Q1 2020 Earnings Call
Sure currently on hold for today's conference call. At this time, we are selling things audience and plan to be underway shortly.
<unk> patients and please remain on the line.
[music].
Good afternoon, and thank you for joining us today to discuss optimized Orix Corporation first quarter ended March 31st 2020.
With us today, the company's Chief Executive Officer, William Channel the President.
Terrible, but chief Financial Officer, Doug Baker, and Chief Commercial Officer, Steve It's a restaurant.
Management's remarks today.
Well open the call for questions.
Before I conclude today's call I'll provide some important cautions regarding forward looking statements made by management during the call.
I'd like to remind everyone that today's call is being recorded.
And we'll be made available for telephone replay instructions in today's press release.
Mr section of the company's website.
Now I'd like to turn the call over to optimize our Axios William Sandal. Please go ahead.
Thank you operator, thank you and good afternoon, everyone. Thanks for joining us on this call today, especially during each difficult times globally.
I'd like to stock by highlighting the bravery and shear strength health care providers block trade respect its communities prior to the Pandemics day to day was already challenging layering on that volume.
This meeting care requires a level commitment that is truly spectacular and hard for us not someone gets weaker. She is there are heroes in these times, we all thank you I.
I believe this period of Mr. B., one for future generations, and studying judge from our successes and failures. They will learn what to do not to do go to count on what's considered exemplary leadership of Gregory and what tools it needed to put short life business cultural.
Okay.
That's been highlighted by many.
Most countries have done a terrible job preparing for pandemic. So it's on all of Austin is safe and consider the bothers, especially we entered the world and we must learn and improve and move forward differently. So we can avoid such dramatic disruption in the future.
Being said I'm, an optimist I tend to look for the positives and such times of trouble lobbied responsible for though still cited in the very real sites, they gotta spend that much.
Optimize Rx we've tried to do apart to help providers and patients in late February began using our point of care not work streams Street real time, CDC alerts for health care providers.
And use our mobile technology platform.
Number three SMS updates to anyone who wanted to sign up for them.
February began using our point of care network to stream Street CDC.
It's filings and it was very helpful for all those who signed up.
Also gathering.
Thought leaders from several major companies to discuss haptics code at night team on a range of critical areas continued character company policies to the rapidly evolving tele health industry, and how we manage our business in times of corn seed.
Want to say I'm proud of our team for pulling all this together so quickly and I've been impressed with our partners and other executives for sharing her wisdom, so openly without concern for commercial benefit.
Today, we're going to run the call slightly differently, while I have my phone executive team, calling in the Snake, Doug will give a quick overview of the financials and then I'll give opening comments and then we'll open it up to questions to be analysts now before we dive into the operational details from the first quarter, Doug take ill take it away.
Thanks will and good afternoon, everyone.
Earlier today, we issued a press release would result supports this quarter that ended March 31st copy is available for dealing and maybe download it from the Investor Relations section of our website.
We'll be filing our 10-Q later this week as well.
I wasn't it for the quarter was a record 7.6 million up 46% compared to a year ago.
Gross margin was 4.3 million up 20% versus a year ago I gross margin percentage declined to 57.3% into quarter.
It was results when I, usually favorable product mix in the first quarter of 2019 and heavier mix of financial messaging this year.
We still expect to cheat the minimum gross margin of 60% for calendar year and are targeting gross margin of 63%.
Operating expenses increased 6.6 million in the first quarter 2020.
The increase reflects the investment that we've made in our team and growth initiatives and you can see the positive impact of this investment in our results for this quarter.
Our investment in our commercial organization led to a 46% increase in revenue shift towards enterprise contracts had to decrease sales cycle, our investment in our marketing product teams gives us give us the ability to be nimble and quickly respond to somebody operational items was discussion on this call.
Adjusted EBITDA, which reports and non-GAAP financial measure was a loss of 880001st quarter as result of each cost initiatives.
Our balance sheet remains strong cash and cash equivalents totaled 15.2 million down from 18.9 billion that you're out. This decrease resulted from increased working capital required to fund growth, including payments to our partners and increased receivables for customers.
We expect these swapped out over the remainder of the year and he expects to generate positive cash flow from operations for the full year.
We have continued to operate debt free and do not anticipate needing to raise additional capital over the foreseeable future for up where do you put this is or just wanted to go for it.
This wraps up our financial results.
During the call back over to well.
Thanks, Doug.
In talking with investors clients and my team over the last six weeks they seem to be to recurring questions. What steps we've taken to lessen the impact of covered 19 on business continuity with regard to the team clients partners and our balance sheet.
Does optimize Rx have us long term strategic competitive advantage.
Which will be reflected in our results and shareholder value.
Well, let's start with a caution there were all on new ground when it comes to the level of disruption due to cope with my team and optimize Rx, we feel fortunate to be so well situated in the market.
And able to digital communication among providers patience and healthcare industry.
In terms of business continuity our teams normally operate in a semi virtual basis distributed work environment. So we saw practically no disruption that operations. Although early on we decided to stop travel and work from home as a proportion for our team and families.
We were already big usually is a video conferencing. So we are able to service our clients and partners as we usually do and without much difficulty.
And our greater use of video communication I'm actually seeing more and many more of our teammates on a daily basis, which city great thing.
We also fully cloud base that they've got to U.S. Sard technology security remains solid to these signs that can handle any increase in activity.
I had is off to everyone in dealing with this change.
Entire team has really stepped up.
Well like 70 or nearly March was very challenging for our clients into partners, we saw very little disruption decision, making in interaction, albeit virtual.
We're thankful we have many very well established relationships with our clients and while none of US wants to see this continued disruption you have seen a dramatic increase in activity and need for our solutions among our client base today not to any final programs eliminated or decrease but I'm sure. The executives are all watching events unfold.
We are ready to adjust if need be there's no question that office visits are down markedly from late February.
Some of said between 25 and 60% depending upon specialties.
We expect that to hold true to the end of June and possibly later again here.
Got to impact on our business the providers are still using their you charge from home and it is also important or number that we focus on the central medications not elected.
With regard to the impact on our business the providers are still using their E. HRG at home and it's been it's just a key let me stay with them.
We had not seen the drop in our branded prescriptions of course, we're thrilled by 40%, 46% increasing year over year revenue girls, perhaps more importantly, we could see not close rate increased to about 60%.
And our sales cycle decrease from 90, just 30 days lately.
Continued to receive positive responses to proposals for enterprise level engagements, which when viewed together have an average annualized contract value of about 3.6 million.
We also feel some strong tailwinds that are back in terms of our client base. Most of our clients have decided not to hold off on new launches. This is due to the complexities and costing on corporation.
And as part of the overall strategy designed to prevent any substantial disruption.
Medical competencies medical liaison lives advisory boards have all been disrupted so expect us to drive an increase in demand for digital communication that delivers mission critical information.
Yes. He is also committed to accelerating approvals medications and indications. So many new novel therapies will be coming to market over the coming months in years issue helped about a healthy pipeline of new opportunities in the future.
While many of our channel partners Argotec Tele health solutions. The adoption has been relatively low today. The recent increasing demand for these types of services has been fantastic for all involved.
For us is implied benefit of our channel partners and the providers increasing their attention on was essential tools in order to care for patients telehealth isn't obvious solution dad and affordability than here in our core solutions have also moved up on the priority list as a result, the discussions there that that we're progressing.
Finally, with new potential partners have all been advanced around enabling affordability is here its tools to deliver at point of care.
We expect the civil lasting positive impact on our ability to grow and continued to build strong values and on network.
Internally, we have accelerated several launches a new solutions that not only solve problems for clients, but also allow us to further showcase to the market the power of our innovation.
And technology required recently highlighted our tele rep solution as an offering that can help providers connect with our clients medical liaisons for sales Representatives specific question.
We expect this to be added this year to a degree and going forward, becoming a terrific addition to our enterprise solutions, especially medications.
Also highlighted a few clients recently the customers that use our virtual pair or tele health solution.
Which we acquired this remedy in Q4 nights.
On the global adoption of these virtual care methods of interaction general feeling that the markets will not revert to previous adoption levels postcode at Nike.
Expect us to help us scale the business for years to come.
We also have you are tells solution is a very effective tool for necip patient engagement group, which will have more to share in the coming quarters as we highlighted in the recent press release, we're honored to help owed to the client maintain chair for its cardiac patients when they're rehab centers the shutdown due to cope with my team I believe the market will CRM.
Treat with these new solutions as a very effective tool.
Relative to our courts messaging solution and covered 90, you're seeing an increase in demand for financial messaging from our clients is given the unemployment levels cost is again surface is a major problem for patients and we expect these trends to continue.
The selected in the slight drop the gross margin in Q1 will bring our cost of sales up a bit as these products are largely connected to providers through legacy contracts and that's a higher revenue share. However, we remain confident that our gross margins will improve and level off at the 50% to 62% range by year end with the positive impact from.
Reprised deals flowing through the piano and continued growth and patient engagement.
We feel confident in this outlook as enterprise deals and patient engagement forward revenue continued to grow.
And actually we are thrilled with this as we began our shift to this model less than a year ago.
Balance sheet as Doug said remained strong debt free and were very diligently managing expenses to reassure our flexibility in this market to be sure. At this time, we don't see any need to raise capital for operational purposes.
So does optimizer actually have a long term sustainable competitive advantage.
Thanks So.
We're a digital health platform that brings together very segmented market of healthcare information technology connect patients and providers within the health care.
The ability to connect all stickier stakeholders in health care in the way that fits into their daily lives and touches on the pain points. We've all experience, which could include awareness affordability and adherence of on medication to live at healthy life.
We built a meaningful position reach over the years some measure of exclusivity by integrating our plans into meeting DHR prescribing systems.
Today, you reach 60% of the ambulatory market.
And that is where most prescribing happens.
We have also become deeply entrenched in their client base, we work with the top 20 pharmaceutical companies more than 60 other clients all of which have multiple silo business can you give our services the trustee of gain from our clients and supporting it continued shift to SaaS based enterprise level recurring revenue model.
And he sits squarely in one of the fastest growing segments in health technology that is point of care communications, where there's a tremendous client demand for greater conductivity that is effective transparent and measurable all of which we do.
Our addressable market is much bigger than it was even two months ago with the recent explosion of Tele health and our connection to it and you couple that with patient engagement and we're sitting on a multi multi billion dollar addressable market.
Given the moat that this bill just around this my excitement for the future is at its highest since I joined optimize are actually in 2016.
We live in the digital age and the strives to be the best digital platform for everyone, who work with today, we have a scalable secure technology to support and protect our growth. So when the documentation are working together to solve issues. We can be there timely when it's time when appropriate.
Paul as I said each time this is very important to be personally.
We're fostering a great work culture and environment continues to be our top priority, which which is any business leader knows or savvy investor.
That's what makes a great company.
We expect the key benefit of the focus to yield on more predictable recurring revenue deeper relationships with our clients and ultimately the ability to innovate with our partners in a way to keep US ahead of the changes in opportunities in the market now with that I'd like to open up to your questions operator.
Thank you Sir if he would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure. Your mute function is turned off to allow your signal to reach our equipment again press star one to ask the question. So Paul for just a moment to allow everyone the opportunity.
To signal for questions.
Well take our first question from Andrew Dsilva.
With B. Riley FBR. Please go ahead.
Well. Thank you good afternoon, I'm glad to hear every one sounds healthy into again, thanks for taking my questions.
Just to start maybe.
Maybe just a little bit contacts and how how you're seeing enterprise solutions develop and.
Are you seeing the seasonality of ours piece changed I, specifically as it relates to a more more activity currently.
It is traditionally experience across the disappointing India.
Hey, Andy Yeah, I'll start and then I'll hand, it over to Steve. So traditionally you know this year, where we sort of stopped talking about pipeline because we're.
Closing business and executing against what was your dollar record pipeline.
Q4 in Q1.
But we given given everything going on we're actually seeing a pickup in that actual pipeline as well as a higher close right.
<unk> tribute that mostly just to the need to communicate digitally with so much else being disrupted in.
In terms of the medical conferences.
Sales sales medical liaison since sales representatives.
And just travel in general that Steve Let me hand, it over here.
Yeah, Thanks, Hey, Andy.
I think in addition.
Market forces that are going on out there you know them onboard several problems at the end of last year commercially and those are now fully routes, they're starting to brings as well some work.
So the das that general RFP beans, and small size and works on more than Oh through that team additions in the market driven than that.
Okay pick up good color you can get the here and see that progress.
And then it's just next question I'm just curious if you could just discuss how how the sales teams performing has your head count grows and it took a little additional color on deal cycles.
HM field outreach and how you're seeing.
Expanding into additional brands with existing clients are you seeing traction there.
Steve you want to take all.
Yeah happy too.
So a couple of things that we'd rather than focus on it and just managing the commercial organization are really the three lovers volume.
So he's an increasing the volume of deals in the pipeline and doesn't can execute on.
Deal value, obviously, you talked about.
Publicly.
A significant growth pipeline dog deal size and saw that seem a.
Transfer over to deals, which is part of our growth.
Story, and then of course velocity.
Yeah, good deals now close.
So.
We're focusing on those two numbers of execution and the team is being managed extremely tight.
Excellent job.
And.
Focusing on executing on the land and expand pieces have proven I'm really successful as well as and as you heard will say in the top 20 clients were very well penetrated, but we're penetrating one or two brands, we've been able to mushroom brought out and expand very well as clients have been very satisfied with existing so.
We should be provided internal referrals and capitalized on those.
Charles.
Global business, you know about ways as well so I think that will come to won as we continue to improve ourselves to our clients and do a great job liver.
Okay.
And your seem that largely because of the transition towards enterprise solutions or is it.
Just a couple other dynamics by my count them.
It's sort of both we're seeing really good <unk> positive feedback from the enterprise solutions. So can you talk about last year or fourth quarter call about the compound in the stacks of multiple solutions into the platform.
Those to drive better adherence and to brings better outcomes will see not being done which is really encouraging for our customers I think that's not part of it I also think the market forces out there.
Moving to digitally at the point of care when we've seen basically 100% production and sales force out on the screen its just.
So it's a it's a combination.
One thing I've also seen we're also seeing maybe as a result of that is just clients looking for more opportunistic.
The point of care outside of what they're currently familiar with and so you know the launch of problem that again is it really is capitalizing on an opportunity that we have to deliver more value to our customers I couldn't care and enable them.
To get information.
Yes.
Okay. Okay got it that's very good color and so that's a question for me I'm sorry, you may have touched on this summer connections little choppy, but.
Just like you're taking advantage of the tele health Telo and create like over 19 or could you just talked about how you're expanding their reach a remedy previously had now that integrating into Oh, p. Rx broader platform.
The Mirimmune I've talked to that.
Sure Yeah, you're kind of come off with me, yeah, sorry about that sorry about that I'm here Hey, Andy.
Yeah, you know Andy we have a Willy I virtual will care delivery mechanism and remedy and when we acquired Evan we saw all the different things that we could do with the platform that's already in needs for a variety of used cases. So those include things that are the care delivery of cardiac lead.
The whole station that we mentioned before mental health services as we talked about before and so our vision on incorporating that that's the larger okay. Rx portfolio is simply that digital wage for the that's sort of virtual wellcare larger umbrella, which includes a point of care communication for the purposes.
Medication affordability in inherence historically in our network handy, but now includes a virtual care tools. So you have.
Patients and providers and on one and one solid on each side of a conversation that you might have health coaches and others on the other so each of these are now because the me virtual point of care that's outside the <unk> child.
And it's where we know we can support the demand for digital communication on a historical industry stakeholders in life science, but that's how we're bringing the two together that's helpful.
After that itself I mean really quite interesting actually huh. Okay. That's it for me think thank you very much piece they face an LP and good luck on for this year.
Thank you Andy.
You can better next question.
This is Richard Baldry.
Roth capital. Please go ahead.
Thanks can you maybe talk and add a little color around enterprise deals sort of fixed it could do area.
Now how fast do you think some of those kind of launch and get up to sort of full stride because I assume most of these are with existing customers expanding its not relatively quick or is there any reason to think that goes to be slower as they kind of movement into broader brown's or broader product sets the company.
Steve you want agreement.
Yeah, I happen to be rich.
Young you interpret yogurt or basically got 30 30 to 45 to launch track right now at this point some of the more complex 160 days.
Before the launch and go lives.
But what we're seeing is you know a tremendous push on the Cline side to get them lots of things that would have gotten larger hurdles previously like long long heated and alarm processing.
I'm just going we've been doing content word billings on doing creed.
Uh huh.
Partners those have all been accelerated because folks are trying to find ways to get can teach out the door.
So.
People have a little bit by the current environment much does that make sense.
Sure.
Yeah I'll answer the prior years, we've seen seasonal challenges when maybe macroeconomic conditions offered a headwind to end customers for whatever reason, obviously called it has its own and market challenges in pharma.
Like your tone is really not or ignoring any change to their marketing spend at least with yourselves.
<unk>.
Oh, I guess, obviously, the digital communications God defensibility skills cars, how how clean you're coming through this can you talk about.
Some of the prioritization discussions you've had with the what's your pharma companies.
Why you think this time around your so much more defensible than we've seen in past.
Yeah, I'll start and then Steve you fill in so we have to be a little carefully because obviously clients are showing a lot of stuff what else are large public companies.
Don't even like footwear public so, but I'd have to talk about this so I you know the reality is though you did everything that's happening now. This is given the works for you know 12 to 18 months in terms of launch activities and support activities and as well as everyone knows the mark.
Cutting spending and pharma is huge.
If you add conferences and medical liaison.
AD boards.
Oh that think video so everyone. This coming into early twomey without just to go and obviously that was completely disrupted. So you wouldn't want to put the brakes on there because they're still so much had gone into getting of medication ready to be sold and so when you take.
Take that content material in time.
Your knocking out slow it down you're going to try to get it to move and so we had not seen that pull back we've seen a I'm sure they're being cautious with certain brands, but again as I mentioned in my prepared remarks, we're focused on really the essential medications not elected like electives, probably getting more of a pull back.
I think also served in personal marketing things that are digital probably getting a pullback because they're not sure if people are seeing.
Remember, we're at point of care doctors with the patient.
The only deliver what's relevant to the two when they're together, they're never hit with anything but it's not relevant so I just put all that into one but Steve why don't you Philadelphia.
I think you summed up really nicely I think the one additional comment that I would say I've been medications that are being delivered that we're supporting arms will says central medications and that means the critical Soc and I think when we look at the script volumes overtime. So that's.
I would say on lifestyle type medications, which generally speaking we're not supporting that's much but the critical medication to thing to think about type two diabetics rich when thinking about even cancer patients those people will not be able to come off there for long periods of time without significant significant harm being done number one would you be hospitals and.
Right well radically increase yeah.
It's a health system pause treating those patients screened.
A long period of time, and I think everyone's cognizant that some prioritization is happening along those lines.
Okay and.
Sure.
Trying to get into more changes in behavior.
This might have driven so they are there any metrics around sort of usage by dr. Panera at home, what the each are or like a penetration or adoption.
Great changing that you can see or is it true early maybe for that and then maybe on the prospects I also any increased activity from new logo potential customers outside of the top 20, plus 60 bed that youre surprised by that might have understood that value proposition much better unopposed called anymore.
[music].
Yes.
So.
Yeah, Yeah, yeah, Okay. So what we're seeing its consistent utilization of the H. ours, because that's a you know it's.
We can dial into it. So many doctors are very used to accessing electronic health record via their home computer or even their mobile device or there I pod Coke all about its you know line, one communication and part of their daily life. So they're on at all on the topic.
Extraordinary ran out of the use of the side car Tele health to all that in most cases is not a inside the HR. It. In addition to the HR until <unk> and what that really need to build is talking about telehealth earlier, and we just talked about virtual care.
Virtual carries a much broader.
Hi way to think about it the tele health. It kinda does want that people are saying, but the doctor headroom right now it is using Bluetooth first specifically for tele medicine purposes or for each visit Coca says.
And because somebody endorsement to positions has been expanded specifically to 80, they'll because it's been tough work I can have confidence that they can barely that you know best restrictions around it used to that technology than they used to be in terms of regulatory restrictions and reimbursement restrictions.
So.
That is happening typically outside the HR, but then it also has to be coupled with the each or because of.
The scheduling and get a master chart.
In the actually HR.
So I'm not seen any slowdown there, but we're seeing in addition to and then your I think you're gonna see that continue going forward.
And Steve you want to take the second one part of the question.
Yeah happy to rich to answer your question, we're seeing significant activity outside of the top 20, even small to mid pharma businesses are coming to the table with digital questions in a willingness and sort of funding to engage.
Several of the larger deals done have been pharma deals, which has been excellent and will likely we will continue to see that same trajectory for those for those two years of customers coming to the table that's been really encouraging.
And lastly, just looking into the financial models. The you know we expect to see any change to your sort of seasonal revenue pattern.
What you would consider a norm given the change in.
Oh, that's brought to the [laughter] contracting and sort of pipelines and then sort of same question below their line I'm expecting side because of the increased pipelines.
Faster cooled rates do you feel like you know you might come into the year, knowing what you thought you need higher maybe that needs to accelerate somewhat.
So we get a feel for the top to bottom line cards from here. Thanks.
Yeah sure.
So as I said in my comments, it's really hard to know for sure because we all look at this on a monthly basis, most big public companies are not giving or pullet guidance. So we don't want to Ah, we want to be humble, but we are in the right place at the right time for our clients and for providers and patients.
We're not seeing a disruption to the seasonality if we see one partially it would be in Q2, just because of.
Ah sort of late March late February March.
But again, we feel pretty confident we're going to work through that and and again if anything substantial changes. We went up they are our investors, but right now were as you're hearing we're feeling very confident we can sort of stayed at a similar seasonality.
Relative to hiring so we didnt actually have a lot of hiring into this year.
As we said we'd get a lot of investing last year, just not just through acquisition, but also building the team out.
And they're really hitting it hard.
And and obviously when you started we kind of put a hold on on hiring because we didnt know.
But again in our model because it's very leverageable, we'd have a team that can execute its long as we're doing what we say which is digitizing content distributing it. It's it's really one of those that you don't need to add a lot of people to to scale back further so as of now we feel like we have the team to continue onto a really nice.
Reflecting this year and we'll keep everyone updated on anything if it changes for right now we're feeling very good about it.
Great. Thanks, Congrats on a good start to the you're in a tough backdrop.
Thank you.
And our next question Ryan Daniels.
William Blair. Please go ahead.
Hi, guys. Congrats on the strong quarter. Thanks for taking my question.
Just a housekeeping one my phone is going and mountain you go back over the course details when it was kind of.
Prior to entering the quantum once you're seeing in prison.
Sure, Steve you want to take that.
It might be on mute I'll start so what what generally weak we gave a range of 30% to 50%.
Late in the year last year talked about again when reported Q4.
We're seeing it above 50% I think that's it's at my hats off to the team, but really I think we had a more curated pipeline, meaning just a lot more substance behind it.
Generally leads to a higher conversion rate.
We also know what our fees and stay away from when the markets are sort of shopping for pricing.
And and also we're just seeing a faster close rate. So generally it was a 90 day close rate gets shifted down to 30 days, which is tremendous in this business and.
Steve if you want to add to it it's it's really.
So.
So really positive thing for us as a team.
Yeah, that's great. Thanks, sorry Amazon.
2018 was down 5% like Bill said Boston.
Up to 39.
You know.
And the teams just on a fabulous job runs focusing on the like deals where the business.
Awesome recent wins most of the velocity of closing those deals.
It's just it's creating a tremendous.
Tremendous.
So I'm very proud of what that means more.
Oh.
To.
Providing as much detail.
Oh.
[laughter] sophistication on sales and it sounds and.
Your broader product offering.
Exactly.
Sorry.
In March systems Conference has got canceled.
Providers.
Uh huh.
Digital channels to.
[noise] losses.
And your friends is saying, let's say.
So.
Okay.
<unk>.
Yes, I won't keep you can break it out by month I'm rounding, but my sense is that it's probably a blend the team has been an incredible job focusing on execution I mean, the we're already off to be we'd start in January February before can you broke out.
You'd see you put up tick in March as well, but I think that the closely.
Focus and execution I think what well see that means more quote 'cause it quarterly sales cycle, so instead of 120 beans or.
Dealings with some sort of last years average sale cycle were spread around the little more since third means.
As Bill said at a decent batch quarterly to the market dynamics and customers.
Actions to get out that's <unk> outbound launch programs, which is excellent.
My best to try to help them.
Fishing.
Ladies and their programs markets companies.
Morning.
Right.
Final question Oh, Oh.
This is elevated.
Digital marketing.
Oh man manager or specific.
So.
Uh huh.
C suite levels they.
You can he says.
Oh yeah.
Sorry.
Oh.
Hi, Mark.
C level and as you for the first time.
Excellent inflection point because.
Well go ahead.
Yeah, Okay, Yeah, Yeah, I mean, we've seen over the last 24 month drying up because it inside of most pharmaceutical organizations, where does the focus on digital outreach has become more Providence. Several large manufacturers has announced chief digital officer, which you would've seen news.
That is a is now is more prominent warm to your point at the table as being a really brining on that person to Oregon business around communication outward and some things almost entirely pharmaceutical brands right now have pretty much pulled all of their sales reps off of Ah.
Before and so they're finding ways to enable those sales reps digital women virtually.
But again it all comes down to the core digital strategy of how bad and how does it become a a whole strategy as opposed to push strategy Knudsen p. wants to be bombarded with inappropriate information correct coupons, but universally all of the good market research being done out there right now and there is.
Lots of that.
Demonstrates that some people want to hear from manufacturers and they want correct information, that's highly reliable and appropriate for their pension. So net net so it's becoming a much more prominent role with organizations.
Great. Thank you Hello.
Yes. Thanks.
Thanks Ryan.
And our next question comes from Eric Martinuzzi with Lake Street. Please go ahead.
Thank you.
My question ties back to an earlier question.
It was sequential growth in Q2 I know the question is framed around the idea of seasonality, but we do.
Kinda one month.
Yeah.
Two and I'm just.
Got it here in Q2 and I'm just wondering if you saw anything there that would lead you to believe it or no.
Q2.
[noise] or anything that you see just.
We don't right you know Eric we yeah, as we said that seasonality should be consistent through the year at least the for the next couple of quarters.
Okay.
I want to talk about.
Limiting pattern the brands that you're working with.
That I mean, they come in but insertion order that go into an RFP that.
Loading francaise.
But you're having good ways.
The people that.
Are they coming back.
More deals that are smaller in size because they don't know what the heck, that's one of them or is it.
Similar larger size.
Okay go everywhere.
Sure sure.
Yes. The answer is is both Eric we're seeing more.
More customers come back so much higher but we'll read between periods margin prove it out I think by the return on investment that they're seeing from initial investments being made.
The later last year.
This year.
What you've been doing so volume up and also value was a key focus as well and I think they're willing to spend more dollars is starting to discuss the leasing piece with some enterprise deals that were seeing.
Okay.
On the that just because obviously its own too.
Existing customers.
There are deals.
Customers.
Sure.
Sounds good to me.
Good question.
Okay statement.
Okay.
<unk> expenses.
Yes.
In doing.
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David can you give me some color there.
Sure that was related to a theme it's one of our channel partners. It's kinda pre paid some of our cost for the year that that should even out and come back to us over the course of the or.
So that's.
My next question.
You're talking.
So I was.
Every quarter.
Sorry, your little little thing.
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They should become a back.
Over the course of the whole you're not all in the second quarter.
Okay, I think I've got my answer thank for taking your question guys and good luck.
Thanks, Eric.
And our next question Alex Silverman.
I am investments. Please go ahead.
And if you press your mute function.
Sorry, I missed that part pardon me congratulations on a great quarter guys. My my question is a little bit along the lines that Eric.
Slightly different.
As you were clients think about their budget.
And our aggressively spending in this period, where their sales force is locked down.
Are they expanded its budget.
Digital budget are they moving budget dollars around.
Dave.
Onetime topping off how are they thinking about that.
You know Ah Hey, Alex the do your voice, it's a it's a mixed bag.
And we deal with a lot of them that all handling it a little differently, but you could even be sure that it's going to be ranked first spy impacts of up revenue.
And those things that could be disruptive and a and not disrupted by engagement.
So we're seeing some just increasing from shifting dollars, we're seeing others keep it where it is.
And then we're seeing new brands come in that maybe weren't thinking of this channel or this strategy.
For right now.
Now there are reassessing so it's it's a mixed bag.
Steve if you want to address.
Well I think you summed it up pretty well, what we haven't seen in the marketplace that Alex or possible [laughter] layoffs and sales or medical science liaisons from the manufacturers.
Then just as we described earlier, but not not pivoting.
Dollars from headcount from her into digital engagement. So its <unk> represents growth since one.
Got it great. Thank you very much the rest of my questions have all been asked and answered. Thanks again.
Thanks, a lot.
At this time. This concludes our question answer session I now like to turn the call back over to Mr. Federal. Please go ahead Sir.
Thank you well if you can take just one thing away from our discussion today I hope, it's the understanding of our potential for strong growth and ability to generate lots of value for shareholders because of our sustainable strategic advantage and beyond the numbers I hope you can see it was created a unique corporate culture that is dedicated to something true.
The valuable.
And which makes a difference in people's lives from patients to physicians and beyond.
We don't give guidance is an early stage public company and especially in this current environment, but given everything you've heard.
What I can see we're very optimistic for 2020 and feel like we will exceed our internal goals given the heightened need for digital communication with providers and patients for our clients I look forward to speaking with our investors in the upcoming virtual conferences would be a very William Blair an RBC in may and June but as always stay.
Feel free to reach out directly with any questions or concerns no doubt will wrap up the call Tonight Hope you all stay healthy and well and I look forward to actually see new again take care.
Before we conclude today's call I've watched provides the company safe Harbor statement that includes important cautious.
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Life market penetration revenue growth gross margin operating expenses.
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The company undertakes no obligation to publicly update or revise any forward looking statements, whether because of new information future events or otherwise.
Forward looking statements or any apparently subject to risks and uncertainties, some of which cannot be predicted or kind of it.
She treatments and actual results could differ materially from those set forth in.
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Competition and other material risks.
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This one is available on the company's website and on the FCC website at <unk> Dot Gov.
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