Q4 2020 Inuvo Inc Earnings Call
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Good day and welcome to the <unk>, Inc, 2020 year end and fourth quarter Financial results Conference call. Today's conference is being recorded at this time I would like to turn the conference over to Valter Pinto managing director of Casey of assays.
T J communications. Please go ahead.
Thank you operator and good afternoon.
I'd like to thank everyone for joining us today for the Hugo of fourth quarter and full year 2020 shareholder update call.
Okay, Yeah of course, Chief Executive Officer, Richard Howell and true Furman.
Financial Officer, Wally Ruiz will be your presenters on the call.
I can start by letting listeners know that as of today now the consequence of the COVID-19 pandemic or all of its in San Jose, California remains closed.
Our little rock facility, we continue to rotate small groups and in the out of the office of voluntary basis in the manner. The permits the potential risk of infection. He went through action colleagues.
I'd also like to remind our shareholders that may cause big problems of the 10-K.
Curious the exchange Commission's evening before we begin I'm going to review the company's Safe Harbor statement statements. In this conference call that are not descriptions of historical facts.
Forward looking statements relating to future events and as such all forward looking statements are made pursuant to the Securities Litigation Reform Act of 1995.
Forward looking statements are subject to risks and uncertainties and actual results may differ materially.
Using this call it wasn't anticipated could enable estimate intend.
Expect believe potential will should project.
The expressions as they relate to near the alright, so let's be forward looking statements that the use of cautioned that all forward looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by you can go up it's part inhibition. All the risks are more fully described many of the public filings.
S Securities and Exchange Commission, which kind of be reviewed at etsy teams that go with that well now like to turn the call over to CEO Richard Howe.
Hey, Thanks, Walter and thanks, everyone for joining us this afternoon for the.
Three months ended December 31, 2020 of your delivered roughly $12 9 million of revenue, which was up 40% sequentially.
And yet another strong quarterly indicator of following Q3 of 21% sequential growth that the business.
To recover following the impacts of COVID-19.
Which for a new low hit us at.
The low point in may of the year.
Of that $12 9 million valid click delivered $9 3 million, which was an increase of 48 per.
Per cent sequentially.
And then turnkey delivered $3 6 million, which was an increase of 22% sequentially.
The old Coke was still down 40% year over year in the quarter. However, the turnkey was up significantly at 34 per cent year over year end of the fourth quarter.
For the full year of the company delivered $44 6 million, which is down roughly 27 per cent year over year, but as we mentioned in the past the balance of the business, which contributed roughly $34 2 million.
Of the annual revenue in 2020 was hardest hit by COVID-19, but as can be seen.
From the third quarter and fourth quarter trajectories in 2020.
Been recovering strongly and barring any unforeseen additional COVID-19 issues.
And 2000 of 'twenty, one we would expect to be roughly back.
That business to its pre Covid 2019 revenue run rate.
Sometime in 'twenty and 'twenty one.
And the turnkey delivered $10 4 million of revenue in the year growing 22% year over year. Despite COVID-19.
We would expect this product lines, the continuous double digit growth rates overall.
The 2000, the 21 for the.
The turnkey in 'twenty 'twenty, we believe COVID-19 effectively constrained the growth rate of the profit.
Both of our product lines serve the marketing and advertising industry. These are pockets.
Excuse me there are pockets within this industry.
Notably like insurance or home refinancing that have continued to do well in spite of Covid and then there's others like travel and entertainment sort of lags.
We expect.
The return to a more predictable market sometime in the second half of 2021 after.
The vaccine find their way into the the population.
[noise] Valley quit gross profit after or traffic acquisition costs was down.
Roughly 35 per cent in 2020, and this is the consequence of the Covid impact on the revenue from that product line.
However, the turnkey gross profit was up almost 90% in.
In 2020.
As a reflection of the steady increase in gross margin that have occurred throughout the year in this part of park.
Adjusted EBITDA in the fourth quarter of 2020 was approximately $340000.
For the full year was the loss of roughly $2 $4 billion.
Now the valves of business has historically been the strong contributor to cash flow and it is an array of category of marketing and advertising business models, where the risk of.
The collections is relatively low and the majority of the payables and the business go out after receivables are collected.
The business is actually up over 100 per cent in December when compared to its low points of.
May in the 2020 year.
Most importantly.
The primary relationships within the business, which are with Google and Yahoo are secure with one of them.
<unk> been renewed in 2020 and the other is in the final signatures the renewal process.
Speak.
The valid click Covid really has offered the company of the opportunity to rethink both the go to market.
And the revenue concentration from the business.
While going through Covid and 2020.
So that we could design a better business to come into 2021 with the business better focused maybe on the future as opposed to the past.
Consequently, we have increased our direct marketing capability within the business, which in turn has provided greater control over our traffic acquisition of allowed us to have a tighter integration with our publishing platform.
And we believe positions the business well as it continues to recover the do so well at higher margins.
Revenue mix within the business has the by design change dramatically in 2020 and.
And we will continue to change into 2021.
As of December 2020 revenue generated within value quake was roughly a third from each of the Google Yahoo, and then a third from the collection of other demand sources.
This compares to December 2019, where Yahoo was <unk> 70 per cent of the revenue of the product line.
So this represents quite a significant day and I believe of a positive diversification change in this business again.
Designed to put the business out of position, where it can scale and scale of higher margins.
In 2021.
And to ensure that the strategies are executed on.
We have a.
Assigned our Chief operating officer.
Direct day to day role in the activities of the business and it's important partnerships.
And so that will be one of his primary responsibilities.
This year.
The market for the services of this business the measures in the tens of billions of dollars annually and as a result.
Never.
Not believed that the with plenty of market share here and there are no issues with respect to the businesses the ability to actually scale.
And ultimately return and and surpassed its pre COVID-19 cash contribution to the enterprise.
And you can't key has continued to deliver outstanding results for clients throughout the.
2020.
We now know in head to head tests against the competition, we are likely to win.
Our job really now is to continue building out of World class sales and account management team around what is truly a unique and proprietary product.
The reason we win is because of our AI creates the audiences.
The near real time that only we know exist.
And therefore, we have an ability of the message those audiences on behalf of our clients.
Before our competitors cant.
I missed the results and better performance for our clients.
We ran a 251 campaigns for clients in 2020.
With approximately 40% of those campaigns coming from new business within the year.
In the fourth quarter, we exceeded our client schools on campaigns by roughly 36%.
Now for the year, we exceeded client goals by 46% on average.
Now since these goals our clients give us are likely based on the performance of our competitors use.
These accomplishments are really a proxy for how much better of the intent key is versus the competition.
Throughout the 2020 year the sales team closed many of the brands across the variety of industry verticals, which itself is a testament to the technology of the ability to identify.
And reach audiences.
Regardless of the product of service being offered by that client.
With the launch of our software the service version of the platform in 2021.
We expanded the market side, so the turnkey by allowing clients who.
We do not require a fully managed service to adopt the cord.
Differentiating components of this platform, which are really the AI modeling and data of components.
Coming out of 2020.
We now have new clients in retail nonprofit automotive.
<unk> pharmaceuticals and tourism.
We did source of record number of Rfps in the third and fourth quarters of 2020, and the pipeline thus far in 2021 looks healthy.
Now of Covid impact remains unknown to us, but typically the first quarter of the new year is our slowest quarter with marketers tend to reassess their budgets for the year in that quarter.
Now since we have not gone through a quarter, where we had a business cycle combined with lagging the impacts of the pandemic. We don't really know how this will impact the distribution of the client media spend throughout the year.
You will recall that the COVID-19 impact last year for renewable really began.
In April and May of the second quarter and if the result, we really have no past experience beyond that to the guidance here.
Technically.
We made a number of major advancements in 2020, and we believe the dispositions as well and was designed to position us well for 2021 and beyond.
The first of these advancements with the launch of our of real time solution.
Now while our AI.
Always able to identify audiences quickly the the infrastructure that supports.
The that AI and the delivery of our clients' ads was.
It was not so.
So what we had to do was we had to significantly improve.
Disconnection between the hardware technology of the software technology and I'm pleased to report that debt.
We can now process up to a staggering one.
<unk> hundred billion transactions per day.
And have the capability to actually act on in market audiences within five minutes of the AI identifying them.
Which we believe is well ahead of any of our competitors.
Our technology was designed from the get go to be anonymous and not dependent necessarily on third party cookies forget for targeting.
Albeit while they remain we will use them I do use them.
In.
2020, we successfully tested and have now deployed the version of the core artificial intelligence engine that does not use those countries and we did not see a material change in the overall performance of the platform.
All of which is good news.
It signals that we are well positioned for any coming changes in privacy as debt situation evolved we expect.
That those changes to the.
<unk> come into play in 2021, but Moreover, probably in 2022.
But either way.
We have our technology in a position of where it can be can work regardless of what occurs there.
And finally in.
In terms of technological advances within the year that were significant.
We were well ahead.
All of our projections.
When we launched the SaaS version of the platform in January of <unk> of this year.
The up through the end of.
Of 2020, we really had been selling the intent key the managed service.
And while this had the benefit of giving us greater control over the campaign since we're running them.
It did limit the market for the sale of the product essentially by excluding sales to prospects, who perhaps wanted to run those campaigns themselves.
This is now no longer the case.
The SaaS version is expected to expand our market potential.
And while doing that it will do it at higher gross margins.
The product was successfully client test of that scale in the fourth quarter of 2020.
And this is the principal reason why we decided to accelerate the launch of the product in 2021 and effectively.
Put it in the bag of our sales people. So they could get out there and start promoting this version of the product alongside the managed service product.
Now before I turn the call over to Wally I also want to address the.
The strategy.
The strategy.
As you all know we now have roughly.
$18 million of cash we have no debt and we have an unused.
Credit facility, we could draw at any time up to $5 million and you know our market capitalization has been hovering somewhere around $200 million.
Strategically our focus.
Is to consider using our strong financial position to accelerate the growth of the turnkey.
As such we have retained an investment banking firm to help us identify qualify.
And hopefully purchase acquisition candidates, including the Pos.
Possibly a digital advertising agencies and consulting firms.
<unk> clients that could benefit from the insights and performance gains.
The existing intensive clients have experienced.
I should note that many of our intent to clients today are in fact themselves digital marketing agencies.
So we've learned a lot about what they do and how they do and we see this as a strong.
Fit where we're acquiring the.
First and foremost clients and don't have a lot of technology type of deal within those acquisitions, it's really more of a client based acquisition strategy.
No not only with the potential acquisitions get of client relationships that we would be expected to grow because of the improved performance, but we believe it would also allow us to eliminate the costs within the.
The acquired business that are related to technology. The technology of the <unk> would replace the result would likely lead.
And an acquisition to increase the margins within that acquired business.
Now interestingly.
At the small scale, we've already proven the model out with a business that we acquired in 2019, albeit it was a small business.
Where we saw in this particular small acquisition both of an improvement in client retention and in margins.
Now with that I'd like to turn the call over to Wally for a more detailed assessment of our financial performance within the quarter Wally.
Thank you rich and good afternoon, everyone.
I will recap the financial results of the fourth quarter fourth quarter of 2020.
As rich mentioned the new.
<unk> reported revenue of $12 $9 billion for the quarter ended December 31 2020.
And this compares to $18 $2 million reported in the fourth quarter of last year or the prior year.
The decrease of this year's revenue is due to lower value click revenue.
During the fourth quarter of this year was $9 $3 billion compared to $15 $5 million from the same quarter of 2019.
The lower valley click revenue was due to reduced advertising budgets associated with the Covid pandemic.
Despite of reported lower year over year revenue, while the clicks recovery began in June following stays low.
The December of 2020, it was up 116% off of that low.
The turnkey revenue was 34% higher of the fourth quarter of this year compared to the same quarter last year.
The the turnkey represents 28% of the overall fourth quarter revenue compared to only 17% of the overall revenue in the fourth quarter of 2019.
The new low gross margins increased in the fourth quarter to 83 per cent compared to 70% from the same quarter last year due primarily to a decision to bring in house historically outsourced campaign delivery of certain fleets with the early click growth improving cost of the correctly the effectiveness.
And the control.
In addition, the turnkey gross margins increased to 45% in the fourth quarter compared to 41% in the prior year contributing to.
The the higher overall gross margin improvement.
Going forward, we expect a turnkey gross margins to continue to improve as we have launched the SaaS version of the intent key.
Margins are expected to be in the neighborhood of 90%.
Operating expenses were $12 $6 million in the fourth quarter of 2020 compared to $14 $1 million the.
Prior year quarter.
The decrease of one kind of half a million dollars.
The largest component of operating expenses marketing costs marketing costs of predominantly traffic acquisition costs associated with all the clip.
The largest expense associated with the value of quick plus platform.
Yeah.
Marketing costs were $8 $3 million in the fourth quarter this year compared to $10 $1 billion.
In the fourth quarter of last year.
The $1 $8 million lower expense this year compared to last year is primarily due to lower valley click revenue as well as two of decision to bring in house traffic acquisition services to bring those services in house.
Compensation expense was $2 $4 million in the fourth quarter this year compared to $2 million in the prior year quarter.
Due to higher employee salary costs of full time employment was 71.
<unk> at December 31, 2020, compared to 61 employees at December 31, 2019.
The increase of the year over year head count is due primarily to hiring traffic acquisition professionals as a result of bringing that function in house as I've just mentioned.
This added cost is expected to be made up in the valley click net margin you prove that we could partner.
We are actively recruiting for various positions with a focus on sales of account management professionals for the intensity.
We expect compensation expense to increase from 2021 as a result of that.
Selling general and administrative expense decreased to $80000 in the fourth quarter compared to the prior year, due primarily to $259000 and lower <unk> costs.
Where we completed the first phase of our computing facilities consolidation program.
The savings for the entire year was over six months over $600000.
We now have three data centers and are in the process of further consolidation with another data center closing very soon.
These savings are related to the real kind of project that rich was referencing in his remarks.
The savings was partially offset by higher public company in the legal expense.
Due to the holding two shareholder meetings, especially.
Our special shareholder meeting in October and the regular meeting in December.
For our facilities the Panther Panther.
Pandemic has allowed us to reconsider our work policies.
Since our little rock facility was expiring, we recently decided to reduce the square footage by F.
So as to structure of go forward model for employees that has a.
In home and at work component. We believe this is going to be the future for us.
Net interest was $2000 income in the fourth quarter.
Of 2020.
And that's compared to $29000 expense in the same quarter.
In 2019.
We had other income of $1 $1 million in the fourth quarter of this year, primarily due to the small business administration forgiving.
Our PPP loans for the payroll protection program loan that we had acquired.
Growth.
Other income in the fourth quarter of 2019.
Was $92000 and that was associated with the change of the fair market value.
Of the derivative liability associated with convertible promissory notes that we had at that time.
We reported a net loss of $715000 or one cents per basic share.
That's compared to $859000 net loss of two cents per basic share in the fourth quarter of 2019.
For the year of we had a net loss of $7 $3 million, which includes $4 $5 million of non cash items like depreciation amortization and stock based compensation.
The adjusted EBITDA for the quarter ended December 31, 2020 was $347000.
And that compares to a loss of $574000 in 2019.
For the full year, we had a.
And adjusted EBITDA loss of $2 4 million.
At December 31, 2020, we had cash and cash equivalents of $7 $9 million.
The net working capital of <unk>.
$5 $8 million.
The only debt at December 31 was a $150000 SBA loans, which.
Which we have since paid off.
In addition, we average $5 million of working capital line of credit, which currently has no outstanding balance.
We maintain a very simple structure with the only common stock and employee restricted stock units that are granted through a.
Equity incentive plan.
In January we completed two underwritten public offerings for 19 million shares of common stock raising gross proceeds of 14 billion of $250000.
The additional funds will be used for working capital.
The building the of turnkey sales force.
And facilitating the acquisition strategy that rich just described.
Our recent capital raise activity has brought in the institutional shareholders, who the company is to replace all of our debt and at the same time of our shareholders have enjoyed the rising stock price.
With that I'd like to turn the call back over the rich.
Thanks Wally.
We've seen a steady upward trend in our business since it's COVID-19 impacted the low point in may of this year, which.
It gives us confidence that the 2021 could be a good year for noble.
We've seen the Val Tex business recover quite strongly.
In Q3, and Q4 of 2020.
Not where we want it to be yet, but we would expect that business to be backwards 2019 financial performance in 2021, barring any remaining unforeseen COVID-19 issues.
I don't see any of turnkey business the key.
To grow in 2020, despite COVID-19 and we would expect that business to continue growing into the future we couldnt be.
More excited about the collection of technologies results clients that debt.
Debt, we would that we've amassed associated with that business.
And finally, we do see an opportunity to accelerate the growth within the in turnkey.
While also taking advantage of our strong financial position by exploring acquisitions.
Bring with them clients from.
For me the intent key client profile.
And we've retained in the investment bank to help us execute on the strategy.
With that I would now like to turn the call over to the operator for any questions.
Thank you if you would like to ask a question. Please signal of the pressing star one on your telephone keypad, if you're using a speaker phone. Please make sure your mute function is turned off.
A lot of your signature.
Again that is star one from questions.
And we will take our first question from Brian singer with Alliance Global partners.
Hey, guys. Thanks for taking my questions.
We had a whole buyback I'm going to add a few.
And then.
I'll, let someone else ask before I get back in place and the.
First question I have.
You mentioned getting back to pre COVID-19 levels and Dallas like at some point this year.
There isn't any valid book.
Having a of couple of much you're still down 40% year over year in the seasonally.
Is the seasonal business in December which is similar of September so.
Has that changed during the current quarter of those days year over year trends and what gives you the confidence of the market's going to return to pre COVID-19 levels. So quickly instead of gradually.
Is it just the trajectory of the business that gives us the comp ex it's kind of get.
Back to where it was the.
The interesting thing about the.
The Covid situation is it dropped quickly, but you know it doesn't recover as fast as the drops are but with that being said as I said in my <unk>.
Paired remarks, I mean, yeah of the December of revenue for that business was up 100% over the low period. So that's a pretty steep trajectory on the business and it's that that's giving us the confidence of that business can get back to its 2019.
The numbers, which I think 2019 was in the.
Somewhere around 50 plus million for that business again with strong.
Non cash.
This has always been a very strong contributor to cash so we feel pretty good about it.
The current quarter of should be weaker than the December quarter, given the seasonality right.
Yeah.
Well the seasonality in that business has tended to be.
The first half lower than the second half.
That's the marketing oriented phenomenon more than it is that business the business. It's the industry that it's a it's.
It's true of the in turnkey as well.
And then in past discussions we've talked about the growth and in turn key is the.
Mostly coming from existing customers increased use of your income priest campaigns with AD budgets beginning to improve of you.
Finding new questionnaire, the beginning to evaluate new AD Tech I know you mentioned you are starting to new logos.
Yes, you know when do you see that new customer acquisition, the beginning to improve.
It's starting to already that's why I referenced.
The increase in the RFP product you have any of that we saw in the Q3 and Q4 and we're seeing that again here in Q1.
So I think it makes sense.
If you're thinking in 2020 with Covid.
The client for a new client for us who already has a provider.
<unk> been using might want.
Want to in of Covid World stay with what they have to mitigate risks and not take a look at something new in spite of the fact that that may be so much better.
So that was sort of two phenomenon going on one day of reducing the budget to the trying to mitigate risks.
Salt of actually reducing the budget.
So that was kind of at cause.
Two I would say have less net sales in 2020 than we had expected when we are projecting 2020 in 2019 before we knew about COVID-19.
But despite that we did sign a whole bunch of new clients. So there was a bunch of them that you.
I wanted to take the.
Go ahead.
And go ahead and get the best performance they could get.
And the 2020 seems to be abating its not over you know I'll say that it's not like the budgets that the brands, we're working with our back to 100 per cent of what they were used to be a it's just it's just coming back it's probably the the answer.
So I guess the second part of that question is are some of those new logos.
Who may have delayed using some new technology of it are you starting to see more campaigns from those new customers in and what's the.
The range of a reasonable growth great in turnkey, giving the exact the existing customers.
More campaigns and then you have campaigns now from new customers as well should the acceleration and you're just trying to get a sense of kind of growth.
Yes.
I think as you know Brian.
Covid.
Not trying to avoid this question, but it's really difficult you know.
Nobody's ever been through a scenario like this with the pandemic and I still we still don't know we're still in it too.
To some degree so I know.
It's hard for me to project the business, but I do know this.
And I said it in my remarks, I mean, there's no reason why that business isn't going to continue with double digit growth rate and things are abating. So it should grow.
Technically faster than it did in 2020 right in 2021.
And to answer your question, specifically I mean, I said it in my notes, but look we ran 250 something campaigns and.
In 2020, and 40% of a more of new campaigns.
So that the new campaigns are a function of new clients and existing clients, who gave us new things to do but that's a pretty healthy number right.
On the on the top of the population.
No.
I don't I've said, it and I'll say, it again, but I, we could not be more bullish about the.
This platform now that we've seen.
Enough clients in the case studies and the results and performance.
Like I said in my prepared notes when we go head to head and where the head to head is fair I mean everybody's got the same metrics win every time.
Right.
One more question then I'll get back in the queue of my others and of course, we've talked obviously, the adding of like it's seasonal.
And as you're ramping off of smaller numbers aren't in turnkey notwithstanding COVID-19.
You think we'll see the seasonality in this business as well any of the first quarter or because you're increasing the number of campaigns, you're increasing usage, you're getting new customers as this business small enough right now to growth through seasonality as we head into 2021.
Hard to tell the.
The high level question forget about the size of the businesses the business like every other.
Marketing or advertising oriented business has.
No.
Uncertainty in the first quarter and you don't know whether the brand in the.
Currently the they finished their own.
Marketing budget allocations of had gotten approval for them.
And with the again with the pandemic still on you know what does that mean that where they would normally get through that process and not have to worry about the pandemic in the first couple of weeks of the first month of 2021, Alex maybe in March or February I don't know I mean.
I, just don't know I've never been through it right. So we'll see but we do know this though I mean overall, regardless of whether or not there's the.
A weaker quarter of somewhere in the year.
You'll end up better than we did last year with the with this product.
Certainly probably the.
Good news is the Pandemics likely.
To have abated provided we can get the vaccines distributed in the U S by the summer and that means we come into the you know the highest quarters of our year of Q3 and Q4.
A bunch of of hopefully pent up demand for spend from Rfps that were actually responding to an hour and we do that none of the bulk of our Rfps interestingly for the second half of the year with the intent of our occurring right now we're negotiating.
And involved and prospecting for Rfps that have the budget for them.
Three in Q4.
Okay, Okay I'll get back in the queue is made of the questions.
Thanks Brent.
Well take our next question from Gary.
And with Roth capital.
Hi, this is going off of Derek Thanks for taking my questions I wanted to ask the vet out yes.
I wanted to ask a little bit about the SaaS component of the claim to Ah I mean, you can talk about the expanding your market range is there anyway sort of.
Yes.
Quantify that and then I guess, where do you see.
The balance of SaaS versus the large clients I guess sort of in 'twenty and 'twenty, one is as a percentage of revenue.
Yeah. So the first question is yeah of the quantification of the marketplace. You know that we can play in when you combine both of the SaaS and managed service piece of somewhere.
Near 100 billion dollar market. So that's one of these gigantic numbers so there's plenty of market.
Clearly, having the SaaS version and the managed service business.
Opens us up to the people who.
It would not have bought it because they want to control over the clients they were making money from running the services that they wanted to do that themselves.
And that's why we're excited about that.
At the size that we're at it's hard for me to quantify whats. The split is going to be it's probably easier to can see of having done. This before that you know that we could be running a business here at.
At some point in the future where half the revenue as services managed services and half of that and just as a side note. This is typically what happens.
When you do have a SaaS version of the platform, there's always clients, who don't want to do it themselves. They want me to do it and you're not going to turn them away.
I want those clients, sometimes by the way they end up being the biggest of the clients.
So if it's 50 50 like that are you know, which is probably where it sort of no ends up you know that would probably be about right, which we would expect you know if you can do the math you know the the managed service piece of the business runs about 50% margin in the SaaS version of probably around about nine of the half and half.
We ended up with the business here that's out of metal.
Had 70% maybe the growth your gross margins, which is healthy.
On the on the combination.
Got it and then sort of I would call up to that one.
What is the timeframe look like for monetizing some of those clients that you talked about doing the data.
As of few months.
Is that ramped our second half of the nature of our point.
Yep.
Yes, so we're done with the beta program now of the Beta program ended in Q4, and that's why we're excited because we got through the beta program the way faster than we had expected if our shareholders will remember I believe I had messaged that we wouldn't actually be the market with the SaaS Park until the second half.
Half of.
The 2021, and we just had.
The opportunity in the fourth quarter.
The clients to basically.
Put the ease of SaaS version two of its.
It's it's it's a number of if you will the.
Run at that scale, and and and and and worked out all of the.
The remaining issues. So there's no more beta we're in go to market with this product we know it works we proved it works it scales.
Now there are some things we have to do internally to support of SaaS product or some some training and whatnot.
A lot of gear up for that but we're doing that now.
Right. That's the last one from me.
I don't see any specific the strength in <unk>.
Certain of.
Tell like something like connected to the user than just where that market's been growing over the past I.
I guess basically plenty of 'twenty.
Sort of in the future.
Yes, we have seen it and we've got we've.
We've had an increased.
The number of connected TV RF.
Rfps and have delivered on quite a number of connected TV campaign. So we do see that as a growing channel for us and the really great news.
The intent key as it relates to connected TV.
One of few.
Products that we are aware of.
And where you can actually have this audience building capability, there's some technical challenges.
Challenges associated with connected TV because of the.
The way the devices.
Our technically designed in the apps on those devices.
But with the work that we worked around that solution and so the.
Of the AI in the modeling of the data.
That is that we've proven it so powerful and video and display of.
Showing itself to be just as.
Just as good with the connected TV side, which of which we believe will give us an advantage and it seems the performance on those campaigns. So yeah connected Tvs of good channel, we've run and just to add it's not just connected to you need that we brought on a couple of our first time ever connected.
Equivalent per connected radio.
In fact, one of our casino.
Customers there was a connected audio and we knew we had it all of the the plumbing in place to make that work and we knew it would work.
But it was the only in the fourth quarter. When we started running some campaigns for various clients and once again, we're seeing really strong results. There just as a complement to the connected TV question.
Great. Thank you.
You bet.
Okay.
Your lines of global partners.
The two follow ups the first on the SaaS offering.
In the real as it relates to the go to market strategy.
You're targeting existing customers.
Well that cannibalize your existing revenue and how should we think about you know the larger upfront campaigns versus the.
The revenue impact on you know, maybe maybe doing a monthly service.
Does that mean lower revenue, but much higher margins.
Yeah, So Bryan we're not we're not targeting existing clients and maybe from the.
Get your head around it this way is it like I said from the get go selling of managed service and selling of SaaS version really are kind of two audiences for that some people just don't want.
Our managed service so maybe you could take it this way the ones that we've already sold.
Who are running services for wanted a managed service.
And that's why we were able to close them. So I don't see of cannibalizing those.
It'll be of net new.
The perfect Yeah. That's good and then lastly on one hand, you mentioned are.
The less space working from home it sounded like a bunch of catch the operating expenses on the other hand, you got.
The slug of increased capital and you talked about increasing the sales force of current turnkey. So maybe how do we think about both of the way both of those should we see opex growing from the fourth quarter of should we see it shrinking the kind of flagged noise I think about those two things.
I think that's Wally.
Yes, I think that.
There's a lot of a lot of the new employees of that.
We're bringing on and work from home, particularly of the salespeople.
So.
Refractories of that into consideration for.
Reducing the spacing.
Little rock.
There's three major major as you know three major components to operating expenses sort of marketing compensation SG&A. So like we said, we expect compensation to increase next year in 2021 because of the investment we're making the sales force.
The SG&A.
It should stay relatively flat throughout the year.
Which includes facilities.
Okay great.
The marketing costs I Didnt movies with there.
The marketing costs will move up and down with with the N turnkey kind of deal with the with valid because out of Norway.
Yes exactly.
Yeah, Yeah, that's right.
One of the things, Brian maybe I'll just note.
Because it's related.
And it's important for our shareholders to understand the advantage we have here.
Particularly with the.
With the SaaS version of the of the platform compared to the competitive marketplace for that product.
But we noted in our call and Wally noted in the financials, but we did make some significant decreases in our overall of information technology.
The expenses in the year from 600000 Bucks.
But what's important here is the recognized as the costs that we have related to how the intent he does what it does.
Is for the most part now other than resources fixed.
And this is not typical of our competitors.
Who use third party data, which they bring together the offer people the ability to find audiences have ongoing.
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Tick costs associated with the purchase of that data.
Have no such cost.
Free additional dollar now that we bring in we have no more of costs associated with the product.
Our productivity if you will of the machine.
It's for US we have an ability to.
It not only go to market with our SaaS product with the product that works better because of the artificial intelligence and because of the way that we manufacture of information, but we can do it at the lower cost of it used to because we can undercut the marketplace. Because we just don't have that cost burden.
It's one of the advantages we have in our go to market.
Great. Thanks for taking the question.
You bet Brian.
Hey, Chris.
And the answer session.
Turning the conference back to your hosts for any additional or closing remarks.
That's great. So thank you very much operator, and thanks, everyone for joining us on the call today and we.
I appreciate your continued interest in the company and look forward to catching up in the future.
That concludes today's presentation. Thank you for your participation you may now disconnect.
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