Some people in video accelerating their plans due to the necessity to go online immediately due to the check like movie theaters and <unk>.
Other content providers need to rush to market are you seeing some on the other side of the table increase engagement from certain parties.
Oh, Yes, sure absolutely you see multi month form content O'neil.
Some form can Tony is likely to one you mentioned, obviously, they're looking to very very quick and fast five degree into submission.
Well I mean, when AAMC, obviously enabled us to go into production fairly quickly four weeks. Since then does a custom moving to know the peaks.
The can you believe it could take the production.
We ended the thousands of subsets upside because we've been very very few months.
So we see more demand and I believed it can be am I to machine tools supposedly stimulant.
Okay.
Are you noticing any trends among regions like is Europe stronger or weaker North America stronger or weaker or Latin America's stronger or weaker in Q1 here right now.
Hey, geography trends.
Yeah. So.
We live in total for but let me see signs I think he shouldn't say that what from yesterday going into Q1 in August we see that I think that we'd be glad you.
[noise] do deems it did we see today Oh significant you significantly I emailed in everything that we've managed to close love field.
Obviously, the larger de quite a longer engagements section.
Bob.
Now getting Dell.
In Gainesville for new demand.
Most of the new demand easy, India, maybe because well some content providers content bono faster we yeah.
You walk with all these symbol.
Concerning the future market six moving slightly slower over there in terms of new demand not calling me mode.
Now if you think about the same old each be no only full.
Less than nine month, so we started to fulfill the favorable.
Well lets the nine month fulfil loves steel we started to offer on the same open you can use the same won't get any be lucky to be sold me lately.
And then we thought that you didn't even within 60 days on so after the introduction.
So as I want to success is quite good and the fact that we have dish lieske some amazing biplane.
Because of the reasons because.
The fact that we have to I technology.
And obviously customers that's knowledge to it.
And also because I mean based engagement, which enable us, especially young believes that these days.
Today, you can can provide is in a way just can you. Let me begin to launch a synergies we of course football.
In common TV full by gives either way this will enable us to do well don't.
Okay and are you guys still expecting somewhere in the ballpark of a similar service revenue per quarter next couple of quarters.
For the 2021.
[noise] so.
We will invite you saw a good my little peacefully.
Yes. So you know obviously the service revenue was a big piece of legacy Sea change.
We will definitely see a decline in that in the next couple of quarters. So service revenue for Q4 was 6 million, we still have probably.
Maybe five to 10 million in total of legacy revenue to transition through the year, but you will see a you know a decline in the services and then that you now will be offset with an increase in product revenue, which is primarily what the framework revenue is.
And when you sell a framework deal is there any service component that gets what through.
All right and so would.
No no there is a component so roughly its you know maybe see two thirds one third so if it's a 3 million dollar deal. It's generally two pieces. It's 2 million of a software license and then the remaining 1 million is a services and support agreement and that's generally over the term.
Of the contracts, which are generally four to five years. So that other million you know would come in ratably and so.
And you can see this in our tables in the press release, we are starting to build up a piece of the framework that is occurring but obviously given that next two thirds, one third with one third being spread over the life, you're seeing that build would set up you know a smaller scale right now and on the framework.
Is it is it earned monthly quarterly or annually payments on how the cash flow those those revenues in the out years.
So.
The model.
Lastly, you know this revenue recognition and this cash so revenue I think we went through the two pieces right right right a license license gonna be deliberate and then ratable generally the first you know kind of 26 deals are so that we sold at the new go to market, we've been spreading the payment terms out ratably. So in that same streaming.
<unk> dollar deal I'm, where we just walk through where our revenue comes in from a billing perspective that will be ratable over the four to five years.
And you built once a year or once a quarter or one so what.
Oh, sorry, there generally once a year or once a quarter.
Okay.
I'd say.
Majority is annual yes, so they'd be assessed kinda, that's what I believe it or do you over five years, you get a million year 1 million. Your two oldest so if you build at April 1st of 2019 it'd be a million April 1st 20 19 million April 1st 20 20 million April 1st 2021 is that usually go.
Correct.
Correct.
Perfect.
Thank you.
There are no further questions at this time outside of a for back to Mr., you'll see aloni for closing remarks. Thank you.
[noise] tissue wonderful Jane investigation into teaching <unk>, she's a clean twentytwenty country.
We now disconnect.
Thank you. This concludes todays conference all parties may disconnect have a great evening.