Q2 2020 Digimarc Corp Earnings Call
Ladies and gentlemen, this is the operator today's conference is scheduled to begin at momentarily until that time Youre lines will again be placed on music hold thank you for your patience.
[music].
Good afternoon, and thank you for participating in today's conference call now I will turn the call over to chairman and CEO of Digimarc Mr. Bruce Davis. Please proceed sir.
Thank you good afternoon.
Them door conference call Charles Burkert see oppose with me.
On the call today will review Q2 financial results discuss significant business developments and working conditions.
But an update on progress and execution strategy.
Most of these prepared remarks in Investor Relations section of our website and will archived this webcast. There later.
Please note that we may make certain forward looking statements on this call. The prepared remarks, we filed with the FCC posted on our website under the heading safe Harbor statement regarding revenue recognition matters results of operations investments initiatives perspectives on business partners customers prospects industry trends are gross renters.
We also will discuss from time to find information provided to us by partners and actual or potential customers.
We are providing this information as we understand it was represented to US we do not verify known about for such information all such statements of information are subject to many assumptions risks uncertainties and changes in circumstances any assumptions, we feel we share about future performance represented point in time most of my actual results may vary materially from those expressed or implied by such.
[laughter], we expressly disclaim any obligation to revise or update statements or other information that we provide during this call to reflect events or circumstances that may arise not the date of this conference call.
More information about risk factors that may cause actual results to differ from expectations. Please see the company's filings with the FCC, including the form 10-Q that we expect to file shortly.
He links included in our prepared remarks are provider for general information and context, only the content references not incorporated by reference to they should not considered part of this presentation, we did not verify and or about for such information Charles will know coming on or financial results, then I'll discuss significant business developments market conditions and execution of strategy Charles.
Thanks, Bruce good afternoon, everyone.
Revenue for the second quarter was 6.5 million, an increase of 300000 or 5% from Q2 last year.
Service revenue increased 9% due to growth in services provided to government and retail customers.
Subscription revenue was flat year over year subscription revenue would have increased 250000, if not for the renegotiated contracts with our supplier partner that we discussed on our Q1 earnings call.
Revenue from retail was up 10% to 1.6 million driven by growth in service revenue.
Revenue from government was up 5% to 4.1 million also driven by growth in service revenue while revenue from media was essentially flat at 900000.
Retail bookings in Q2 were 1.1 million down from 1.8 million in Q2 last year.
Looking thinking Q2 last year included a large multiyear committed contract which accounts for most of the variance.
Workings in Q2. This year included two notable developments.
First we generated our first two bookings for solutions using our variable date Accreting software one for a tree stability use case and the other for brand, but then occasion use case.
While these two bookings contributed only tens of thousands to our reported Q2 bookings we anticipate they will become larger contributors to bookings in the second half of this year and thereafter.
Well with opportunities include variable piece to us based on units produced versus an upfront fixed fee, which mitigates amounts included in bookings.
These are partner led initiatives whereby charging per unit is preferred to align our cost with their existing business models.
I anticipate you'll see more opportunities like these in the coming quarters as our business partners are becoming more engaged in selling digimarc enabled solutions.
Just to use cases are also repeatable amongst the large base of perspective customers.
Second we closed our first for paid contracts for recycling use cases during the quarter.
To the contracts provided for enhancement of product packaging, one for consulting on optimizing the reading that environment for plastic sortation.
And the other on enhancing plastic packaging moulds with Digimarc barcode.
The bookings impacted these four contracts Q2 was not significant as the fees are variable or dependent upon meeting milestones, but we anticipate that will grow in significance going forward.
These contracts along with other opportunities we are seeing them. The sales pipeline are encouraging signs of real interest and investing in recycling use cases.
Gross margin for the quarter was 67% up from 65% last year, largely driven by an increase in service margins.
Service margins are 59% up from 53% last year, primarily due to a favorable mix in billable expenses with higher labor and look lower non labor expenses.
Labor expenses have a much higher margin the non labor expenses in our service contracts.
Subscription revenue was unchanged at 80%.
Operating expenses were 11.9 million a decrease of 2% from Q2 last year, mainly due to lower travel consulting and marketing costs.
Operating expenses were down sequentially from last quarter, dropping 1.1 million as we successfully executed the cost cutting measures that we shared with you on the last earnings call.
Expenses ended up even lower than the 12 to 12.5 million range, we guided to as we identified additional expense reduction opportunities in non essential areas.
We are further decreasing spending by virtue of some corporate restructuring that is underway to improve our execution strategy.
These changes will further reduce our operating expenses by reducing headcount by approximately 7%.
We expect to incur severance costs of 900000 during Q3, consisting of 400000 of cash based severance and 500000 of stock based severance.
Annual operating costs are expected to decreased 2.3 million as a result at these reductions consisting of 2.1 million of cash based compensation and 200000 or stock based compensation.
We anticipate operating expenses in third quarter to be between 12.2 million and 12.6 million, which includes a 900000 of nonrecurring severance costs I just mentioned.
We expect cash usage in the third quarter to be between 6.5, and 7.5 million, including 400000 of nonrecurring cash based sevens.
We will continue to closely monitor our product and financial markets and our sales pipeline in relation to our working capital on hand, managing our rate of investment allocation of resources.
Net loss for Q2 was lower than last year at 7.5 million were 62 cents per diluted share versus a net loss of 7.9 million or 68 cents per diluted share in the second quarter last year.
We used 100000 of cash and investments during Q2, well below the low end of the range of one to 2 million, we provided on our last earnings call.
Our cash usage was lower than anticipated as we reduced in deferred spending where we could as well as restructured some vendor contracts.
As noted on our Q1 earnings call, we received the $5 million Paycheck protection program loan in April.
We spent the entire amount on qualified expenses as defined by the Paycheck protection program and plan to file for forgiveness of the entire 5 million dollar loan once the portal to apply for forgiveness is available.
Once we file the bank has 60 days to review our application and then the small business administration has 90 days to approve our application for forgiveness.
We ended the quarter were $30.5 million in cash and investments.
We did not raise any capital under the ATM program during the second quarter.
We filed a new form S. Three registration statement with the FCC in June for $100 million as our prior registration statement was expiring.
Old registration statement had 49 million remaining for future future issuance that has now expired.
We continue to believe having a registration statement on file with the S&P, it's prudent to allow us maximum financial flexibility.
We plan to follow prospectus supplement to our form S. Three registration statements soon that will allow us to continue to utilize the ATM program, which has 9 million available for future issuance.
This filing is currently in administrative requirement at the ATM program was initiated on what is now unexpired registration statement.
Exercise customary care in determining the best course of action regarding the remainder of the ATM authorization.
We've also reengaged on strategic financing in parallel.
For further discussion of our financial results and risks and prospects for business. Please see our form 10-Q that we expect to fall shortly.
I'll now provide his comments on significant business developments market conditions and execution strategy.
Thanks Charles.
We had a great start to the year and then came coven 19.
The pandemic continues to cast a shadow on our economy and society or company has responded as well as the Ken to the pandemic crisis so far.
First stage of response focused on health and safety of our employees. The next stage focused on productivity of an entirely remote workforce running tools training and support to optimize the workstreams.
Most stages of been executed well.
In parallel we continue to grow revenues reduced expenses unsecured interim financing via the paycheck protection program.
Loan gave us time to better assess the impact of the pandemic on our business before making significant changes.
In making that assessment, we determined that we can realign and streamline our operations to better support continuing development of our target markets led a maturation of our platform and growth of the partner ecosystem.
We're restructuring certain areas operations to improve productivity communication time to market and support for sales and partners.
These changes better align engineering product management client services and sales with the principal components of our platform.
My clear ownership and product development of our contributions to solutions addressing the needs of identified customers and prospects and simplify the relationship between sales and product teams.
Changes will further reduce the company's operating expense run rate.
We're determined to run as efficiently as possible in this challenging environment, taking advantage of efficiencies as our platform matures.
As I noted on last call I believe the health prices expands it makes more of this long term benefits of our platform for retailers and brand owners.
But we're also finding that creek friction in sales for both of US both us and our partners.
We felt the effects in Q2 was we experienced delays and running pilots and closing deals affecting several important important in store programs and recycling initiatives.
As we often note bookings will tend to be lumpy.
However, we are mindful that uncertainties in the general economy due to the pandemic may inspired delays a more enterprise bookings and other short term measures of performance.
Grocery retailers have been working around the clock on urgent accommodations to implications and health crisis. We are assuming that these purchases will persist persist for a while contributing to friction in closing new retail business.
And a change in mix of fixed versus variable contracts due to the circumstances for at least the remainder of 2020.
The crisis is causing everyone to be cautious about long term commitments.
The most obvious place where this will be evident is in bookings were a preference for pay as you go will diminish the value of bookings as a leading indicator of revenues until the crisis passes.
Nonetheless, we will continue to report this important measure of performance.
In retail, we're continuing to scale the Walmart private brand program.
Entered into additional statements of work regarding and store marketing and anticipate enhancing the annual toy catalog again this year.
Lots of thermal levels has been paused by Walmart due to the need to focus on means to accommodate effects of the pandemic.
There are ongoing discussions with other major retailers all of whom are doing their best to manage near term changes required to operate safely and efficiently.
Solutions based on our platform take time for about an excellent benefits more urgent matters are taking priority for the time being.
I noted in the last call that we were witnessing increases in both demand and deferrals, reflecting a sense of urgency among some prospects and distraction from other priorities for others. This continued in Q2.
With the friction in retail noted above on the other hand, we witnessed a meaningful uptick in demand among brand owners seeking improvements in supply chain management, particularly involving serialization.
Serialization is emerging as a significant new source of demand new approaches for applying digimarc post print, including laser ablation and merkur code or over printing, we're opening doors for digimarc, allowing us to leapfrog the slowly evolving digital printing market.
As previously govern the pace of adoption of our platform for serialization.
The primary solutions, we enabler trees ability brand protection in food safety.
We have several actual impending customer engagements with prominent brand owners or work with initial customers indicates our superiority over QR codes data matrix and just 128 in first test read rates lower incomes of faster scan speeds.
We're also bring your experience and security printing to bear on the design of counterfeit deterrent strategies for customers.
We have discussed previously the strong evidence we have of an important role to play in recycling and sustainability more generally it as a massive long term opportunity from the company.
The not we must crack is funding really market development. We finally saw some encouraging signs of the starting to happen during Q2 with the bookings that Charles mentioned earlier.
Plastic is going to be around for a long time.
It's a very useful product with the unfortunate character of not being very environmentally friendly.
Just a plastic has expanded dramatically with the pandemic aggravating damage to our oceans waterways landfills atmosphere foods sources and drinking water.
Crisis is real and getting worse.
Economic calculus is becoming clear to us.
The glut of cheap oil undermines the economics of proposed solutions.
However, the health and quality of life costs are large enough for government intervene and counterbalanced market economics. The pandemic is creating heightened concern among many consumers about health and safety.
Contributing additional motivation for brands to adopt mitigation strategies.
We are witnessing increased pressure and brand orders from both new sources of influence.
Trials last year demonstrated that enhancing plastic packaging with Digimarc barcode holds promise to greatly improve the range and accuracy of identification of materials and sorting recycling facilities industry coalesced around the formation of Holy Grail 2.0 to study the path to commercial is well positioned at scale progress was slow.
During the first half the year 2020 by operational budget pressures triggered by the pandemic.
Onset of the health crisis during Q1 effected progress some funding for enhancement of packaging and detection investments by dual systems companies.
Merck's and manufacturers. It also slowed the launch pulling rail to Dido.
There is good news of late.
The pace is picking up we are working with eight global brands, so far to enhance packaging in support of recycling that sustainability initiatives.
CNG as publicly announced its moving forward with products and several other brands for initial distribution in Germany in the UK. We expect more Cpgs will go lives than 2020, we're also collaborating with the with two of the largest global manufacturers of high speed sortation equipment, which together provide over 80% of the lines in recycling facilities.
Globally.
And we are in planning.
Development prototype detection systems for use in industrial trials.
Importantly, Holy Grail to formed in July we expect more news about those later this year.
We're engaged with government industry in three countries launch Golden thread projects, which are intended to provide commercialization models for brands retailers manufactures dual system, operator sorting facilities and other ecosystem players.
These proposed projects into tested developed strategies for better Recyclability collection customer education, sortation and recovery to enable true circularity.
Operational and funding problems largely driven by the pandemic led to a deferral of two funded projects. We had anticipated would start in Q2.
We are hopeful for more meaningful signs of progress in Q3.
We are mid progress opening a second front in North America.
Early promising signs include an invitation from the association of plastic recyclers to join a new committee on material cover facility operations.
Support from the consumer goods form plastic lease coalition of action. The membership that includes more than 24 brands and retailers from across the globe include Walmart Mars Merck cocoa Pepsico.
Nestle PNG GSK Henkel, Unilever, JJ, Colgate monopolies and so forth.
The PPP loan from the federal government served its intended purpose, giving us time to assess the impact of the pandemic and adapt to a slickly effects.
Given the important role that our platform can play in health safety and efficient retail in supply chain I expect that the pandemic will change shopping in ways that will encourage adoption as we help retailers and consumer brand owners adapt to the new normal we're reliable efficient auto notification theres a cornerstone.
In the short term health and economic uncertainties make judging the pace of change difficult.
We are managing our working capital carefully encouraging in facilitating extraordinary efforts by our team.
And doing our best to articulate and deliver the extraordinary value of our platform to customers and suppliers.
Secular trends in digital transformation of businesses and increasing evidence of the need to move beyond the you PC have been accentuated by the pandemic.
Our long term prospects brighter than ever.
The key takeaways from the core our revenues an EPS exceeded analysts' estimates for the second quarter in a row.
We received a paycheck protection loan for $5 million and will be applying for forgiveness of the full amount.
Changing cash was less than $100000.
We made significant organizational changes to improve performance.
The annual operating costs are expected to decreased by $2.3 million as a result of these changes.
The key market themes were observing our sustainability supply chain visibility brand protection.
So while real retail is scrambling to deal with the grown the virus demand for brand owners is increasing.
Thank you for your support of our mission and confidence in our ability to achieve that we wish you all the best in these difficult times in closing I'd like to point out the.
The Jr.
Head of Investor Relations is getting settled in.
With his help we have revamp the Investor Relations section of our website. Please check it out we welcome your feedback.
For the prepared remarks for today now we'll open the call to investors.
Thank you Sir to ask your question you will need to press star one on your telephone to withdraw your question press the pound key.
Please standby will begin to allocate a day roster.
And again that is star one if you wish to ask a question at this time.
You do you have a question in queue from Jeff Bernstein talent.
Hey, Bruce and Charles.
A couple of questions for you if one could could you just go back over you talked about.
Serialization.
Demand and you mentioned some technology. There can you just go back over what that is exactly and what's happening there.
Yes so.
Serialization has always been believed to be of key differentiator of our platform in relation to alternative data carriers, but the implementation was painted by the progress of digital printing in relation to traditional offset printing.
And so we're kind of gated by that well in the past year. We have now reached the stage of being able to deliver serialization through what's known as industrial inkjet or marker coder technology.
And so.
We now can deliver serialization very large bird large numbers much larger than those that would be economically feasible using.
The digital presses.
Second area of serialization as is our work is lasers and laser or local laser ablation are laser etching.
That is an amazing area of development not only because of its ability to deliver serialization.
But also the promise perhaps.
Of label Us containers, plastic containers, which would reduce contaminants and dramatically reduce the cost of production of those items in a way that would be consistent we think with the evolving consumer preference for.
Allowing the planet to remain habitable.
So we're working with some suppliers and customers.
Laser engraving of plastic materials. We also have a project we believe will begin here in Q3.
That does not involve plastic but is involving the use of lasers for serialization of products.
Gotcha and have you been able to prove out the laser action on plastic yet or is that still concept.
It's more than a concept, but I wouldn't call it.
Proven out in terms of commercialization, but it works.
At this stage of our of our research, we're very confident about the ability to impart the signal the question becomes.
The speed at which it can be done.
And and so we're in that stage of research and development at this point with some.
Highly qualified very large suppliers.
No what they're doing a doing great work, our team's doing great work.
And I remain optimistic that we're going to.
Fine to.
Rather amazing implementation of the platform in this work.
Gotcha, Okay, and then just on the retail side understandably.
Moving to low touch retail as you described it last quarter that that that is now being talked about.
Kind of everywhere.
You look.
It does seem like a lot of the trends in low touch would be very positive.
For you so how do you kind of see after the immediate disruption.
This is playing out as as we go forward.
I think it's great for us Jeff.
We.
Can articulate a very powerful argument for improving not only efficiency, but now safety of shopping and safety is.
Become an important differentiation for retailers several.
The leading retailers Ceos have talked about that on their most recent conference calls the people are a bit fearful an uncomfortable going to stores. So they're trying to figure out how to create a safer environment, but it's also more complex environment, because creating a safer environment also means that there other things going on the stores that weren't going on to the same level, you've probably witness the surge.
Surgeon Instacart.
Activity and then of course.
All of the major retailers have been working on order from home and pick up.
At the curve or haven't delivered to your home and that means that store associates are going to be in the stores, making the picks.
And for stores, who are up 24 hours of course.
They are going to be naturally interfering with customers.
But there is much more work to be done in keeping the stores safe and clean and organized as on that was previously as well so it's a very difficult retail environment today.
As they try to find.
A new normal and so in the new normal we're very confident that there's going to be a big movement from cashier assisted to self checkout and then self checkout, both from the store and mobile.
And then.
A large shift from near zero.
To some significant percentage of total sales being done through associate or contract shopper.
Activities rather than direct.
Nothing at the shelf by consumers. So there are lot a lot of changes going on all of them I consider favorable to us because we make all of that work better.
And if the to robust.
Become part of the efficiency solution out there and trials in a number of places than we make the robots work better too and we also think inventory management better. So so theres. So many ways in which we can help the new retail again its footing the only hold up there really is the competition with urgent.
Activities.
And Trust me there are many urgent ongoing urgent activities that will settle down.
And and so I don't know how long Alaska's I don't know what goes on with the pandemic, but but it will it will get resolved them we will.
Gain our proper place as a cornerstone of the new retail environments.
And it seems like there's a lot of opportunities for guys like zebra our Honeywell other.
In store technology type companies the robot guys.
Are those folks.
On track to be able to offer this stuff.
Oh, yes in a in organized fashion.
As soon as retailers can focus on it.
LIBOR as a as an excellent partner of ours as our all the other major scanner vendors.
And.
They have a robot offering.
We have done preliminary work with a number of robot companies. So we know what they're up to and when the.
Economics justify we're happy to to participate.
And ultimately the robot Revolution.
Flourish as if it will.
Another important dimension, though.
Of change.
In retail is the importance of mobile shopping and Europe, there's a dedicated models.
Shopping with devices mobile devices pickup from the store, but in the US there's a growing believes that the people will want to use their their smartphones more or shopping and there's a bunch of work that needs to be done to do that.
One of the problems.
We helped overcome uniquely.
It is how do you how do you identify the package for the purchase and picking that up and turning around way holding phone in your arms and many of the grocery shoppers are women they might have a person or child in their arms that it gets really complicated really fast we make it uncomplicated. So I think I think that we will find.
Greater receptivity with Apple and Google and and the Google Oems that we have previously.
Because of the changes in nature of shopping that are underway.
Okay, all right I'm going to ask the one more and I'll get back in queue, let somebody else asked.
You talked about the brands being more motivated right now having the ability to to execute now more than the retailers and it seems as if the store brands have taken a lot of share.
Because the consumers' desires just to stock up and not really carrying so much about what the item is but that is available.
The brands kind of have to win back back share here somehow are they more engaged.
Because of that or or how do you read that.
I think there's an influence so so sitting in this use of the global brand. The competition from private brands has been intends and is getting more serious and the consumers are becoming more concerned about health and safety and frankly about social matters given the enormous impact.
Act of Black labs matter movement in the United States and so.
I think and it's just a theory, but but I was a bit surprised by the this the surgeon interest in supply chain among.
National brands, I think they're worried about having problems. They they went too serious issues of disruption supply chain due to the pandemic just because of staffing problems, but they don't want to have health problems. They don't want to have product that has identified is coming from a slave labor or or some of overseas.
Our C or whatever it might be because damage to the brand now can have more serious consequences given up the alternative may not be another national brand and maybe the private brand.
And so theres this attention right now great tension going on between the retailers as they make their stores safe and inviting places to to shop, and allowing for flexibility in how people shop, thus building greater brand loyalty with their shoppers.
How do you how do you market effectively international brands These days.
So I think the national brands are in during a painful wakeup call right now I'm trying to figure out how they're going to maintain competitiveness in the changing landscape retail and so supply chain is an area, where they have really become enlightened and another of influence of the pandemic I think in the sense of the constant refrain about you.
Can't make good decisions were good data, there's a lot of areas of supply chain.
That would benefit from increased visibility that we can provide.
That's great thanks very much.
Yes.
As a reminder, if he would like to ask your question at this time simply press Star then the number one on your telephone keypad.
Your next question from Jeff Van Rhee with Craig Hallum.
Hi, guys. This is pretty on for Jeff.
I guess first off.
The trick ability in the authentication.
Case that.
Are going to be a pay by unit could you just I guess is any unit economics chair or I guess, how how big do you think those contracts could be I.
I guess near term and over the longer term.
You want to us on Charles.
Sure I can handle that so in this quarter as I said, they were kind of tens of thousands.
Level.
They start looking out over more like a 12 month type horizon I.
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Well into six figure kind of deals what potentially full scale to the even larger than that so these are big potential deals with lots of lots of volume.
They are starting with page to go model I think over time as they build out the scale they potentially may want to negotiate annual fee, but right now given their business models.
And that pay as you go.
It's working well for them.
Got it and then.
Touched a lot on the retail environment, obviously, the challenges they're going through on recycling I guess encouraging to see that the first couple deals signed there what's been the impact.
Sort of to the whole Holy Grail and all the progress you guys were making there with respect to covert and disruption.
Well in the in the first quarter and continuing into the second quarter.
There was sort of obviously.
General disruption affecting everybody that affected everybody in that world as well as elsewhere.
And so it impeded some of the organizational activities and some of the funding.
That we thought was nearly right.
And so what has happened now on so with the plays the past six or eight weeks or so was that things now our perking up.
That there is a sense of understanding the environment better understanding how.
To manage workflows.
Suppliers that are involved.
Growing interest as I said among the national brands.
To make sure that they will remain competitive but being a trustworthy brand. So trustworthiness encompasses.
Sustainability and social awareness and so I think these things are driving everybody it could get off the diamond get going but also.
The the Holy Grail initiative is has now been form that'll be a public announcement from relevant people a little later in the year here, but but they are getting knowing now of the you know where they want to go and so we're really excited actually about the progress of the last month or or so.
In that area.
Great that's it for me thanks.
Yes.
You have an additional question in queue from and Jeff Bernstein with Cowen.
Bruce you mentioned reengaging on the strategic financing.
Can you just give a little more color.
At that.
Yes so.
It doesn't a bit to the restructuring that we alluded to.
During the call today, we have continued to make great strides in.
Maturation of our platform.
So as we went out.
Late last year and talk to some companies I don't think we were quite as clear as we needed to be about the nature of the platform and our ability to deliver improves of delivery.
And so all of those things.
Our concerns that we are addressing the made great progress on and so we're we're circling back around.
To to some of the folks that we talked too.
We've talked to them about our progress and them we are targeting some other.
Potential investors that we hadn't yet approach. So we're going both ways were wrong mark around to the early discussions to demonstrate our progress and then we're addressing some new opportunities and as again as the world real changes fairly dramatically here in the first half of 2020.
The landscape of opportunity, maybe they'd be broader than we had thought previously because I add does I'd put on my list and in May of last year a.
Pretty good idea, where I wanted to go but now there are some interesting things going on that could broaden the the landscape of opportunity for us. So so we are back.
I would say on the road.
Exactly right expression anymore.
Second the air.
No.
Virtually.
Gotcha, Okay, and then can you just talk about.
Yes, I guess is furthest along.
The customers at retail.
I think you've talked about really kind of focusing.
On using them to demonstrate that the depth of.
The the effectiveness of the product and Im wondering how thats going and particularly with regard to low touch shopping.
If theres anything to be learned from the wegmans experience so far.
The.
Efforts to too.
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Move along with Wegmans had been.
Struggle.
In the first couple of quarters here of this year.
I have been focused on other things.
And.
So and we.
Our table to go out and visit them very effectively.
And so.
Thats been going slow.
And I think.
Their focus and the focus frankly, the other retailers is appropriate they've been buying plexiglass them.
Non violent the floors and figured I'd be home delivery and there's just a lot of stuff going on lot of urgent changes where the effect on operations is more profound in the media done than ours.
And so that's that's where we are thinking I would say that as a general state and remote retail, but particularly with respect to wegmans were not as far as long as I had hoped would would be.
Okay, great. Thank you.
No.
And again that is star one if you would like to ask your question at this time.
And you do have a question in queue from Steven.
Tomkins with Oppenheimer.
Yes, I address.
I believe last quarter, you mentioned that you were working with seven at the top 11 global consumer brands.
And yeah, I think you mentioned that your update now.
I guess I think we did miss need in the.
Although I haven't gone back to check the my diagram that shows everybody, but yes, I believe it's pretty much everybody at this point I think we're pretty close to doing business long.
Okay.
Would you say, you're getting revenue recognition from most of them or how's that working there.
Could you say revenue recognition.
Are you seeing revenue from the top consumer brands.
Yes.
Okay, Yes, we need hurdle that we need to gross revenues, yes, yes, all of our work in.
In the.
Recycling sustainability areas is funded.
Got you and the other question I had was regarding Japan do you have any updates for now.
Charles Let me turn that will already have a Charles Charles manages our our work in Japan directly.
Yes, so were.
And we're working hard to work on the implementation with retailers. There. We've got a couple of projects that are going on with some brands, but nothing quite yet where theres.
Submission details I'd mentioned last quarter.
Had a pilot going look on large logistics company. There that is continuing and we're trying to leverage that relationship into some other opportunities. Once those opportunities are far enough. Along then I'll provide more detailed disclosure around them, but they're just not at the point yet we're going to start naming names.
Excellent. Thank you very much.
This concludes our question and answer session I would now like to turn the call back over to Bruce Davis, Sir. Please proceed.
Thank you everyone for participating today, we'll look forward to talking to you again soon and please.
Get in touch with the irony any any questions.
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Contact to the appropriate folks we now have the DJ in.
The charge of Investor Relations, we thought that to help anyone on needs more information. So that's it for now thank you and goodbye.
This concludes today's call. Thank you, ladies and gentlemen for joining us today for our presentation you may now disconnect.
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