Q1 2021 Earnings Call
There will be a question and answer session to ask a question. During the session. You want me to press Star one on your telephone if you require any further assistance. Please press star zero. Please be advised piece conference is being recorded I would now like to him the conference over to your speakers today Mr. Robison. Thank you. Please.
Go ahead.
Thanks, Cheryl Good day, everyone and welcome to the first quarter fiscal year 2021 earnings call.
My name is Matt Robison, almost director of IR corporate development on the call with me today, our CEO, Eric Stine and CFO, probably in a ruling.
After the merger closed today issued a press release to be a globe newswire. The release is also available on the company's website <unk> Dot com. This call is being webcast live and is accessible from a link on the that's page of the Investor Relations section of our website. This like will be active for replay for this call for at least one year a telephonic replay will also be available for a week starting to.
Evening about eight PM Eastern time dining information for it is included in todays earnings press release.
Today's presentation, our Jackie this will make forward looking statements within the meaning of the federal Securities laws forward looking statements generally relate to future events or future financial operating performance.
Our expectations and beliefs regarding these matters may not materialize and actual results and financial periods are subject to risks and uncertainties that could cause actual results could differ materially from those projected.
These risks include those set forth in the press release, we issued earlier today just related to the impact of the cobot 19 pandemic and those risk more fully described in our filings for the Securities and Exchange Commission.
Forward looking statements in this presentation are based on information available to us as of the day here also we disclaim any obligation to update any forward looking statements, except as required by law.
Please note that other than revenue was otherwise stated the financial measures to be disclosed on this call will be on a non-GAAP basis. The non-GAAP financial measures are not intended to be considered in isolation or the substitute for results prepared in accordance with gap.
A discussion of why we present non-GAAP financial measures and a reconciliation of the non-GAAP financial measures discussed in this call to the most directly comparable GAAP financial measures are included in our earnings press release, which is available on our website.
On this call will give guidance for second quarter and for your fiscal 2021 on a non-GAAP basis. Also in addition to our press release, an 8-K filing the events and presentations page and investors section as well as a quarterly results page of the financial information section of our website includes links to cost and expenses not include non-GAAP values and keep.
Metrics Evercore subscription businesses.
These are titled supplemental financial disclosure, one supplemental financial disclosure to Additionally, our investor presentation slides include GAAP to non-GAAP reconciliation that also provides resolution of GAAP expenses are excluded from non-GAAP metrics now I will hand, the call overcome a CEO Eric Stan.
[noise]. Thank you Matt.
Hi, everyone welcome to assume as Q1 fiscal year 2021 earnings call I'm pleased to talk with you today.
Q1 was a strong in busy quarter for Houma. During Q1, we remained focused on executing our strategy well awesome adapting to the changes in our marketing environment in business activities driven by the global pandemic.
I'm proud of all employees for stepping up to meet the new challenges, we faced and I'm extremely pleased to report that all employees and their families remain safe today Htwolm employees. Thank you.
Our Q1 revenues were 40.3 million up 19% year over year subscription revenues from business users grew 54% year over year.
Q1, non-GAAP net income was 2.4 million up substantially both year over year and versus our guidance as we optimize your activities in response to the pandemic.
I believe our solid growth coupled with increasing profitability speaks to the resiliency of our business model and our ability to adapt to changing market conditions.
Given that our Q1 ended on April 30.
We experienced the effects the pandemic for much of our quarter.
As you would expect except for a few a central functions all employees shifted to working from home.
Inside sales and online sales were largely unaffected, but sales to face to face channels in through retailers became more difficult.
We adapted our marketing programs to emphasize to a greater extent, the flexibility and savings afforded by our solutions.
Feature wise, we moved quickly to introduce a modernized video collaboration user experience for the enterprise customers.
To enable use of my office IP phones concurrently at both working home.
And to launch the M. office desktop out.
The comedy and an approximately 50% increase in call volume in our network and we managed supply chain challenges effectively.
Overall, it's clear or services or even more vital when these times and we can adapt to changing market conditions.
Well Q1 was a very dynamic quarter for ooma, we nonetheless made substantial progress on implementing our strategy and plan for this year.
In April we made two exciting product announcements.
First was the launch of connect our new fixed wireless Internet service.
Well my connect utilizes advanced L T to deliver both internet connectivity in whom office phone service for as long as $50 per month combined.
It is it is designed both for businesses that want backup internet to ensure vital functions such as phone service and for businesses that want to replace unreliable or expensive DSL or satellite internet.
Strategically interconnect affords us a double play solution in the market in a distinctive new service.
We also plans to enable more new services in conjunction with interconnect later this year.
And then connect represents the next step in our longer term strategy to provide a complete managed infrastructure solution for small and midsized businesses.
We're pleased that since the April lunch, we now have over 100 customers running on human connect.
We're also thrilled that Houma connects recently won TMC Labs, 2020, Internet telephony Innovation Award, which honors products. That's display innovation unique features and significant contributions toward improving communications technology.
Our second major product announcement in April was the expansion of our office Pro service tier to include the new office desktop back.
The SAP expands the work from anywhere capabilities of whom office, they turning windows Pcs and Max into full featured business phones.
Summers can access coal controls start conferences review voicemail, some coal recordings searched the company directory send and receive faxes and more using yeah.
This launch bolsters, our strategy to make room office pro and attractive step up for more of our customers.
In this regard we're planting further feature additions to whom office pro later this year.
We also made progress during Q1, and our strategy and planned this year to expand into a new region of the world outside of North America.
You'll recall that at the end of Q4, we served over 20000 users in North America with a large multinational corporation.
And then our plan calls for us to expand further with this customer in a new region. After completing a proof of concept.
I'm pleased to report that we will start the proof of concept this quarter after only a short delay caused by the pandemic.
This timing leaves US open leaves open the opportunity to roll out to a significant number of users in the back half of this year.
Regarding enabling our partner sprint to gross sales of whom office branded a sprint omni we make good progress during the first half of Q1, but then were constrained by the shelter in place rules that took effect since sprints salesforce includes face to face sales.
In addition, the sprint T mobile merger took effect April one is I'm sure you can imagine sprint and T mobile have a big undertaking in front of them to merge there are two organizations.
Sprint has had success with sprint omni and we know sprint Salesforce and customers are very happy with the solution.
At this point, though it is difficult to predict the further impact the pandemic and the merger process will have on our plans with sprint T mobile and so we're adopting a cautious outlook at this time.
A final key element of our strategy and planned this year is our focus on sales and marketing execution, including securing large customers.
The pandemic and changes in our economy have certainly created new sales and marketing challenges, but nonetheless, we feel we are well placed to execute as the economy opens up.
To share some examples our largest new office customer in Q1 will roll out to approximately 500 users in more than 150 locations over the next six to 12 months.
We also added about 450 more office users this quarter with a large national brand, where we now enable over 900 local independent locations.
Referrals have played a key role and securing these locations.
And regarding enterprise, we added approximately 150 users in Q1 with an existing customer with whom we expect to grow further this year to approximately 800 users in total.
Looking forward, we are dynamic in our sales and marketing activities and we are engaged with all our sales channels to be prepared as the economy returns to normal.
We also believe our products and services are in even greater need in these times.
Well the customers want to take their desk phones home.
Communicate from their computers with our desktop out or work anywhere via our mobile apps, we have them cover.
Small businesses increasingly operate via telephone and online we have seen further interest larger businesses as well are reevaluating their needs in light of the changing work environment. We believe this opens up new opportunities for our solutions.
I will now turn the call over to Robby to discuss our results and outlook in more detail and then return with some closing remarks. Thank you Eric and good afternoon, everyone before as talk I want to thank the entire my team, but the hardwood and focus during these challenging times I want to get my best wishes for everyone safety at <unk> and B.
John.
With that I'd started at a review of our fourth quarter financial results, then provide our outlook for the second quarter and full year fiscal 21.
Despite the extraordinary circumstances created by the spend dynamic and to stay at home orders.
Once again had a strong financial performance in the quarter, achieving $40.3 million in revenue with another previously issued guidance range of $40 million to $40.5 million.
On a year over year basis reported revenue grew 19% driven by my business.
Well my business now accounts for 43% of revenue compared to 33% in the prior year quarter.
Net income for the first quarter fiscal 21, plus $2.4 million significantly higher than our previously issued guidance range of $500000 to $1 million.
I have a strong profitability demonstrated significant leverage now an expense structure as we optimize out activities during the pandemic and focused on operational efficiencies.
Now some details on our Q1 revenue business subscription and services revenue grew 54% on a year over year basis, or 33% year over year when normalizing for the effect of the Broadsmart acquisitions made in may of last year.
Residential subscription and services revenue grew 4% year over year, it's combined subscription and services revenue from both business and residential growing 22%.
Subscription and services revenue as a percentage of total revenue was 93% compared to 91% for the bad he had a flatter.
Product revenue for the first quarter was $2.7 million compared to $2.9 million into Brad you repeated.
During March and April a number of our channel partners, such as best buy what impacted by the shutdown orders, which affected our revenues and user drilling.
Now some ddas another key customer metric.
We had 1.049 million quote users at the end of the first quarter up from 985000 at the end of the same period last year and flat sequentially.
During the quarter, we've continued to add business users, primarily through online sales and marketing activities.
At the end of the first quarter, 23% apart Borden quarter users our business users, which is up from 17%, but the same period last year.
I would average monthly subscription and services revenue politically use it or ARPU increased 13% to $11.56.
Up from $10.25 in the Friday in quarter as he added business customers, including many office pool users.
We expect this increasing ARPU trend to continue for the foreseeable future.
Our annual exit to recurring revenue increased $245.6 million.
Growing 20% year over year.
Our net Gardner subscription retention rate performed well at Henry per cent compared to 99% for the prior year quarter.
During March and April we saw our churn rate increased by two percentage points on an annualized basis.
We believe due to the impact of covert 19 on the economy.
We are monitoring our customers turn closely and all that we experienced an increase in March and April we've seen some stabilization in churn rates for me.
Now some color on gross margin subscription and services gross margins for the first quarter were 71% and increased from 70% year over year.
This increase in gross margins was due to the growth the houma business and associates.
Benefits of economies of scale.
Project and other gross margins for the first quarter went negative 39% a decrease from negative 26% year over year driven in part they increased air freight charges related to the pandemic, we've increased our inventory levels during the quarter positioning us to meet our customers and partners future.
Needs.
Overall, we're very pleased to see our total gross margins in the first quarter increased to 63% up from 61% into Friday in Florida.
With that I'll now provide some color on other operating expenses for the quarter.
Operating expenses for the first quarter about $23.2 million up $1.2 million or 5% year over year.
Sales and marketing expenses were $11.7 million are 29% of total revenue the 7% year over year in fees, what driven was driven by higher suits activities thought well my business.
Sales and marketing expenses were down 5% from the fourth quarter off last year, as we had moderated some sales and marketing programs, including other promotions been brick and mortar retailers.
Research and development expenses was $7.8 million, 19% of poker revenue flat year over year, we sustained our R&D expenses.
At our dog 11, a sub 20% of quarter revenue down from 23% by the prior year quarter.
DNA expenses were $3.8 million or 9% of total revenue compared to $3.3 million for the priority in Florida.
During Q1, our net income of $2.4 million resulted in diluted earnings per share of 11 cents compared to a four cents loss per share in the prior year quarter.
For the first quarter fiscal 21, adjusted EBITDA improved significantly to $3 million or 8% of children revenue versus a loss of $468000, but the prior year quarter.
EBITDA achievement is well ahead of our midterm target goal of 5% of <unk> revenue.
We ended Q1, but total cash and investments of $23.3 million, but no debt.
Cash used in operations for the first quarter fiscal 21, plus $2.8 million driven by the timing of annual tax and other payments and was significantly better from the fyfe and $7 million of gas usage during the prior year quarter.
On the headcount side, we ended the first quarter of at 799 employees and contractors up from 740, yet at the same time last year and down from 895 sequentially as we managed our spending primarily with our contractors.
Before I provide our financial guidance I want to highlight some of our key focus areas going forward first we continue to assess the impact of the pandemic on another profitability and cash flows as well as on key business trends, such as customer growth Joan and supplier situations.
I'm pleased to highlight that'd be a solid cash position, but no debt and a large and diversified customer base on a French gives us confidence that we have well positioned to weather the issues on hand.
Now onto our second quarter and full year fiscal 21 guidance again, our guidance is non-GAAP and has been adjusted <unk> expenses, such as stock based compensation and amortization of intangibles.
After taking into account the current machnik, not macroeconomic and social environment.
Expect Boulder revenue for the second quarter fiscal 21 to be in the being to $40 million to $40.5 million.
We expect not second quarter non-GAAP net income to be in the range of $1.5 million to $2 million.
Non-GAAP diluted EPS is expected to be between six cents and nine cents.
We have assumed 22.2 million weighted average basic shares and 23.1 million weighted average diluted shares outstanding for Q2.
For full year fiscal 21, given that gendron uncertainty around the current situation and its impact on our targeted customers you're taking a cautious approach. This full year fiscal 21 in terms of user growth and customer churn. Accordingly, we expect total revenue for fiscal 21 to be in the range.
Hundred $61 million $264 million forces. The previously issued guidance range off I mean $67 million $270 million.
It's the revised guidance Dickson gets into account lower rates of customer additions due to decreased face to face since activities and moderately higher churn for the year.
Additionally, on the year over year basis, we have assumed very little revenue growth for our residential business and approximately 20% to 25% <unk> well my business segment.
We now expect non-GAAP net income for fiscal 21 to be in the range of $5 million to $7 million versus the previously issued guidance range of $2 million to $4 million.
This is this guidance assumes higher profitability in the first half of this fiscal year and with expectations have increased spending and use it rolled in the back half of this fiscal year.
Non-GAAP diluted EPS is expected to be in the range of 21 cents to 30 cents. We have assumed approximately 22.5 million weighted average basic shares and 23.5 million weighted average diluted shares outstanding for fiscal 21.
We also expect to generate positive cash flow from operations during this fiscal year.
In summary, we executed well in the first quarter Inspite of the effects of the pandemic and we remain confident in our long term strategy with that I'll pass it back that it for some closing remarks Eric.
Thanks Robbie.
Our current business view is that while the economy will gradually open up going forward the pandemic and its effects will be with us through this year and perhaps beyond.
Although we plan to be cautious in or outlook, we believe our solutions not only hope businesses work more flexibly, but also often save the money.
As we look forward the value, we bring to customers as a core strength in these times.
Another core strain is our range of capabilities.
Our expanding office pro feature set.
Ability to customize whom enterprise and integrated with whom office and new OMA connect Internet solution extend our reach and differentiation.
In both our residential and our small business solutions are ranked number one by users themselves with tremendously high customer satisfaction scores and customer referrals.
We believe our strategy is working and we can capitalize on significant opportunity over the long term.
Thank you operator.
To ask a question. Please press star one on your telephone keypad. The first question is from Josh Nichols B. Riley. Please go ahead. Your line is open.
Yeah glad to hear had one safe and thanks for taking my question, a really strong profitability on the bottom line this quarter.
I didn't want to ask like thinking about it good to see the R&D leverage at the company's capitalizing on this quarter is a thought that that's going to continue to remain at or around these levels as a percentage of revenue or maybe that starts to trickle up a little bit given the investments. The company is doing with the new launches in the second half of the ship for offerings.
Hi, Josh it's good to talk to you.
Our R&D this quarters about the same level spend as it was a year ago.
And we don't intend to grow it at the rate we grow sales so that would mean some leverages an order maybe Robbie has more to comment John here. So if you look at our midterm target Martin not 123 years.
R&D range, we have given its 17% to 19%, yes, we are at the high end up that range today, but as we grow the business would be you do expect some more leverage coming in so it that 19% could I'll, let Peter time could go down to 79 so.
Thanks, and then Eric I wanted to ask a great to see the company has this big opportunity in front a bit to expand outside the North America market. How long is this the I guess demo proof of concept expected to take for the company [noise].
I think that that's a little open but.
I don't expect it will last more than a couple months, maybe maybe a little longer than that we had intended a quarter ago to have this proof of concept started at the end of Q1.
We had to do some work before we'd be ready to start it we got all that work done and it will be starting this quarter and that means a as I said in my script.
For the back half of this year, we're hopeful that we can roll out to some significant numbers of users.
And is there any additional detail that you could provide as far as the size of the opportunity I know last quarter. You mentioned you already have 20000 seats.
This company has ever been is large and this new area geographic region of the world as it is here in North America. So the opportunity is pretty significant and I do think to overtime. This is a customer who we could be growing with for years to come.
So, it's a pretty big opportunity.
Thanks, and then my last question and then our hop back into queue, I know management, taking a pretty conservative stance on the topline for the guidance like what what's kind of built in there the expectation around.
Houma connect the desktop at the end and Upsells to these pro solutions that the company's thinking about.
I'll take the second part of your question first and then come back to connect.
Pretty pleased with the progress Weve made with whom office program since its launch late last year. It say about 5% of our base is now using it and a on new customers were seeing some.
Some channels were seeing about 10% and new customers take it in some other channels for C as much as 30% to 40% of new customers take it.
And so.
It is our goal to drive it to a double digit percentage as we go forward year of our entire base.
So we're pretty happy with it we're obviously, adding more to it as time goes on we just added the desktop out.
And that is an important work from home tool as well by the way.
So so I think it's off to a good start and we're doing some good things.
On the connect.
Well, we haven't set.
Very precise goals, yet because it's just out in the market and we're getting feel for what customers think about it I can tell you that we are come in cross customers have remarkably poor inexpensive internet and in those cases, it's a good primary solution. Good primary internet solution, we have.
Some pretty good success already in those types of situations.
So we know we've got to success there I think the what we need to learn as we go forward with this product is what amount of our customer base, we'll see value and having a backup internet solution for their everyday needs and we're hopeful that we can drive that and we can all.
We're also hopeful that some much larger companies with lots of distributed locations will find I'm a connected great backup internet solution.
For them as well those companies today put in other solutions today, and we're hopeful that they'll find it would connect a better choice so as lot to come with whom uconnect in its early days, but I'll try to give more color on it next quarter. After we've got another quarter under our belt.
Great. Thank you.
Your next question is from Mike Latimore of Northland Capital. Please go ahead. Your line is open.
Thank you yeah, congratulations on a nice quarter there.
I guess on the hundred connect users or connect customers.
Do they come through any specific channel was there any verticals the ticket any kind of color on that regret.
Yeah.
Well they did not come through a you know general marketing and inbound lead generation as much as they came through either customers, we already know or.
Some of our more face to face sales channels that we're still able to operate these tend to be a little bit larger sized customers I would say a lot of them. So far are.
I would call some form of a main street location, where they just don't have good access the internet for whatever reason.
And that's really where we got started with the product when we roll out a new product like this something so fundamental we started off with what we call. We cut we start off with levels and we only exposed to a small portion of our customer base at wants to kind of get some experience with it.
It's worked fantastic and now where we're expanding we aren't finding it will work in all customer situations. It depends on it. It runs today on the sprint network and we're finding we are subject to the coverage that that network has.
We're hopeful that with the T mobile sprint merger will be able to expand.
Or the range of coverage, we can we can adapt we can create with this product, but but no all or effort. So far have worked out as we expected.
Right.
HM.
And then on Sunday gross margins.
Subscription was pretty strong you mentioned that freight cost on the product side I guess, how should we think about those margins in the next in the second quarter.
Personally and product.
Yeah, Mike This Ravi I do expect the dissolve is small puts and takes it happens for example.
Hi, I'm, calling volume.
He has some impact on the margins, but at the same time office pro customers as we keep adding does that help us on the margin side. So I do expect subscription services margins for Q2 to be around the Q1 levels on the subscription side on the product margins I do expect it to be improving life.
Leave from Q1 levels, given we'll have less and franchises, but obviously, it's a function of overall freight charges have they gone up or not but we do expect less air freight charges in Q2 since they have been that put inventory.
Got it.
And then just in terms of pricing your various services are you having to.
Changed too much in the way of pricing given the environment, we're in or is that pretty consistent.
We haven't made any changes of note in pricing, we've always been a strong provided a strong value to the market and we haven't felt the need to to change it.
And just last one talkatone what was the knock on revenue in the quarter.
Oh it was.
And $1 million slightly below $1 million, given cpms had gone down, especially in March and April. So it was and I are tied below million dollars.
Yeah.
Okay great.
Thanks, very much but he had been expecting about $4 million for the yet I think that on backed by that so nothing big income soft docket done.
Okay. Thanks.
Your next question is from Kevin Mcveigh of Credit Suisse. Please go ahead. Your line is open.
Great. Thank you chief.
Can you give a sense, so what percentages shellfish face to face versus the other channels because it seems like net net even just despite the disruption the covert disruptions so some pretty good.
Outcome overall, though on the revenue.
[laughter].
We did have a good outcome.
Although keep in mind that.
Spending on when new customers come in the quarter. They may not be much revenue in the quarter, but then they build over time.
Approximately 30% of our of our of our business sales Hum through some channel that I would consider face to face, which means there's there's field activities going on in some form.
So it's.
30%.
On a trip or is it fair to say the east from over delivered another area [laughter], where they read the overall.
[noise] [noise] <unk>, we did well in certain areas in fact, our inbound and direct sales were a little stronger.
But.
Not enough to to make a big point of it.
[noise], maybe just real quick.
You know are you see obviously.
No post Kobe that teaches the since the inception.
Hello Hello.
There seems to benefit some of that well behavior.
Well this channel.
You know unopposed Covance world where.
So it's also the [noise].
Oh.
Kevin transitional yeah.
Well I apologize I couldn't get that from you. There was some background noise can you just ask it again I apologize, yes of course distress. Just you know how are you folks thinking about that business model work scope at 19, no. It feels like it could be in a position.
The benefit.
The other entities coming out of close so so depressing those who think about honestly.
Yeah.
Oh, I think we're well placed posts covert 19 or solutions are strong and I think over 19 is woke up woken up a lot of businesses to the frailty or the limitations of the existing solutions they've had.
And let me take a very small.
Petty example, but if you're a restaurant and now you have to do all your business through you know phone orders and pick up you need a phone system, that's going to handle that and so I think that or it's an opportunity for us to tell people about what more we can do for them and maybe get them.
A little more interested in looking at that switching for reasons other than just you know.
Cost savings per se. So I think it's I think it's it's I think it's going to help us as we think about coming outposts cobot I would say for mid sized and larger businesses.
You know the move to work from home on a lot of those companies have kind of hunkered down a little bit a these are companies that make more strategic decisions. It's more of a sell to an I.T. professional I think that.
If anything there'll be some potentially some pent up demand as people come back to work, we'll see I.
I don't but but but you know at the moment those companies aren't making big fundamental new decisions. They they may be augmenting what they have are getting some extra users for work from home, but they're not going to try to make bigger changes right at the moment. So.
Yeah, I think that post coded will be building back up our sales team so little bit as we go through that that'll be a measured case for us and there will be able to take advantage of that [noise].
Situation [noise].
Thank you.
Your next question is from Matt Stotler.
William Blair. Please go ahead your line is open.
Hi, guys. Thank you for taking my questions a solid results good to see that even the challenging environment I guess first like to maybe double click on the Kogan impact you said, obviously, some some push outs and the.
No deals that require face to face interaction, we love to maybe delineate between.
What you're seeing and then how this environment is impacting conversations with existing customers or what you saw deals that were in process and then overall new business given it seems like outside of face to face situations, because it's actually was pretty good and the first quarter.
Yeah, let me see if I can elaborate a little bit.
You know a lot of or a lot of course, there's lot of the smaller businesses. We serve still are still maybe close to actually are in work from home mode, but we are finding a in the market that they're very interested in saving money, they're very interested in our mobile apps or virtual receptionist, our remote flexibility.
In our current closing ratios with the businesses were talking to are in line, we're not seeing any increase resistance to change in fact, if anything we're seeing a.
Recognition that that Theres better solutions out there.
And I already mentioned in the previous comment that I think the larger size business, a little bit hunkered down and just getting through these times as they then reevaluate where they where they go from here, there's no doubt that that the covance situations put a spotlight on.
A work from home capabilities and I don't know, how the nation's gonna go but out here in California.
Some big companies like Google and Facebook, and and others have announced that people are going to continue to work from home for the balance of this year and maybe even longer. So we're seeing things change and you know I cloud phone service that can be flexible and frankly integrate.
We ended the way Youre business needs to operate which is where we think we did we are most distinctive I I think that it's just even more valuable as we look forward you know in terms of deals. We are doing I don't think any pushed out per se.
We tend to have for most of the business. We do we tend to have a relatively fast sales cycle.
It's the a enterprise deals that tend to be a longer in nature and that's a smaller portion of our business today.
But we're.
You know I will say in terms of building channel one of our goals. This year is to strengthen our sales through.
Channel partners little bit harder to build that when you can't win conferences conferences get get get shut down and you can't go out to meet with channel partners and really you know tell your story that way, but even there were doing the best we can and I'm sure that will turn around so.
I think.
Yeah, I think that pretty much lays it out if that's helpful. It Matt. This is Rob if I may just add one other comment that it over the last couple of years the ability they diversify its channels right. We have vars be a V centers. We have retailers you have inbound we do lot of marketing activities. So that also gives us not up.
Then strength that we can deal with issues shocked them and long term and obviously, we are going is to continue to building.
More and more channels and more logged in channels as Eric said, but we are pretty happy with the diversification of us incentives so far.
Right now it's very helpful. Thank you.
Just one more for me I would love to get some updated thoughts and the competitive landscape, especially in the current environment.
We've heard a intermediate to deal with any see recently and we've been hearing more on it I'll pass it would love to get your thoughts on those players and what else you're seeing on the market Theres any change. Thank you.
Yeah, I don't think Theres any.
Fundamental change we go up against.
These types of companies you know depending on on the users' needs in the channel were in some some companies have chosen to give away video conferencing for free is a way to maybe expand recognition a little bit that's something we've not done although we did as I said in early on.
We did modernize their video conferencing for our users on the enterprise side to make little a little stronger that's something we're doing generally on with our enterprise solution.
You know a.
Microsoft.
Announced a.
A solution force or took one step further and their solutions for smaller size businesses, but what they define a smaller is still pretty large and I can tell you having looked at that solution. It. It's its an intricate product to set up in U.S. So it's not something for the.
A lot of the channels that where we are addressing.
And I don't know that theres much else to particularly particularly mentioned.
This is very helpful. Thanks for taking my questions.
Sure.
Your next question is from Joel Good win JMP Securities. Please go ahead. Your line is open.
Thank you for taking my question that everyone's well just just with regards to.
The largest 20000 she deal that was close last year I mean is there any other.
Any other potential opportunities out there in the pipeline currently.
[music].
HM Yeah, I can't really talk about pending deals per se the opportunity with that same large can customer. This year is there to have another very significant increase.
We have set out this year too.
Secure more larger sized customers and I think we're off to good start on that.
We think we have a great solution for larger companies with a lot of distributed locations typically when they need back enough backup internet in those locations and so that's one area of strategic focus for US. If you will and there are companies were talking too in that regard.
And then a in general we're able to garner.
Opportunity with larger sized companies when they have a business process are in need that's not well fulfilled by what they have today.
And particularly if they need some customization or some flexibility in the way the solution works for them and you know we've talked about our enterprise solution is being very epi based and the ability to be different for every single user on or multi tenant platform.
Based on how we customize it for them and that's that's a real advantage when the customer has a need so.
That's how we that's that's how we see it looking forward and.
Yeah.
That's responsive.
Yeah that was helpful. Thank you and then just <unk> expansion outside of North America.
As a large opportunity kind of beyond.
Justin customer.
I do for us as a business.
It's fun to have a little history here, maybe it's fun you know we first got started in.
Internationally with a we work in a variety of locations and that drove us to re architect our our office solution in particular to be able to operate it you know in.
More easily in other countries.
And.
I think with this customer will take the next step, but it will be our goal to to launch more generally than just with specific specific customers.
Great. Thank you.
Your next question is from Brian Kinstlinger Alliance Global Partners. Please go ahead. Your line is open.
Great. Thanks, so much I'm wondering okay. Two follow ups with questions that have been aspect in changing the competitive landscape, namely Ringcentral and recently came out with 1999 price point, it's similar to yours do you believe this has any impact on your sales going forward and how often are customers inquiring about the difference between.
And your 1999 per month plan versus damaged in your and your discussion you know new business opportunities.
Yeah.
Yeah, we have seen a little bit more.
Price competitiveness from certain players you don't always get everything and you don't always get it except with a one year contract or or other constraints.
And to be honest with you it's only a minority of the time that we see them in the marketplace.
Our our solution at that level at that price point is designed to be really easy to set up and use and its curated to be just two other business needs without further complexity.
And you know I think Thats why were ranked number one by users themselves as the best solution available and it's why we get so much of our business through referrals. So yeah, we're gonna have competition, but I don't think.
We're not seeing.
Particular issue with with others trying to beat us on price, but let me say that.
Great.
My follow up is in terms on the large customer and.
The ramp that you're expecting should then have much more of an impact on 2021 being a revenue catalyst or is that it or we may not be at the end of 2020. Thank you.
Brian This is Ravi yeah. Once we have the PEO see done and.
And at the installed starting to happen, even see some and you'll see some positive impact in fiscal 2001, obviously they are more binary so it's very hard to predict which month in which quarter. They will have a bunch, but then impact but the impact on I might add will be more in fiscal 2002, given when I put in.
And we installed.
Even thousands of users in the second half of this year the biggest impact will be in the year after but there could be also some install revenue are some impact on the amount also I am optimistic that people see some.
Some growth from this large customer in the second half, but since his binary obviously, we want to be more caution caution or any of our it.
Great. Thanks, so much guy.
Your next question from Matthew Harrigan of Benchmark. Please go ahead. Your line is open.
Oh, Thank you I apologize if these are two relatively.
My questions, but when you look at the Internet capability.
Max recognizing that.
Marketing is different than you have to maintain the.
Business perception would there be any color introducing that also is appropriate price point as a higher in residential products and then secondly, the second question, though is there any thought for the progress on the voice recognition size of inclusive boys. If you guys in your your product suite a is that.
As a differentiator.
I realize it's apparent that general questions, but I was interested thank you. Thanks for taking my questions.
No happy to talk and thank you. Thank you.
I I could see our our houma connect being used in certain homeowner home situations, particularly when you have a home office and it really dedicated need we do offer today, something we called Telo Fourg, which is a fourg tower married up with our tallow home.
Home.
Phone solution and that is targeted at the residential space. It's not it's not as high powered or is it was capable was as when we connect but it's just seeing product that we launched a little while ago and and continues to build for us. So so we do have we do have a a capability there I will take a minute to the mentioned that.
We designed it to connect in a modular way that when the time comes it will not be difficult for us to put a different modem in it and move it up to five G.
And.
We are looking forward with this product as well as as throughput speeds and capabilities developed in the networks.
We also designed it with continuous voiced by the way, which is something we've.
Apply for a patent on where if your voice call drops on your main Internet your backup internet through through the wireless will immediately pickup the call with no with no Miss and that's a very nice feature to for businesses have to be very sure of not losing customers.
In terms of.
Boy <unk> wise, its not our strategy today too.
Expose a p. eyes and targeted developer type community, but it is our strategy for larger customers to work with <unk> as we have internally to be able to customize for the customer and so it's it's kind of a a solution approach to the market all in one yeah.
And Oh, we think that's we think thats powerful we can do a lot with it and frankly, our largest customer the when we've talked a lot about we wouldn't have that customer if we hadn't done something special with whom enterprise and then integrated it with whom office. So that could have a combined solution that does something just what they need so we kind of do.
Doing what use sort of I think talking about today, but we're doing it cause an all in one solution as a company.
Thank you Sir.
Thank you.
I guess to ask a question. Please press star one on your telephone keypad.
There are no further questions at this time I will turn the call over to the presenters for closing remarks.
Thank you. We appreciate all of your time today, we're working hard to Duma and Oh, we do hope everyone out there is staying safe and you know that we get through these challenges of the times quickly and can move forward because we're excited about what we're doing with us.
Strategy. Thank you everyone.
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