Q1 2020 Earnings Call
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Ladies and gentlemen, thank you for standing.
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Thank you.
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Please standby work.
Thank you for standing Dan Welcome Synergistic first quarter 2020 earnings call. Today's conference is being recorded at this time I would like to turn the conference.
Synergistic.
Please go ahead.
Thank you operator, I want to welcome everyone to synergistic for score 2020 earnings call. Joining us today can be company includes Mr., Kayla Barlow, President and Chief Executive Officer Mr. Paul.
Financial Officer.
You didn't the formal presentation I'd like to remind everyone that some statements made on the call and webcast, including those regarding future financial results and industry prospects among others for booking and maybe subject to a number of risks and uncertainties that could cause actual results to differ materially. Those described in the conference call certain of these risks and uncertainties are.
Well be described in greater detail in the company's actually cheap.
And I guess ticket is under no obligation and expressly disclaims any such out the beach.
<unk> or alter its forward looking statements, whether as a result of me information future events or otherwise.
At this time I'd like to turn the call over to our CEO Pilobolus.
Thank you Brian it's good afternoon, everyone. It's only going on board since we talk so let me start but getting used to more insights around the tokenizing pandemic.
And to give pockets avocado business.
Our clients all the fault lines of its crisis. This is well until Dick's store and we're doing everything we can help them down.
I'm sure, you're all Wellbores and the public health crisis, and the impact that is having on America's hospital.
The public health crisis is directly contributing to a financial crisis. It many more clients as a lesser procedures have been put a whole revenues are down and cash reserves that many institutions are well right now.
Rather than the information security community, along with multiple government agencies.
Including Interfyl, yet to say the department of Homeland Security Cyber security infrastructure Security Agency Yep.
Okay National Cyber Security center, or all warning of the likelihood of increased security threats to hospitals ball cyber and physical has narrowed well well could take advantage getting responsibilities and public sentiment.
The Tele health adoption hold has accelerated dramatically, forcing many of our clients to play catch up on security for sure.
New personnel and commercial grade devices being added to the network each day, both streamlining care, but also introducing new for casual bar abilities that exactly the same talk.
The healthcare landscape continues to change and many of our clients only began to feel the impacts of the pen.
March our clients first focusing courses operational early planning and preparations and ball preparing the supply you gotta inventory levels for personal protective equipment.
Of course that only occurs.
<unk> building approaches to add capacity purpose central surgeon patient volumes well a month later in our point of view, both operationally and financially.
Pack is manifesting customers coming to us for support with extended payment terms contract orbitz modifications, even pushing out start dates for services.
No, we evaluate increasing risk to our operations, we have a threefold strategy to address the business risk across the short then Baird I've a long term aspects of this recovery.
So in the short term we are absolutely here to support our clients. Our team will continue to act as a trusted advisors for their security and privacy, we've reduced expenses where possible.
Good on major unique sales and deliberate headcount will practical.
Given the nature of our walk in the school required keeping her team in China is incredibly important to supporting our customers.
I'm proud of our team the speed at which they deployed did nothing to worry tools procedures, and frankly, even a cultural shift 100% remote walking BARDA.
Even though we're remote we're still working internally and many of the sneaky steps taken to walk remotely or frankly also like use more efficient now those learnings will continue even with this crisis passes.
I'm also focused on ensuring the safety of all being as a team works we can travel.
Yeah, and you remember we rebuilt our sales team and enable met with their new sales team is going well they've been able to focus all learning our expanded service offerings in new ways to expand the footprint within our clients, but working closely with the delivery team after only assessment the core or would it be identified security with into pipeline opportunities.
We have a solid base recurring managed services revenue as evidenced by the two large contracts, we announced during the quarter.
We'll continue to focus on growing this revenue base with artists LP.
We have seen its one of the quality and delivery utilization other costs and started the world class movie engagement out into Q2, and even the second half a year.
Our goal again in the short term if it continues to deliver exceptional expertise and God just your clients during the crisis, our delivery infill can do in constant communication with them wanting to understand their needs when necessary, we're making adjustments to our strongest when a delivery timelines in Africa ballast water security and privacy names as well as it.
Financial constraints.
Well the mid term like all businesses right now we have no idea how long is paying down the blast and our clients have both the responsibility of public health.
As walls around financial lobby, we know, they're losing money and they're starting to make financial decisions that are impacting spent.
Yes, the government has set aside.
Hey for hospital, however, the distribution of the utilization of the funds it's not clear.
Well I started to scrutinize the robustness and we've already seen deals slipped into Q2 Q3, including approximately 10% of managed services clients requesting to change contract terms orderly payments.
We will remain there for our clients that are constantly looking for opportunities to gain share it with a market but of course in a disciplined way. We've also recently reorganized the business to improve performance the reorganization, including a reduction of the company's workforce, primarily the back office support and executive ranks easier.
Mix of both temporary and permanent reductions at all going to mix will be leaner more efficient and more flexible gas coming out of this.
Well the long term.
Fundamentals of the business Armstrong.
We'll continue to focus resources on our sales and delivery team as they are driving the business and supporting our clients.
Now, we're still managing towards the five key imperatives that we laid out you know hunger games CEO webcast goes it's building pairs of business and we continue to move towards those goals only recognized in this period of uncertainty well they trade been talking about one we can get there, but rest assured health care continues to be security and privacy is a priority.
We're still getting lead pipeline is still strong and we continue to close deals.
Just much more focused on scrubbing the pipeline walking the fundamentals and picking up any unnecessary costs are inefficiencies, but they were well positioned once they get on the other side. The corky I'll now hand, the call over to Paul because it's only the Q1 financials. All go ahead.
Thanks killed I'd like to start with the standards financial disclosures, then get into more specifics around the cobot 19 financial impact in our initial responses.
Financial information if it includes Q1 2019 is for the security business only.
Security revenue was inline with expectations for the quarter decreased by approximately point Sevenmillion 5.1 billion, mainly due to lower revenue for professional consulting services customers, who had large nonrecurring remediation contracts completed most of the work in Q1 of last year.
Breaking down the revenue for Q1 2020 versus 19 managed services revenue was 3 million increase of 7%.
Professional consulting services decreased 29% to 2.1 million.
Backbone consultants, which was acquired in Q4 19 contributed 1.1 million in the quarter, a 30% year over increased for them.
Gross margin was 33% for Q1 2020 compared to 40% 19.
Although weve, although we saw a reduction in total labor costs due to the reduction in consulting and professional services. We did see it increased labor costs as a percent of revenue due to additional costs and investment in attracting and retaining cyber security employees and costs associated with ramping up some of the new services.
Recently enacted some staff reductions at the ended the quarter, though that will improve margins on a go forward basis.
Sales and marketing expenses were flat at 1.5 million for Q1 2020 compare to the same period in 19.
DNA expense increased point 4 million to 2.1 million for Q1 2020 compared to the same period 19 <unk>.
This increase was primarily due to a point 1 million an additional stock based comp.
1 million in additional cost for backbone and then point 2 million in additional cost related to the professional fees and recruiting costs.
Both at year end and into Q2, we have taken steps to reduce DNA expenses, which I'll discuss shortly.
Non-GAAP adjusted EBITDA loss was 1.4 million or 28% of revenues for Q1 2020 compared to point 2 million for 2019.
The full financials reconciliation of the GAAP to non-GAAP information can be found in the earned earnings release or came out.
As we've discussed in the past our business has a concentration in health care provider space.
Short and long term impact to this side of the health care industry are still uncertain and developing on a daily basis.
Kevin mentioned, there's a lot of uncertainty right now, we're seeing some pull back from existing and prospective customers.
To respond to these developments we've taken a number of steps that we think positions us well.
React when opportunities present themselves as these clients face many new challenges.
The first critical step we took was to secure the necessary funds needed to support the business through these uncertain times to maintain critical resources.
This crisis developed the credit market started to significantly Titan. Fortunately, we were able to work with an existing investor to obtain an equity commitment, which we announced last month.
Additionally, as we started to appreciate our customers were being impacted we also secured funds through the picture protection program.
Second.
We have partner with our employees you made some temporary adjustments to compensation travel and discretionary spending that will provide an opportunity to say between 150000 in $250000 each month, depending on how did your develops.
Next we made permanent and targeted expense reductions that addresses the reduced utilization that we saw in Q1 that negatively impacted gross margins as well as the go forward reaction to this pandemic.
This expense reductions will save us approximately $170000 per month.
Has and will result in one time charges of approximately 40000 in Q1 and a projected $280000 in Q2.
Finally, we have also built out contingency plans to reduce expenses further to better position. The company, we continue to see negative sites from the industry and dark customers.
This concludes the financials in the prepared remarks for Q1 2020.
Operator, please open the floor for questions.
Thank you just signal for a question. Please press star one on your telephone keypad also if you are using a speakerphone. Please make sure that your mute button, it's turned off.
Your signal to reach our equipment once again it is star one at this time for questions.
Just a moment to give everyone the opportunity to signal.
First question will come from Matt Hewitt with Craig Hallum capital.
Good afternoon, and Ah. Thank you for taking the questions I'm just a few for me for a first off regarding so you've got some puts and takes backbone, obviously have a strong quarter up 30% year over year, but you are you did comment I'm seeing some push outs on a new contracts or is it your expectation or should we anticipate.
Revenue is growing in the second quarter or would that be much more Q3, Q4, we would start to see that the increase again.
Yeah, that's gonna be Q3 in Q4 definitely as soon as our anticipation right now.
Okay, and then as far as gross margins you've taken some steps there are 33% in Q1 will that given the stuff that you've taken a we should gross margins expand in the second quarter.
We would expect gross margins to improve even in the second quarter, but but too.
But again, we're targeting Q3 Q4 to really start driving back towards that but a big die 40 range.
The die for it it's okay and then maybe a couple of housekeeping items. What is your current cash balance. So you exited the quarter that numbers in the queue, but since then the two and half million dollar direct investment as well as the P.P. loan.
What is the current cash position.
So we didnt specific we didnt initially.
Tap the equity commitment. So there was no cash taking than we did bring in as we mentioned 2.8 million.
Dollars from the P.P.P. program currently adds of the latest month were in excess of $6 million in cash right now.
Okay, Great and then maybe one last question about more but.
Hi level item for it for you feel up so yesterday there were several articles talking about how there's been an increased.
Interest or actually there there's increased cyber security risk, where foreign companies countries whatever have been trying to hack into some of our pharma companies either with the intent of stealing information for vaccines or treatments or to potentially alter that.
You know whatever the reason does that create an opportunity for you obviously, it's outside of that the hospital setting, but healthcare in general or have you seen any increased interest from those types of companies and what type of an opportune does that represent for you. Thank you.
Well I think the you know the best way to describe this and you know we caught it used to determine.
And the comment this is truly a perfect storm right. So.
The same time, you have a healthcare crisis, which has led to a public health crisis, which is like financial crisis in many industries.
You also have a looming cyber security crisis that particularly manifest in health care and added a couple of reasons for that right. One. It you know certainly there's interest level around covert 19 research from a nation say doctors you also have the fact that you know people are reading more neutral.
Pork their home a you know the entire threat landscape has completely changed and don't forget.
Bad guys are dealing with this too right you're talking about human adversary. It's also likely quarantined no matter where in the world. They are.
That's causing some interesting dynamics there you know their business, whether that's a business in the nation state or that the business and organize criminal their businesses change to the places they were making money in the past or were interested in pursuing in the past or different right. You know if you are at an actor than in the past had been.
Okay, let's say on travel and tourism going after hotels are people when they're traveling whether that even physical or kinetic I mean, physical or cyber well those targets aren't there anymore because people are traveling right.
So it's natural that see a shift I think a lot like many businesses are looking for where they're going to make revenue next so with the bad guys. But of course. The other thing is there's new opportunities here you know, there's new information people want to get their hands on what you're often in vulnerabilities I mean, no one ever anticipated.
That.
Everybody would be working from home and eight years of base.
Yes analogy I can give you and I'll I'll do what security thoughts you never get wouldn't give you a needle capital metaphor right, but imagine you Gotta medieval castle.
Got you know the boat yards, there's not a wall the princess in the Crown jewels locked up in the tower and you get the evacuated the castle. He told everybody to walk on the forest get outside of those defenses and defend yourself that literally what just happened Dolly hospitals, but frankly most of the industry everybody's operating out.
Outside the traditional firewalls and defenses and that's absolutely what we need to get you to get you know you get people operational during this crisis, but it creates an enormous risks they will only now beginning to understand so put a great opportunity sure because anytime there's risks or changes in the marketplace. It creates.
Opportunity, it's just a matter about executing well to navigate that particularly when you've got customers that are also going through a financial crisis and that's what we're laser focused on.
Understood great. Thank you very much.
Once again it is star one if you do Ethans question moving out.
But.
Yeah, Hi, guys.
Yep.
Let me just say that comment to what you just said Caleb.
I can't recall, some information on a major telecom service provider yesterday the basically.
The what's happening now with the work at home in so many enterprise SaaS companies are in affects and setting up enterprise access points and People's homes, all over the place where they'll have access to main databases and so forth and so on the company and therefore as you're thinking about that I really.
Does increases cyber security risk.
Immensely.
Oh, you're absolutely right and what you know I, even in my House I mean, right now, there's probably four zooming going out in my house people are on shared computers, you know and I mean, I've always been taken a lot of protections to isolate myself or my children.
Everything else going on in my own house, but I don't I think that's unusual right I think it a lot of cases.
These corporate networks is being connected to buy you know what could even be a shared workstation was at home because people just needed to do it as quickly as possible and now what a lot of ways. We're on a race to go shopping defenses.
Yeah, Okay and that none of my questions.
Paul.
Absent the 1.1 billion in backbone revenue in Q1, it really seems like the nine backbone revenue fell off a cliff from a year ago.
Roughly.
What percentage that was due to the two contracts with ends up.
Completing versus pandemic related.
Drops.
Yeah I made it was almost entirely a function of those two clients as to clients for over a million and a half and.
Option.
From quarter over quarter so.
At least at this point, we're not seeing a specific drop in revenue related to go but we're just not seeing a increase or add to [noise] those buckets at this point until.
We get more clarity on on what's going on.
In the marketplace.
The next question I was a.
A little start over here the reference are high Fortys gross margin in your answer them out Hewitt.
In the past.
I've been thinking in terms of.
45%.
The last quarter saw that somebody goes of having to pay more.
No higher good quality folks.
Are you actually now at <unk>.
Struck servier expenses and so for the was going again on the other side of all its you could see a high fortys gross margins.
With with the growth that we would hope to receive I'd I do believe that's possible I pick that given a number of the changes that we made a recently as we get back to growth levels, and we start to push into [noise].
Higher monthly revenue numbers that are typically every opportunity to get into the mid to high so [noise].
Oh, that's excellent.
Last question I guess is for Caleb.
To be a little judicious and answering those but how do you escapes a conclusion that given the enormous publicity about hospitals closing laying off people and everything and then you step back a mom and say hey, what that's going on.
<unk> increased demand for medical services, because those pandemic [noise].
Uh huh.
The this hasn't been grossly mismatch since at all levels of government.
The people who.
Have elective surgery can't get isn't that by the way I.
I know from a friend can include people, who have cancer diagnosis can't get the surgery either.
I mean, I'm, having a hard time escaping the conclusion of this has been horribly mismanaged and I'd be curious.
More professional.
Well I think probably not the time a place to just government, but here's what I can say for you.
There is absolutely a dear friend here that I think any leader, including myself, how does shift into.
Right now, which is really crisis decision, making which is very different than normal decision, making right you've got to make decisions unlimited data would be information you have on the ground you got to be willing and able to pivot and Joc and go back funny thing your own decisions that day later I'll, because what you're trying to do is.
Well I agree real a landscape that there is no playbook for nobody's ever been before and you don't want to Jeff I think a lot of people struggle with that.
You know what and the reality here and I think a lot of articulating today is we don't know how long is going to last we don't necessarily know with a bottoms gonna look like but what we do know how to execute through that and you know make those out makos judgment calls not only to try to me.
Maintain the types of resources that we need on the other side, but constantly evaluating every decision to ask ourselves how do we de risk that's as much as possible and you know I think anything after folks at my team, but were de risk comes out of my mouth more times a day now than I think now because that's really.
Part of what you've Gotta look at I think during this you know navigating through this.
[noise] Roe.
I've got to say I'm frustrated because I live in the second worst state.
And the whole idea any was to do this with the hospitals. So bizarre schools wouldn't be overwhelmed and I don't think that's it's anywhere even in New York City Center with a.
Hi School Sip with the Feds sign up there and.
It seems to me that hospitals should be back in full gear now and they are those.
Supporting the in effect, where you have to stuff will be girls.
Well you got anything about it this way right I mean, we don't know what the ended that story is yeah. There's a lot of dialog about hearing aid in the health care sector and also at some point here, probably you know probably not as soon as a restaurant will turn itself back off at some point. These hospitals all got turned back on it.
There is gonna be some sort of a backlog of electric procedures and that's going to pick back up I think the big question for our business. It really comes down to.
What are we going to see there when they get to the extra $10 in their bank account what are they going to spend it on and how important cyber security going to be in that dialogue. You know the two things that I remind people are constantly one the threat landscape is totally changed meaning whether you're a hospital.
All or a bank what you need to worry about today is totally different than what you need to worry about two months ago.
The second thing is your attack surface. The places you're going to likely be attack has also completely changed and faster people realize that move out around it the better chance they haven't protecting themselves from somebody was happening and if not well then we'll see what happens.
Alright, Thanks, Jeff anything else.
Thank you.
Next I'll go to Michael Potter with monarch in capital group.
Hey, guys.
Not to beat a dead horse, but the I guess on me and the same theme.
Oh, hi, everybody recognizes that the thing.
So with sub change that they've expanded obviously more there's more.
Uh huh.
Potential all areas that need to cover that they weren't before.
I'm, assuming the hospitals do as well.
I know a lot of these hospitals you cannot get to their chief Technology Officer War, the appropriate person that have the dialogue with many of these home health networks I have to assume war.
Is very plan in place wants funding does become available Oh, how about quotes increased pipeline expansion.
Yeah. So let me give me a little color into some of the things we're doing I mean.
So as you can imagine sales has completely changed in that you know that their typical things in a sales person would do so she said let's face it.
You go out and he would Clos you can't take a lot. The launch you can't do all the normal things you would do however.
I will say I've been pretty impressed with both our creativity of how we can get in follow that as well as yeah, the willingness and clients to continue having dialogue because you're the one thing that hasn't changed is whether it's a sales dialogue or subject matter expertise dialogue people.
We'll need information more than ever and that's just more likely gotta happened down in video conference versus face to face.
So you know that had been going actually fairly well I mean is it the same level one came to normally seen no, but I'm actually pretty encouraged by it and frankly, it's a lot more cost effective and efficient they always getting people on airplanes and some of that's gonna probably step.
You know so I think that's the first piece of it I think the second piece is looking at what does this kind of looked like coming out the other side and.
You know one of the dialogues have really been having a lot with our clients, including a few today. He said you know the these changes that are occurring remember one of the big parts of our business as we go in and we will evaluate the cyber security posture of company.
And you know that manifests not only in advice and guidance in a technical assessment, but also you know what exactly did workshops are we talking through what we learn.
One of the biggest seems I find myself talking about now it's really funny guys.
What we did six months ago, you have to completely re look at it because everything is changed you got all these vendors that work.
Normally connected to your network connecting because after work from home you taking your whole administrative staff put them at home all Youre doing work with health care Records on consumer grade products like you know zoom meetings, not you know you're you're not using the normal tools that you would use and help.
Care.
Exactly how to do but you've gotta go shore those things out now.
Thank you.
The challenge is there is twofold, one we've got to figure out what do people really need going the other side I think we've got I'd be confident we've got a really good ideas that because we know where the risks are but in the second question. It is there's got to willingness to meet control.
Problems as you know that is that's somewhat delayed but those conversations because I think people realize that.
They have they've got a short or this up wants their budgets open back up and they get out of kind of financial crisis.
You know the other interesting in this and you know there's no telling how this unfold, but you know there's all kinds of dialogue that hey, you know some large percentage of restaurants out there I can just after this crisis.
You know there's also a reasonable chance, we will see changes in the healthcare landscape and you know along the predictions and we'll see walking consolidation right. You know the the company's better solvent health systems that are solvent will likely by the ones that are so you know a lot of what we're thinking about right now is.
That consolidation, which is likely to occur happens what are your upfront season. The services delivery for the mechanisms that we do things are required if we're dealing with larger systems. You know so look in a in a strange way, having a little extra time.
And.
Where we're not 100% utilize gives us an opportunity it really speaks through these issues and you are homework and that's exactly what we're doing right now.
Okay. So so I get back to the question though.
A lot of B.
Tactical officers out these hospitals and health networks, Although you know people right and they know what the landscape has changed hi.
And many of which we've worked over the years you know have.
Probably started having a dialogue for one thing you begin to open up but this is an area that they're going to tackle.
Quickly and aggressively.
Yeah, not only are we having not dialogue, but we're actually engaging with some of the industry groups, we work with as well too.
Health to happen dialogue on an even broader scale right I think it.
Not only incumbent on us to have the dialogue one on one individually and you know frankly I've also been calling clients directly to have that dialogue, but we're also trying to have that it's a broader humidity as well.
He is remember there's a third actor in this play right. It's not just houses the vendor and our clients is also the bad guys and.
Not that I want to say they have any control over what people are going to buy per se, but they certainly have a whole lot of control over what they're going to attack. What your timing is and that could have a very big impact on this you know we.
In 28 19, you saw massive increases in ransomware as an example, particularly on health care that is largely stopped.
It's starting to creep back in and all of these things can really change what's happening. If you. If you look right now just at the news you know for the most part with few exceptions, there haven't been a whole lot of attacks on hospital most of it right now seems dependent it's a laboratories. So you know that Ken.
Right and how people think about things and even at a hospital, we're getting a lot of questions around eight out of why I don't like you were my research arm and what do I need to do there because it just dropped more attention too.
Okay. That's that's.
Next we'll hear from William Brenner with Vanquished capital partners.
Hi, gentlemen, how are you.
Yes, I don't know Deerfield.
Hey Kids Burbs question.
Okay that soon.
What.
Is needed in terms of our potential service offerings, not just personnel, but you had your yield bullish what else would love to add 12 service offerings at this time.
And so right now.
Well you know I mean.
Without got competitors on the call. So I'm not going to give you every intimate detail and open call, but let me just say you know wanting to talk about in the past is the pivot from.
Penetration testing to read team that is well underway. We also think that there are a variety of ways that we can continue to be a little more sophisticated and what we deliver two more and more sophisticated clients, but you know also recognizing that the needs of a larger system are very different than the names.
The small regional hospital.
Not only in the technical capabilities, what we might bring to bear, but even frankly in the reporting on the dialogue. So those are all areas that we're keenly focused on and you know now we've got that hard to do a little bit of that research a whole lot of training and make sure. They will only come off the other side as it seems crazy though.
Gotcha.
And secondly, I'm just curious how small clients than attack I would say no say year to date, so to speak and how did the how do we asked them.
That's situation.
Yeah, I mean, there there is a function of policy I would never talk about what's <unk> clients has been attacker haven't or what happened, but yes. We have clients that are attack all the time, all we absolutely engage and that can be everything from helping them deal with regulators to you know helping them in their incident response.
Hey, Good day for US you know when we really feel we've done our job is you have to recognize anybody even with the most most robust security posture can get attack, but a good day for US is you know when we sit down with the regulator to help a client and the regular I've looked at what we did it looks at the recommendations looks.
At how our client responded those recommendations and said, Okay. You know bad things happen to get people I'm. Good here, that's a real that's a big win for US obviously another win prevented something from happening in the first place and those things happen every day, but I, obviously cant talk about specific incidence or quantities or anything like that is because I would never do that's work lies.
No I completely understand and I think you put the coal.
The next well go to been Goodman would be good holdings.
Hi, Thanks, good afternoon.
Two questions one.
So so one thing the federal government has done in that situation is they eat up once and regulations to.
Good news restrictions around things like Tele medicine.
And and I'm wondering yeah.
Our see any interest in that in services. If he has a position than services for that.
Kind of along the same Lyons.
Our medical device management. So that's I'm curious if you can give us any insight into a you know whether that's changing.
Better worse or is there you see that going.
Sure So let's start with let's start with the medical device piece.
You know medical devices, you know you've probably heard a you know I M. T and you know the challenges in the Shadow I see when you know people just bring things in the company's and plug them into the network medical devices are you know kind of the combination of both here and there are a gigantic problem.
Because you you might have fivesix thousand devices touching a network in a hospital many of which are connected things its very difficult to get the inventory those devices figure out where they are.
Additional tools you didn't used to scan for them.
You really can't using these environments because.
Connected it teaches you can't with top we want to be sitting over.
So we've gotten really good finding new devices, helping companies deal with patching them and it's not uncommon to find a 20 year old and ROI. This was XP and we've got to figure out how to isolate that so they can continue running it because the upgrade it requires bringing a crane literally I mean, there these are not Duncan.
On the scenarios. So you know that whole business is one of our newer service is it has really started to pick up in terms of interest this level and I think as we get outside of this that will be one of the key areas where real thing it's a.
Let's put it this way it's a very big mass for your typical CIO and you know what made it will just take a problem author hands and manager for them for a flat rate for three years.
Now what would remind me get started what was your first question again.
Well tell tele medicine, so oh, well number one the federal government has eased restrictions on that number two in all likelihood just like you were saying earlier some of the changes that you're making to deal with the the pandemic are probably going it's Dick and telemedicine was already taking off before that's happened.
Just just wondering if you see that as.
You know significant growth opportunity, if you've got any traction in that area in securing a telemedicine. So for us what your take is what it is a huge opportunity in here here's the way to think about right telemedicine was going to happen, but it was probably going to happen very slowly and very deliberately and there were two reasons for this right one would protect not.
Oh Gee constraints.
Finding ways to do it doing it securely getting those devices in methodology has improved and you know that's a slow but in addition to that and I think [laughter]. He said a lot of people don't completely understand.
The the clinician Didnt get paid in the same way for given Kellogg medicine.
So you also had constraints around could you get reimbursed fighting a patient over the phone or Webex meeting or what have you and.
No. It wasn't handled in the same way so when regulators come in and say two things absolutely get paid just like somebody showed up in your office and too.
Don't worry about the security and privacy constraints temporarily always thought you'd get an acceleration in innovation in my estimation by five to 10 years and it happened in at a four weeks.
Now.
Absolutely.
Hey, this is a security professionals, they absolutely we need to happen right. It with the right fusion my thinking.
To accelerate this and make things safer.
Now what comes with that and I think it's very clear about it. This is temporary we now need to shore up all of those systems that are gonna be used get keep will likely awful kind of consumer grade systems and honored systems that clearly pretax and happy appropriate secure.
Ready for patients. So yes, there's certainly an opportunity there you can area, where we're having a lot of discussion.
And of course.
Part of what has to come out of this is well indications from the regulators will be acceptable in this new world. Both in terms of their reimbursements as well as from a security privacy perspective.
Thank you.
Thank you ever anything that does conclude today's conference we'd like to thank everyone for their participation you may now disconnect.
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