Q1 2020 Earnings Call

Ladies and gentlemen, this appeal.

This conference is scheduled to begin a momentarily until that time, unless we can be placed on musical. Thank you for your patience.

[music].

Good afternoon, My name is using and I will be your conference operator for today.

Hi, I would like to welcome everyone to the very Tony first quarter 2020 financial results Conference.

All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question answer session.

I would like question. During this time simply press Star then the number one on your telephone keypad. If he would like to withdraw your question. Please press the pound Keith Thank you.

<unk> Alger senior Vice President of corporate development and Investor Relations you May begin your conference.

Good afternoon.

Come to bear comes first quarter of 2020 conference call and Brian Alger Senior Vice President corporate development and Investor Relations. After market close today are tone issued a press release announcing results for the first quarter ended March 31st 2020.

The press release is available on the Investor section of our website.

Joining me for cased hole or Burcons, Chairman and CEO, John Gilbert President Frank Silver.

He called.

On the 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 and birds business strategy and future financial and operating for that.

Including its expected net revenues non-GAAP net loss for the second quarter of 2020.

Forward looking statements are subject to risks uncertainties and assumptions that may cause actual results to differ materially can go stated or implied by those tickets.

These risks and assumptions are discussed in birds eye SEC filings, including annual report on form 10-K, and its quarterly report on form 10-Q filed today.

These forward looking statements are based on assumptions as of today may 11th 2020.

Undertakes no obligation to revise or update them.

During this call the actual and forecasted financial measures will be discussing including gross margin operating expenses net loss will be presented on a non-GAAP basis. Reconciliations of these measures people are spending GAAP measures are included in a press release, we issued today.

Finally, I would like to remind everyone that this call is being recorded will be made available for replay. The link on are available on the investor section of the company's website Www <unk> Dot com.

Now I'd like to turned over to our chairman and CEO, Kevin Stewart CAD.

Thank you Bye welcome everyone and thank you for joining us today.

Hope you and your families are staying safe and healthy in light of these extraordinary circumstances.

Well I spoke with you in early March no one could have imagined how much and how quickly the world would change our prayers are with everyone who has been hit by depends on mix, especially those who have lost loved ones.

Dependent make had an immediate impact on our content licensing and advertising businesses in March with approximately 1.5 million and expected revenue loss or delayed in the last few weeks for the quarter. Despite the significant revenue pressure I am pleased with our Q1 results, which demonstrate the resiliency of our team and the value of our differentiated and diverse portfolio.

Yeah.

It sounds Q1 revenue was 11.9 million.

On the cost side, we weren't as strong position given the focus we've had since Q4 on the bottom line at the pandemic continue to spread were able to quickly accelerate and expand our program and further reduce our operating expenses without a reduction in headcount, enabling us to reduce our non-GAAP net loss to 6.7 million.

I cannot stress enough elements the proud I am other herculean effort of our talented employees.

Working from home to maintain operations in this environment, well driving customer engagement and product development levels to all time highs.

We've seen a decades worth of digital transformation or last two month.

This is increasingly moved to the cloud and AI recognizing a subsidy for change in the changing world.

As a result, we expect to see increased strong engagement on our powerful and unique platform.

We continue to innovate and explore new verticals, such as energy and safety, we're building out existing relationships and adding new customers upgrades to worry I. We're operating system continued to gain high praise from our customers.

Security and privacy remains a priority for every organization and we have been working closely with customers to ensure that as they become digital first businesses using AI.

They have the necessary checks and balances in place.

More specifically veritone launched the groundbreaking AI benchmarking tool to help our customers compare the performance inefficiencies.

Seriously I model on a eyewear and equally important to measure and mitigate bias within the machine.

In addition to helping customers and the communities. These are very kind of hyper focused on effort to help reopen the global economy, we are hardly immune from the global economic downturn, but we believe this current environment also creates new opportunities for a digital and AI are critical to finding the path to recovery.

In that spirit, we're doubling down on our government business working with top private and public sector organization to develop AI based solutions aimed at bringing back much needed trust and confidence to the places where we work live shop and play.

There's still plenty to do but we hope to be in a position to share additional details in the coming weeks.

Looking past our first response Bay, we see profound structural changes in the global economy, but particularly for the quick and agile it relatively fast recovery and bright future.

Our core we're driven by the belief that AI is mankind's greatest innovation and is the key to building a more just transparent and productive society.

Baritone is committed to making AI technology available to transform the activities of organizations of all sizes and industry.

Now I'd like to hand, the call over to Ryan, our President and co founder to discuss our operations progress in greater detail right.

Thank you Chad and good afternoon, everyone.

Let me start by saying that in the face of pressures, resulting from the pandemic and economic restrictions our entire team had been laser focused on not just mitigating the impact on our business that emerging even stronger than before I'd like to spend a few minutes discussing our first quarter revenues and outlook in each of our businesses.

In our advertising business, while we saw the cancellation and delay of several advertising campaigns in March our differentiated cognizant processing and analytics capabilities. The diversity of our served medium market and the fact that many of our clients our direct to consumer focused helped to mitigate the disruption from the pandemics to some extent.

In terms of performance highlights for the quarter in this business, while its revenues declined sequentially. Our net customer count have continued to be relatively stable and its revenues grew 5% year over year like most of their peers are reporting declines.

We're introducing a new capex <unk> average gross billings per active clients as it is a primary indicator of our current and future performance of our advertising business.

Our average gross billings per active client for Q1, 2020 increased 23.7% year over year to 579000, reflecting an increasing traction we are happy with accounts like express TPN and a large pharmaceutical company that is adding new drugs to its campaigns service through there it's on one.

Our performance marketing and podcast broadcast and digital Influencers enabled by a out where cognitive analytics continue to perform very well gross billings in the segment continued to represent more than 60% of our total gross billings and revenue growth here continues to outperform the competition.

I also want to call out the strength, we are seen in our new AD networks business very yet we have seen a strong pick up in our various offering this quarter as stations and advertisers and look to transact increasing loads of unsold inventory.

Looking ahead, we expect our advertising revenues to rebound somewhat in Q2 Q2, new client campaigns and growth in various and we are optimistic that they will increase further later this year once global economies start to open back up.

And our content licensing business, we are seeing similar near term revenue pressures from coated Oh, you're taking decisive actions to mitigate these temporary impacts.

We remain confident that our strategy of leveraging the power of AI there to monetize both live and historical video and audio content is a game changer for the media and entertainment industry.

Starting in mid March virtually every major sporting event worldwide has been canceled or postponed in particular two of our licensing groups. Most material revenue drivers the NC delayed basketball tournament and the Masters golf tournament had been canceled and postponed respectively.

In addition film and television production was largely shutdown in March and April, which also impacted our Q1 and Q2 revenue.

However, our team has done an excellent job finding new opportunities to license the top tier content, we represent and leveraging AI, where its capabilities to add value to that content.

In terms of performance highlights, we're seeing a material increase in demand for Kogan 19 related content provided by licensing partners, such as CBS News, Bloomberg and CNN and with a Edwards indexing search capabilities, we're able to identify and provides its content quickly and efficiently.

Within our existing base of content, we are finding new distribution models emerge such as with the Gulf channels presence on NBC Universal New streaming service Peacock.

We have also added notable new licensing clients like CBS is game on.

And Additionally, our licensee business has expanded into indexing and representing user generated content or UGC and we're already starting to license this new content.

While we expect the impact on our content licensing revenue to continue in Q2. We are seeing then start to stabilize somewhat at some of our new business initiatives start to produce revenue and we're optimistic that they will start to rebound later this year when sporting event start to take place and film and TV production returns to normal levels. We also expect that somebody events that have been re.

Scheduled to the second half of the year, including the Masters Golf tournament, well have a positive impact on our licensee revenue later this year.

Shifting to our staff businesses, we continue to transform the activity of organizations of all sizes in industries through the power of AI, where.

Despite the challenging economic climate, our SaaS business continued to deliver strong performance total SaaS revenue in Q1 were a record 3.1 million up 8% sequentially and 13% year over year.

Another update to keep your table illustrate our bookings and TCB at each showed strong improvement over the last four quarters.

Our land and expand strategy is continuing to drive growth in our media and entertainment business, while our government legal and compliance business is seen as momentum come from landing new customers.

In both of these businesses the vast majority of our deployments part in the cloud enabling customers to you are skewed our solutions remotely and that's the adoption of and usage of our staff offering continues to grow despite the changes in our customers operations.

Within Emoney, we continue to see virtually zero customer churn and a number of our existing customers have renewed into broader and longer term contracts.

I'm pleased to say that is as of this month I Heart radio is now using AI were on all at 903 U.S. stations all of its Premier radio networks, and we have began processing their national podcast.

Moreover, nearly all of Hubbard Bonneville and Enercom U.S. stations are also using hey, I wear.

In addition to our broadcast partners, we assign the Iwear deals with Sony Pictures, Freemantle and several other large media companies and professional sports team.

Before we intend to extend the cognitive capabilities that they eyewear across all of our customers.

GLC posted a good quarter strengthened by a six figure subcontract under a program sponsored by AFE works. The U.S. Air Force's innovation, our we're very excited about this opportunity to play out here for the U.S. military.

Importantly, GLP business activity has shifted from demos and trials to signing new license agreements year to date, we assigned new contracts with 29 public safety injustice agencies in several different state.

Thats more than we signed in all of 2019.

Also last Friday U.S. Department of Justice awarded Veritone, a two year sole source I'd like to contract covering various cognitive solutions.

We consider this award a significant milestones in our strategy to expand our business with the federal government.

Furthermore, our engagement with partners such as epic, Microsoft PR, right, Deloitte and others continues to drive expansion and leverage through our organization.

Looking at GLP is new business pipeline for Q2, and the remainder of the year. We are increasingly confident that GLC will rapidly grow cubic feet are emoney SaaS business.

Pecans will now review our financial results for the first quarter of 2020 and provide details around our financial guidance Pete.

Thank you Ryan and good afternoon, everyone.

Each of you should have access to the results from released earlier. This afternoon and Ryan has already provided significant color on the first quarter revenues of our business units.

The covet 19 pandemic had an immediate impact on our monetization businesses starting in March which resulted in our total revenues declining by 4.3% sequentially and 1.8% year over year.

As I reviewed our financial results a couple of items weren't further discussion.

First we were able to achieve significant improvements in our gross margin in Q1, our overall non-GAAP gross margin improved 110 basis points sequentially and more than 150 basis points year over year.

This is due primarily to our revenue mix in Q1 as content licensing is our lowest gross margin business.

But is also reflective of enhancement, we enhancements we have made to our underlying anywhere software, which are not only reducing our computing costs, but also improving performance and stability.

We've also made great progress in reducing our operating expenses.

Turning back in Q4 in 2019, we began aggressively cutting costs and pursuing efficiencies in a number of areas.

As we saw conditions begin to deteriorate in March we implemented additional actions to reduce our costs.

As a result, we were able to bring our non-GAAP operating expenses down by nearly $2.2 million versus the fourth quarter of last year.

On an annualized basis, we are now operating with a $13 million lower cost base than we had in the third quarter 2019, before we shifted our focus on driving towards cash flow breakeven.

As a result of these actions despite the revenue disruption caused by the pandemic, our gross margin improvement together with tight expense controls.

Helped us to reduce our Q1 non-GAAP net loss to $6.7 billion the lowest levels since we had been a public company.

Over the past three quarters shifting our focus towards reaching cash flow breakeven.

Quarterly non-GAAP net losses have dropped from $9.6 million.

$8.1 million and now to $6.7 billion in Q1.

Well the team has been very diligent improving efficiencies and reducing costs, where possible I'd like to point out that our largest expense continues to be our employees compensation.

40 bonus commission or payroll benefits consideration than our current head count we have an annual cash cost of $30 million.

The $6.5 million in loans that we have received under the paycheck protection program have been deposited into separate accounts and all withdrawals are directly linked to payroll and occupancy related costs as as required under the program rules.

As we noted in our April 16th press release. These loans together with our cost savings initiatives are helping us to avoid actions that would impact our employees such as salary reductions layoffs or furloughs.

Based on our current outlook, we do not anticipate needing additional capital in the near term.

We will continue to take actions that will reduce our cloud compute in Cogs intervention costs and control our operating expenses as we pursue revenue growth. The combination of revenue growth continued cost reductions in operating expense control reduce our cash burn and minimize the amount of cash we will need to raise.

Until we reach cash flow breakeven from operations.

Turning toward guidance regarding the second quarter 2020, we continue to see cancellations and delays in sporting events and slowness in film and television production impacting our content licensing business unit we.

We also see some delays and expected new revenues from our SaaS businesses, resulting from the economic shutdown.

We expect these impacts to be offset by a rebound in our advertising businesses due primarily to additional spending by existing clients and growth in very ads.

As a result, we now expect our total net revenues for the second quarter of 2020 to be in the range of $11.8 million to $12.2 million.

As we have discussed we've made significant progress on the cost front and as result of efficiency gains and tight operational controls. We believe we should once again being positioned to reduce our cash burn sequentially.

Affect our second quarter non-GAAP net loss to be in the range of $6.5 billion to $6.1 billion.

Now I'll hand, the call back over to chat to summarize Chad.

Thank you Pete as you persevere through this crisis. It is clear that we will be facing a world very different than before and while we recognize the severe human and economic impact. This pandemic has created we also see new opportunities ahead.

We're committed to ensuring that very time will play a critical role in the rebuilding of our global economy.

Hey, eyewear, our proprietary operating system for artificial intelligence is the backbone of our strategy and key to enterprise AI transformation.

Our customers Trust in artificial intelligence is deepening and a new found fellowship between man and machine is being forced as a result of our efforts.

I'll conclude by reiterating our confidence that very time will emerge stronger through this crisis. Our business today is differentiated in the marketplace. We have a unique in diverse portfolio of products and solutions.

And we have a very strong relationships and engagement with our customers. We're truly a partner to our customers and are helping them through this period.

Which brings me to our team and our culture, which is our source of strength and differentiation.

During this pandemic as fear and uncertainty spread like wildfire I watched the baritone team become a family.

They care to encourage one another with sincerity and empathy.

I am honored and blessed to be counted among them and im thankful for our shareholders customers and partners for your continued support in business.

We look forward to connecting directly with our investors and analysts at the Oppenheimer Virtual conference Tomorrow May 12.

To arrange meetings at this event, we incurred institutional investors to reach out to their respective brokers or to contact Brian Alger at this time, we'd like to begin the QNX session operator.

And thank you very much.

Just a reminder, in order to ask a question simply press Star then the number one and your telephone keypad well pause for just a moment lung capacity many milestones.

Our first question comes lineup Pat Walravens with JMP Securities. Your line is open.

Oh, great. Thank you and congratulations you guys on controlling your expenses in the huh.

Extremely volatile period.

Jack can I start with with certain one of the big questions. I know people have which is you announced in April that you've got that six and a half million from the paycheck protection program and there's just been so many different headlines about that can can you update us on what the statuses.

Yeah. Good morning, good afternoon, Paul or equal.

Yeah, Mcneary, Okay, and then I mean, yeah, yeah yeah.

Great.

Well first let me start with Barrington first paired view is always been and continues to be the safety and well being of their employees their families and our community and meeting our obligation to our customers and partners is paramount to our or future success.

As we noted in his prepared remarks, the Kobin 19 pandemic had an immediate negative impact had business starting in March.

And there was a tremendous amount of uncertainty I'm actually both the duration and intensity that both the pandemic and the economic downturn, we haven't or ability to access capital them, obviously continue to finance the business going forward the profitability.

And the cares Act was passed we applied for a PPP loans in good faith based on the rules and interpretations and affected the time and these loans truly allowed us to avoid the salary reductions and layoffs and hope that through this period of economic uncertainty.

Okay.

We do not have any update today, though on that question Pat now our board continues to evaluate the situation as you know the government continues to to make modifications to the rules governing the cares akamai PPP length themselves.

But we will update you in the future, but again, our primary goal is to protect their business and our employees going forward.

Okay. Thanks for that.

And then two more I'll just I'll just put them out there. So you had a big hey, eyewear SaaS bookings quarter in Q4, and I'm wondering did that turned into revenue. The way you thought it would or were there some things about the environment that might have.

Impacted that and then Pete maybe this is a little unfair because I know you didn't guide for the year, but any any ideas on how we should think about the quarters. After Q2, I mean should they go down sequentially should that be flat anything you can share with us would be really helpful.

So what I have Ryan addressed the the bookings and how that translates into revenue in 2020.

Right, Yeah, I'll go into bookings so in the fourth quarter, we renewed and expanded some very material large contracts, including a material expansion with Iheart media.

That trees that expansion is on track.

So setting us up to deploy our next generation attribute application software across their station groups. So I wouldn't say that theres been a material delay. So the bookings were very confident with in terms of total contract value.

We'll start to see more accelerated expansion specifically as it relates to attribute through the end of Q2 and into Q3.

And then Pat this is Pete let me pick up on that so actually question about the full year outlook, you know that I think the thing that the as you as you mentioned when you first started it was the job we did with operating expenses and that's the thing that we can really control. The most so let me just kind of.

Sure feedback with you on what we see from that perspective, I think for the rest of year. We're looking to we're expecting that our operating expenses will be very similar to where they are in Q1 and what we're guiding to for from Q2. So we're not expecting to see significant changes from that operating expense perspective.

Looking out a for the remainder of the year.

Okay, great. Thank you very much.

Our next question comes line up there aren't happy of Roth Capital Partners. Your line is open.

Hey, guys I'm good afternoon Super well, a few colorful keep telling your commentary around opex reductions just so I understand it clearly I think you referenced a 13 million an annualized savings correct me if I'm wrong, so does that compare to the 8 million.

Annualized savings you guys sequencing at the end of numbers the third quarter.

In 2019, and so should we think about run rate of Opex as benefiting from that by 14 loan annualized basis starting into Q.

No I think the comment was really back anchored on the third quarter of last year, Darren and saying that we've pulled out roughly oh, you know over a $3 million a quarters at that point in time. So the 13 million is really an annual improvement over.

For the that Q3 2019 run rate.

Okay, and that's starting in the second quarter, though correct.

Yeah, I mean, it what it did yes, it's ongoing from the first and second quarter, yes.

Got it got it.

And then.

Two more if I may.

Well.

On your ads business can you.

Kind of de duplicate between the.

Core.

Business and maybe very adds I know the commentary in the release you said.

Weakness around content licensing and then a guy SAS.

A little bit surprised though you said a rebound in the ads business. So maybe Ryan if you could just talk about your core business versus very ads and then kind of compare contrast.

Sure. They the core agency business was rather resilient.

Although it was softer than we had hoped for Q1 it was rather resilient and you can primarily because of the just the type and appropriate portfolio of different types of customers that we represent I'm, specifically, we had a heavy distribution of dollars for direct to consumer type of accounts the X.

Correct ends of the world.

The go to the log means and which actually maintained in some instances actually increased spend we win that we were never really historically heavy with consumer package goods or retail so I think that bode very well for us throughout the quarter.

And we did bring on some very recent larger pharmaceutical buys that I'm starting to kick in at the end of Q1 and are continuing through Q2.

Yeah, I would chalk it up mostly to great great discipline and execution, but team, but going into the year, we had a pretty diversified portfolio and a sort of done its position as it relates to clients distribution force direct to consumers.

Great and I'm just last one for me noticed two parts of this on the AI, where accounts that was up I think pretty materially.

He both year on year and sequentially. So maybe if you could talk to that and then Chad I think you mentioned energy is a vertical maybe in the first time, you've talked about that for a eyewear. So I'm just kind of curious if you could talk little bit more to that thanks.

Sure Ryan you take the first and I'll take the second sure.

GLC, we obviously had been late laying the groundwork in land the infrastructure for a long time and I think we're just starting to really see the benefits of that obviously, we specifically referenced a couple of mark the opportunities.

With that with an extension to our ATRIO with the DLJ and really starting to roll out and trained they're 94 state U.S. attorneys offices. So we're pretty excited about that obviously with Apple App works with with a relatively immaterial size deal for us to deploy yeah were for the Air Force.

Yes.

Within the U.S. military.

As again been a longtime coming but we're starting to see a lot of those deals start to come in and actually close. So we are very optimistic about the pipeline for GLC.

Both from I'll say more legal centric approach initiatives with the DLJ, but also with beauty and other related opportunities within the government.

Chad.

Yes. Thanks, Thanks, then yes, but the.

Yeah, I, where it was always develop does an operating system that was independent of any vertical industry specific and so over the past year, we have been working heavily but there were team and our labs organization to explore new new markets in new applications, both in the safety security and even the energy market.

And as these markets and continued to evolve and really the neither of those markets continue to progress to the standpoint, where they actually can take advantage of artificial intelligence in terms of their transformation to be into technology for sectors.

I've been really pleased with and the opportunities that we see in finding that both in terms of again, the energy markets as well as just general safety and so stay tuned I think we've got some big big things and underway that we're working on for over a year with regards to our core data and I were team that could have a dramatic impact into new markets for us.

Great. Thank you.

Our next question comes lot of type ended of Craig Hallum. Your line is open.

Great. Thanks for taking my questions, Hey, Pete I don't know.

I missed it in the prepared or are in.

The press release did you talk about it EMR for Air War, where in the quarter.

We did not we've we've refined our capesize and with the mix of business. We've got we just found that that wasn't a significant a factor for us. So it's not that presented in the UK table any longer.

Okay. I guess it was are you know that 3.1 million in the quarter was there any any revenue in there that would be more onetime in nature.

Yeah the one.

Project a the one piece of revenue Ryan was referring to from AFE works with either one item that would be.

They are a onetime or in the revenue for the quarter jet.

Okay, and okay and can you quantify that.

Yeah. It was a 300000.

Okay got it and then.

Just directionally it sounds like I think it was Ryan talking about the segments and you Pete you.

You think AI were sequentially will grow again in the June quarter here as far as you can tell today.

We haven't given a broken out the color on the segments I think that the you know the comments that Ryan I'm shared emphasize the improvement that we're seeing in advertising.

And the the.

You know the challenges are facing especially in content licensing. So those are the two that I'd say overall are kind of on a sequential basis or more directionally, one heading up one heading down for the factors that the Ryan talks about the overall producing relatively flat revenues Q1.

Looking at Q2.

Right, Okay, maybe last one for me the.

Yeah, we're bookings in the quarter 1.4 million is there any kind of split you can provide with respect to GLC and emoney in that bookings a dollar amount. Thanks.

Yes, I mean, the bookings are still skewed more towards M&A as they have been in the past that what we talked about with the significant ramp up in the number of GLC accounts that we sign and from our perspective. This is following the playbook that we've seen in the past.

You know where where we get in we've got typically kind of five figure type contracts with with.

Customers once they get more familiar with with the Iwear and applications that we built specifically for GLC, we expect to be able to expand that revenue on a account by account basis as well as adding new accounts. So I'm really excited about the growth we've got an accounts.

And the adoption and really the reaction to the applications as well. This is the overall improvements we've made in the operating system and looking to continue to build that momentum in Q2 and throughout the rest of the year.

Okay, and sorry, one last one from for me.

I think you indicated on the call you're comfortable with with the capital position right now does that.

Imply that you guys won't utilized the ATM going forward at least near term.

Yes, we what we said is that we do not need.

With the proceeds from the TPP loan, we do not expect to need additional capital in the near term.

Okay. Thanks I appreciate it.

Yes, Thank you Jason.

And again in order to ask a question simply press Star then one of my one of your telephone Keypad. Your next question comes Wanna, Tim just think of D.A. Davidson. Your line is open.

Hi, Good afternoon, guys. This is Frank going for Tom This afternoon.

I wanted to dig into little bit on the revenue impact it had in the quarter you talked about.

Cancellations and push outs late in the quarter or do you have any sort of visibility into what percentage of the.

Backlist cancellations versus push outs.

Hi, Frank.

Have Ryan to address that question for you right.

Yeah, I'm, sorry, you guys cut out for a second can you repeat the question.

Yeah, it's a I'm just trying to.

Understand what the.

Revenue in fact in a quarter was Uh huh.

Sure and cancellations and push outs.

And color I think we yeah, I mean, I think we represented that based on our estimates it was around 1.5 million of an impact in the quarter in it started pretty immediately.

No. We do believe some of these our singular event not systemic so specifically if you look at March madness, and the Masters. Those we historically have generated several hundred thousand dollars ads of revenue for us.

The matters is at least as everybody knows rescheduled for this year. So we do expect recoup.

It's not an immaterial amount a majority of those lost revenues for the Masters. The antidumping play basketball term. It obviously has not been rescheduled and so we look at that assist locked on opportunity there, but again, what I think it's important is for the other businesses. They all look relatively resilience and our pipeline look.

Strong and healthy as we sit here today with the exception of the licensing business, which is still going to be somewhat predicated upon production opening backup and potentially these professional sports leagues going back to work in and a lot of although theres lots of discussions about opening up MBA and other sports as we sit here today, you know nothing has been definitively.

We schedule with the exception of the PJ tour.

Okay. Thanks sort of the color on that and then have you seen any impact on saving engagements or perhaps the timing if the deals on the Chelsea vertical as a result condemning.

There's definitely been some softness and you know a delay and I wouldn't say, it's not necessarily directly correlated to the appetite in demands for the products and services, specifically back and identify part of it is just the police agency themself for all <unk> also impacted by Koby 19, and the stay at home.

Orders has just put I see that deal flow and time into into a little bit of a bump that being said as you itself having a recent press release, we did libbey, we're pretty excited that the city Council for Anaheim Police Department did approve.

The renewal of our license for identify.

And now with a unanimous vote with a pretty good good sized city operation So that bodes very well for us for other agency to point too. So we do we have seen softness, but we don't believe it's going to be overly impactful over the course of the year.

[laughter] and then one last one if I may.

And you have any updates on the performance I've recently introduced pockets. So if it in the markets after a quarter ago.

The podcast tools I think you referred to the text analytics solutions.

But it's something like.

Is that correct, but I think that look some of your beneficiary of the primary beneficiary of those new technologies is actually our own monetization group. So.

I think we've started to roll out and have started to leverage at the tardy capabilities provided by text analytics against our own advertising clients, which we're really excited about and again to be clear that's ins in lieu of just trying to target. The entire show. We now can lift into these shows in target very specific.

Topics in different context categories, and so that we're going to be the really big push initially in addition to art 19 in a few other groups, we're starting to license that technology externally, but I'd say the primary beneficiary of that technology is actually Fairchild, one and our own monetization group.

Okay. Thank you.

Thank you.

[music].

Okay, and if you would like to ask a question. Please press star one on your telephone keeper you have any follow up questions. Please go ahead in queue up that's well start one for any follow up question.

First question comes from one long onto <unk>, a private investor. Please go ahead. Your line is open.

Thank you.

Oh, what I'm very sorry, you had to cancel the shareholder.

Conference, meaning are you planning I'm trying to reschedule if this year or next year, what's your thoughts on that.

Yes, we put a lot of effort in this is Pete we put a lot effort into preparing for that the shareholder meeting.

So we definitely like to let me correct myself not the shoulder many but the investor meeting.

And it was it was timed to coincide with the Roth conference when many of the folks would be in town and it would be and it just made sense from a logistics perspective to host them in our offices because.

That proximity between that conference in our office. So once once things can get back to normal and we kinda back in a more normal operating pattern.

We'll reevaluate you know kind of getting that back on the schedule, but we were excited to hosted and update investors and look forward to doing some most likely at later in the year.

Thank you.

Yes.

Your next question comes lot of Chad Latam I don't think capital your line is open [laughter].

Hi, guys Mike here.

[laughter] on the you talked about GLC exceeding media Entertainment will what was the timeline again for that.

What are you thinking there.

I think I think the timeline just longer term might we see more opportunities long term and GLC, but today. The mix is something like 80, 20, emoney versus GLC and so you know GLC will grow faster than M&A, just because of the the detailed.

And that's out there [noise].

Sure.

Hi content licensing [laughter], what is so what's the kind of rough gross margin on that.

The gross margins in the low Fortys now the good thing is is the overhead is relatively low as well. So it's a good operating margins business for us, but it is our lowest.

No kind of on a on a rough a high level basis, our lowest gross margin business.

And then just last on podcasting sounds like that is going well overall, I mean does that kind of meeting expectations as it ahead of expectations.

As a woman, Florida because of the common stuff just kind of more color there will be grant.

Yeah, I think that podcast business remains very strong.

The demand has kind of always been there and the performance as it relates to our clients to our clients benefit but also just during this event in New York Times spends consuming podcast continues to increase at a disproportionate rate for obviously people not being in the office and so we're taking advantage of.

The work from home so across the board engagements at higher the performance of the advertising is still maintaining in the demand for investment within into podcast remain tight.

Okay, great. Thanks.

Thanks, Mike.

No no further questions in the queue I turn the call back to Mr. chats Gilbert for his closing remarks.

Thank you operator, I think you all for joining us on todays call as I said I'm very proud of the way our entire team has responded to this very challenging situation. Once personally thank each of them for their tireless efforts. These past two months and for their unwavering focus on continuing to pursue our vision of building the world.

Eating AI solutions company.

We have huge opportunities in our businesses.

And our teams are better positioned to capture them than they ever have been before we look forward to reporting to you on our progress.

Goodbye.

And this concludes today's conference call you may now disconnect.

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