Q1 2021 AudioCodes Ltd Earnings Call
[music].
Hello, and welcome to the audio of Cold first quarter 2021 earnings conference call. At this time, all participants are in a listen only mode of quest.
So the answer session will follow the formal presentation. As a reminder of this conference is being recorded it's on my pleasure to turn the call over to Roger True Chen. Please go ahead Sir.
Thank you all seem to call today of Shopify atmosphere, President and Chief Executive Officer, and Robert Vice President of Finance of Chief Financial Officer before we begin I'd like to remind you that the information provided during this call may contain forward looking statements relating to <unk> business outlook future economic performance product introductions plans.
On objectives related there too.
Concerning assumptions made or expectations as to any future events conditions performance or other matters are forward looking statements as the term. This is fine under U S Federal Securities Law.
Looking statements are subject to various risks and uncertainties and other factors that could cause actual results to differ materially from those stated in such statements. These risks uncertainties and factors include but are not limited to the effects of global economic conditions in general and conditions in the audio cause industry and target markets in particular shifts in supply in the man.
The market acceptance of new products and the man for existing products, the impact of competitive products and pricing on audio codes and its customers products and markets timely product and technology development.
And the bill of demand changes in market conditions as needed possible need for additional financing the only need the SaaS like covenants and the company for only part.
Possible disruptions from acquisitions the ability of articles the.
Successfully integrate the price and operations of the acquired companies into <unk> business possible adverse impact of the COVID-19 pandemic on the business and results of operations and other factors detailed in audio codes filings with the U S Securities and Exchange Commission on he codes assumes no obligation to update this information in addition.
During the call audio codes will refer to non-GAAP net income and net income per share on your bill.
<unk> has provided a full reconciliation of the non-GAAP net income and net income per share to its net income and income per share of according to GAAP in the press release that is posted on its website before I turn the call over to management I would like to remind everyone that this call is being recorded an archived webcast will be made available on the investor Relations section of the company's.
Website at the conclusion of the call.
That said I would like to turn the call over of the shop shop Guy. Please go ahead.
Okay.
Thank you Roger good morning, and good afternoon everybody.
I would like to welcome all of our first core of 2000.
21 conference call with many of this morning, the Rumble Chief Financial Officer on Vice President of Finance, It's all of the codes Miranda was thought of by presenting a financial overview of the quarter.
I will then review of the business highlights on summary for the quarter, and then discuss trends and developments in our of business in the industry.
And then Tony.
And to the Q&A session.
We're on.
Yeah.
Thank you the shop and the lawyers.
As usual on today's call, we will be referring to both GAAP and non-GAAP financial results.
The earnings press release debt, we issued earlier. This morning contains a reconciliation of the supplemental non-GAAP financial information the type.
We'll be discussing on this call.
Revenue for the fifth quarter were $58 8 million, an increase of the pinpoint 1% over the 52 million on reported in the first quarter of last year.
Services revenue for the first quarter were 21.8 million up 23, 3% over the year ago period.
Services revenue in the first quarter accounted for 37.1 per cent of total revenues.
The amount of deferred revenue as of March 30 for 2021 was 17.
71, 6 million up from $64 2 million as of March 31st win of 'twenty.
Revenue by geographical region for the quarter of a sleep is for those North America 39 per cent been there, 39% Asia Pacific 18 per cent and central and Latin America of 4%.
Our top 15 customers represented.
<unk> of 61 per cent of our revenue in the first quarter of <unk>.
With 49% was attributed to our 11 largest distributors.
GAAP results are as follows gross margin for the quarter was $68 four per cent compared to 65, 9% in Q1 2020.
Operating income for the first quarter was 10.1 zone or 17, 2% of revenues.
Per to $6 2 million or 11, 8% of revenue in Q1 2020.
Net income for the quarter was 10 million or 29 cents per diluted share.
Compared to $5 3 million on all 17 for them.
<unk> per diluted share for Q1 'twenty 'twenty.
Non-GAAP results all of the swallow non-GAAP gross margin for the quarter was $68 seven per cent compared to $66 one per cent in Q1 2020.
Non-GAAP operating income for the first quarter was $13 2 million or $22 five per cent of revenues compared to $7 9 million or 15.2% of revenues in Q1 2020, an increase of 66, 9%.
Non-GAAP net income for the first quarter was $12 7 million of 37 cents per diluted share.
Compared to seven 8 million of 25 cents per diluted share.
Q1, 'twenty 'twenty.
At the end of March 'twenty, 'twenty, one cash cash equivalents bank deposits of marketable securities totaled 100 of $92 5 million.
Net cash provided by operating activities of war.
The 10 million for the fourth quarter of plenty of 'twenty one.
Day sales outstanding as of March 31, 20 of 21 were 56 days.
During the quarter, we acquired 350000 of our ordinary shares for a total consideration of approximately $10 3 million.
We reiterate our guidance for 2021 it follows we expect revenue was in the range of $240 million to 250 million on and non-GAAP diluted net income per share of $1 45 to one point 65. So now I will now turn the call back over to shop.
Yeah.
Thank you and you're on.
I'm pleased to report strong first quarter of 'twenty, one for natural resource I had the far into the budget.
And continued progress in our business.
The most important on we've been.
Our strong and the markets, we've seen strong market for our three main growth engines, namely Microsoft business contact centers and conversational AI is.
The Microsoft business came from Skype for business.
<unk> grew above 20% all of our most notably the U S market showing increased activity in the view of the declining pandemic, we saw better environments for new created the counts and businesses. So it is stronger book to Bill Tryon.
For the.
<unk> strong growth I had contact center, we've seen strong pickup in activity conversational AI growth of more than 100% year over year in total.
Importantly, first quarter industry dynamics for the underlines the notion of collaboration and work from home.
On the stage in 'twenty, 'twenty, one and beyond even post pandemic and present long term growth prospect for us at the strong performance in our North America services of separation and continue the SBC business strength the outlook for 2021.
On ward is positive.
I'm talking about growth and services are the calls live continues on track with the initial plan and we will talk more about it later on.
Also with the return to office strength, peaking senior zero of countries are of devices IP phones decks desktop phones video conference devices showed meaningful improvement from 'twenty 'twenty, the vo magnitude of recovery could be cap going forward, but the well known.
The ongoing chip supply constraints of shortage.
So the touching on the key highlights of the first score a total revenue grew 16, 1% year over year, an improvement as compared to the 11, 7% growth back in the first score of 2020.
Growth driven mainly by of secular growth opportunity within the unified communication as a service on cortex into the markets.
Service revenues grew 23, 3% year over year service revenues.
Given by strength in professional and managed services of suffering.
Most important we made ongoing progress in pivoting the recurring revenues with strong traction express with zero debt goes live on.
Offering.
In terms of the first score of 21 revenue. Let me go by segment, referring to the 13 points of on overall company year by year revenue growth. It is important to note the growth in the Archie markets Ucas and contact center was substantially higher.
<unk> accounted for over 65 per cent of revenue and grew above 15% of year over year contact center accounts for 12 per cent of revenue and grew above 20% of the year over year. So combined and that is the enterprise operations. We have we now.
The more than 80% of our revenues growing at the rate of 15% year over year, which is substantial.
Growth above the overall company growth.
<unk>.
Two more segments voice as I've mentioned, the crew are over 100% still a less than 2% of revenue of this stage.
The decline was Sydney, the service provider and technology.
Of which finally, the make up the balance of revenues are.
Down in the quarter.
Now to reach the right to our our three year financial model targets.
Growth, which was 15% in enterprise revenues in the first core provides strong support for rates rise the 2021 outlook as well as our long term financial model.
The model calls for 13% to 15% growth of revenues, we did 13.1 on non.
Non-GAAP gross margin are we defined the range of 67% to 70% we ended up doing $68 seven opex as the percentage of revenue.
We said, we would cap it at 47% it came to 46, 3% and then when we're talking about the non-GAAP operating margin. We said the range to be between 20 and 23, we ended up at 22 one for.
Now, let's focus on two more key developments in the core of this is the focus on real time cloud communication and on transition to recurring revenue.
A recurring seeming the operation for the pass the earliest has been increased focus on rapid transition before our solutions and services. It's the right time cloud communications, we continue to invest in cloud service for this autonation and the insofar as the service solution development and we see for the growth in this space.
<unk> was the Chilean 'twenty 'twenty and the first quarter of 'twenty, one we have inquiries and the accelerating the investment in this area of driving the momentum in 2021 and beyond.
Of this we have substantially moved the our focus in sales towards recurring revenue model and an increasing percentage of revenue now comes from recurring revenue sources versus the circle model of Capex sales of foreign networking gear.
The further highlight this focus on transition to recurring revenues.
In March 2020, we announced articles live initiative, which offer of study codes voice expertise product and solution to enterprises.
I have a very flexible subscription based managed services model.
We have made good progress through the second half of 'twenty 'twenty and into the first quarter of 'twenty one.
And now see the momentum growing and expanding by mid 'twenty 'twenty. One we expect this line to cross the $10 million a of our Mark enriched 15 meat on the error by the end of the year more than doubling twenty-twenty levels are booking or total contract value of this business on an ease.
He is already several tenths of millions of the others and it is signed with large number of enterprises, who have already started or about to start the UK deployments with us.
This fast growing business is the tangible proof to our superior technology in the areas of connectivity management automation tools services and adjacent applications through the use of solutions I'm confident that this business will keep growing and represent a very significant portion of for the codes veteran.
Some of gears is recurring revenue basis.
Now to Microsoft operations in the quarter for.
First quarter of 'twenty, one business grew over 20% year over year. Microsoft business is now 45 per cent of overall business, we target of 120 million by the end of the year growing about 20% on top of 'twenty 'twenty.
We've seen accelerating opportunities in the market some of which focus more in the mid market. We've seen a lot of activity around dark routing of service.
And we have seen dozens of opportunities.
In booking and in pipeline.
We also enjoy a lot of success in our business development efforts in the field, we've seen increased success in the field identifying new large enterprise opportunities.
By now were getting several qualified deals every week.
On the average size. The is few thousands of seamless success now he's speaking GAAP in certain countries of Europe.
Well, we see cooperation with the local teams of Microsoft.
Now to the mix of revenues in the Microsoft space Joseph of mixed revenue the mix of revenues, Microsoft teams witness growth of 170% year over the year, while Skype for business declined moderately less than 10% sequentially and about 50% year over year.
All of the lump all in all we see a much success and growth in the Microsoft business.
We talking usually about revenues, but I think it's more important to talk about what's evolving.
About what I would call a book to Bill ratio. So we've seen an acceleration of overall games business opportunities in the U S. In the first score having increased over 100% of on a year by year basis and over 30 per cent relative to the prior quarter. This metric is good leading indicator pointing to ongoing momentum.
Many of our Microsoft business, So all in all.
The substantial new team for putting into developing for us going forward.
As to the mix of accounts, where does it come from.
We are.
The round about 100, and give or take opportunities per quarter coming from our old Skype for business installed base.
For the growing number on team so all in all comparing first score of 21 through the first quarter of 'twenty 'twenty.
We have seen an increase of more than 50 per cent year over year in Joseph a number of accounts moving to tims.
To highlight some top wins in the first quarter in the Microsoft space I'm talking about the large private company from the 14th.
This is the long term on the coast customer.
With Skype for business, we have a gradual journey from Skype for business attempts.
On a.
A huge a po for index for us are.
Replacing a competitor of our phones.
Also we are providing.
Providing there that growth is the service to the lives of essential service and that's a big account in the U S. The company well known in the financial space. They are basically on track with the 18th migration project from Skype for business with.
Done large professional services project for argue meeting you know its capabilities are talking about a project in Asia Pacific are we talking about the bank in APAC, we have provided a mixture of our product and services, including gateways.
Session border controllers management of Central management routing capability management capability for subscribers.
Subscribers and professional services are fairly competitive win against a competitor from the space and are we in that specific the partnering with the local a large service provider.
So how do we grow from here.
We have a clear plan, we're going to grow the number of for the kinds of live users you're going to scale up in revenue true articles live professional on the premium services.
Yes.
Cash and services and the Upselling so that would include recording.
Contact Center services analytics meeting space services and couldn't recession on a a services.
Now going to the second large market contact center. That's the that is a very fast growing market revenue is now about 15% of our business with target growth of above 15% year over year. This market is on the GAAP.
Thank God for several disruptions are firstly the transition to cloud.
So our work from home at Wassa main trial, so web RTC becomes mainstream to maintain the quality of service.
Cash.
And our clients and then we are engaged in investing in.
The new emerging intelligent contact center.
And there we have a greater role to our conversational AI.
All in all.
This breadth of different technologies allows us to expand our business in the past we've been much more focused on working very close to just with the.
The Genesis these days.
Expanding our work to work with more contact center vendors and also working with and so the focus on a contact center and the users.
In contrast to the past contact for inventor focus helps us the lapping of expanding the business on.
All in all of the concession of yeah. It gets a big boost for automated and being of sales service customer engagement.
The all in all of our very successful quarter for contact center as I've mentioned before we've outgrown in revenues of more than 20% over the year ago core as I've mentioned, we have expanded beyond the genesys environment. So we now selling into some other large contact center vendors.
In a meaningful way.
EMEA was very strong the score.
And and we do see the same developing in the second quarter of the current quarter.
We also are engaged much in new.
I technology that we call <unk>.
The connect that helps to connect with the voice to chat box and that activity is becoming fairly successful.
Let me touch for a second on our SBC operation, which is our most important our per.
Product on last year.
The sales reached a short of a 100 million we plan to grow this year.
<unk> per cent.
The corner of was very successful.
30% above the.
The year ago core we've seen very strong booking growth a more than 40% year over year, we already know see lot of activity in the space Hum.
On the from project of different technologies for Us.
This represents for.
The TNT Microsoft revenues in the space continue to grow 17% year over year in terms of Geo split on the majority of revenues came from Europe about 40% of about 25 and above from North America, 13% from.
The APAC and in the restaurant Caroline.
Israel.
Now, let me get to Hum the smallest growth engine.
For them and very exciting talking about conversational AI on nexgen growth engine.
Our current recession.
Includes the following the lines it includes the recording.
That's smart for teams and meeting insights. It includes also the device.
Connect connect voice chat bots, and then we have the Hawker four kind of recession of IV or we've seen strong business ex I've mentioned, our revenue grew more than 100% year over year origin. The serious stems from the fact that technology realized a combination of kron cognizant.
Surface technologies, such as Hum speech to the tax, Texas speech machine learning and in the U L. P. And then cloud cognitive services and SBC networking telephony expertise, which some of our competition just in the current service area a lack of some of it.
These components long term growth potential that business on a.
Ended up in 'twenty 'twenty at about the trip on 6 million, we now target to grow more than 50% of this year and we start to reach 10 million by the end of 'twenty 'twenty two.
Growth is driven by trends in the U S and contact center and meeting our industry and the trend from self service.
The recall automation in the.
Contact center market.
Our smart App, which is our solution for comprised of recording.
I'm enjoying a lot of success.
We just got certification for tims about three months ago.
We are one of the few goddess certification, we've seen pipeline growing significantly driven by the increase compliance for coding of needs from using a number of teams users in the enterprise space. So very successful operation there I'll mention also of voice AI connect.
Our industry, leading voice, enabling chatbot technology plays a vital role in enabling contact centers to support the increase in call volume arising from the ongoing secular shift to digital engagements. We are preparing for production with several customers and are on track to achieve 1 million.
Or by the end of 2021 we will continue to provide updates on this exciting imaging business going forward. So all in all of our very successful operation.
With that of concluding my presentation I would like to move the car to the Q&A session.
Operator.
Please go ahead.
Thank you will not be conducting a question and answer session if you'd like to be placed in the question queue. Please press star one on the telephone keypad.
Confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue for participants using speaker equipment may be necessary to pick up of handset before pressing star one one moment. Please while we poll for questions.
Our first question today is coming from some of Tomorrow from Jefferies. Your line is that of life.
Hi, good morning, and congrats on the on the strong results. It said, it's good to see you kicked the year off what strong numbers. So maybe first you know the teams growth continues to be very exciting and I know you dug into it about the quarter or somewhat in your prepared remarks, but you know when you think about the go to market motion or you guys are hiring.
For sales reps to just to sell into that yeah, Microsoft install base to drive voice into teams or maybe what's audio codes doing as an organization to address that opportunity from a go to market perspective.
Yes.
Thank you Samantha I'm really glad you brought that up I Didnt mentioned, you know headcount and headcount has really changed dramatically. We grew 6% over the last year. So we added another 45 employees.
To the 745 employees. We had then majority of these positions.
Positions are with our sales and services organization and and and as you can expect because we see a lot of.
Growth in the U S. Most of it is really occurring in the U S. So, yes, and I can tell you. The just in the past two weeks we of our approved from you know between 10 and 15 new positions for the sales and services organization are the.
The lot of activity and we're going to support that with debt.
Great and then maybe on the pipeline again your confidence in the environment definitely rang true rang through on the prepared remarks, but when you think about how you measure it in terms of either of client inbound requests or sign ups for demos anything that that maybe kind of tangibly, they eat that audio codes measure.
That points to what the pipeline looks like or how healthy the pipeline for teams related deals is.
Yes, we are we definitely track that internally, we have an analytics each of these deals as we're moving more and more into recurring revenues are we measuring the pipeline who measuring the total contract value that is accumulated we measure the obviously the execution how much was the.
Floyd how much you need also to by the way to stimulate that you know every organization's it starts to move into articles live in our managed services is really deploying on a very small portion of its operation initially so.
We'll be very natural for them on an organization to start with just few hundreds right.
Hum the proof.
For cross it may start with the hundreds of our 200, but at the end of the day. This organization is about 3000 or above so what you. We basically tell you is debt and I've I've really in terms of total contract value we have not counted in the thousands we've counted.
The only the hundreds so does the lot of the cumulated potential there and as we continue to deliver well on or no.
You know our promises are we basically see growth of you know of mentioned tens of millions of total contract value that is what's developing within the scope of for the year now so a lot of activity.
Great maybe just one last one for me for for either of you, but yeah. The profitability continued to be nicely above our expectations and so.
You know I saw that that audio cause repurchased $10 million worth of shares in the quarter, maybe how should we think about.
The rest of what's left in terms of that $30 million buyback and and if there's any appetite to maybe expand the the buyback level given the current evaluation.
Right. So right now I mean by you know.
We are at the in a position where we need to.
Re launch of new purchasing.
Airport every six months so the current one basically add like 25 million in total out of which we've already executed on 10 million. So we are left with about 14 million for the.
Rest of the six months the two land somewhere in July.
Again based on the situation there.
On what makes sense for us.
I think that we see a lot of value in this buyback because you know well, we definitely want to invest where we believe the investment makes sense and right. Now you know that is what's happening.
Great I'll I'll turn it over but congrats again on the quarter and thanks for taking my questions.
Sure. Thank you for men.
Thank you. Our next question today is coming from Raimo <unk> from Barclays. Your line is that of life.
Hey.
For now.
Taking the question on congrats from me as well.
Can you talk a little bit about the strength in the in the call center market like how much of that do you think is that you see there is kind of more of like pandemic kind of on one of the emergency versus really strategic changes to what's going on in the industry.
I think pandemic really put you know a lot of weight on the issue of you know moving the you know the agents you know from the.
Of the facilities into working from home right. There was no other choice. So but you know during that process of think many of the vendor at the end use of sexually found all of that you know the cost of using you know.
Agents its armies is substantially lower than the cost of maintaining debt operation on prem on on facilities. So there's a natural savings when that force is sitting at home. So obviously that is a driver of debt that's going to stay beyond that.
The evolution of the cognitive services.
No technology in the industry I think help moving you know from you know human agents. The operation. This was 100% two years ago.
80% now and in and according to our research you know people believed that in three years from today only about 30 per cent of the agents will remain the human so it's really the evolution of the technology and you know completely orthogonal to the pandemic that is.
Driving that shift beyond debt does the shift from you know the premises to cloud, which makes sense usually for smaller companies. But then provides a lot of the efficiency for the vendors. So.
Not all of it I think it's mainly you know the work from home. It's the wherever it is the you know quality monitoring end to end over the Internet those are the countries that evolve.
Due to the pandemic, but are going to stay with us.
Okay. Okay, perfect and then if you think about your ongoing migration like towards more software away from hardware can you talk a little bit about like.
Any more active steps you need to do as an organization to kind of the cheated or do you think it's just the natural evolution.
It's depth of it's an evolution I mean, we've started that journey I'm like three years ago. We've done a great steps, we are improving core at the core and I believe that in you know.
Today, there is no single application that the developing internally that does not rely on cloud communications real time cloud communications. So.
Everything that needs to take into account you know Dev ops I'm, you know I'm, a sulfur out of service automation tools et cetera analytics all of that is being developed.
As we go into 2021 so I assumed debt in less than two years will be fully cloud based.
Okay. Thank you.
Sure.
Thank you as a reminder of that star one to be placed on the question queue. Our next question is coming from Greg Burns from Sidoti and company. Your line is now live.
Good morning.
The the the relative growth rates between teams and Skype for business, but can you just give us the.
The mix of revenue how much revenue the Microsoft Skype for business.
Yeah, I I can tell you from for somebody.
So on.
The revenues.
25 million or above.
Scott.
For give or take about eight and the rest of it came from teams.
Okay, great. Thanks.
And then.
You know when you look at the the the teams market in terms of.
Voice penetration, but then the user base.
Could you give us an update on on.
Where that stands and how have you seen any change in in.
And the trajectory or the pace of of voice adoption within the teams user base.
Yeah, I'd say I think we're seeing in 'twenty, one on greater emphasis on voice.
It may relate to competition coming from you know our other companies, making you.
You know voice more important this year also of you know if you want to play on the top line of you know the the vendors of our Ucas, you really need to have all of the different components and this drives some other companies to invest a lot of them in.
In voice I would mentioned also by the way. This is not came up during the discussion that we have made some very nice steps in selling also into the zoom environment.
Zoom phone, which was less visible.
Visible.
In our operation last year, so that the pick up end of last year first quarter was a really strong above you know more than double of the bins. We had in the fourth quarter. So I guess debt you know greater emphasis by all of the other players on our take I'd buy it in and the ring central and.
Now seeing you know services that combine their offering with teams I think all in all of the voice space is is getting more important these days.
Okay, Great and then in terms of lives.
Could you maybe.
What are the one is embedded in that those are.
Our targets for the 10 million by mid year of millions by end of the year in terms of the baby.
The number of seats of the the relative size of the accounts and Arpels.
Right. So basically you know we're talking about companies. The you know our targets is mainly you know thousands of seats, but the project do start with type of of hundreds of interest of services. We do provide the first the more most basic services direct route SBC on top of that for.
Provide management on top of debt will provide.
Other routing services call recording services in the future also some cognitive services. So it is a stack of the college actually we.
Start to push it as you know Oh, Tim's voices of service and when you're deploying voice like themes for voice you really need the you know a stack of technologies to provide overall processing. So it's a it's the SBC. It's routing it's management, it's the devices its meeting.
<unk> et cetera.
And then that's a that's a what's consist of the you know seems the voices of service or.
This guy called it before you know the Coke life.
Okay. When you look at that stack of the you know the the underlying.
Technology stack required to stand up like a seat and then.
Also these some of the incremental applications you are talking about cross selling or selling into that universe, where where do you think.
Or where do you think you'll get to or where do we see it maybe starting okay Eric.
Yeah. It's great question, you know we can start of the slowest as you know of dollar you know one of the services. The most basic one but when you stack up all of the different capabilities or when you need to connect to the local PBX or to provide more advanced services. The ARPA can go up to.
The 467 et cetera. So you know you can make the average yourself, but this is the range for you know I would say one to seven is the range of four we should on Earth.
Okay, Great and then the just lastly, how are you going to market with light do you have any like direct.
Our internal sales force selling that are used to going all through the chi.
Channel.
So we're working with those channels I mean, we've not changed anything in our go to market. We actually include all of our partners in the <unk>.
Came you know.
Obviously, we help them, whereas the lack the.
The knowledge and or the expertise, but the go to market is.
Indirect for.
Phil you know for some very large customers, who have hundreds of thousands of employees in some cases, we do have some direct touch but the majority of the services in there.
Okay. Thank you.
Sure.
Thank you. The next question today is coming from Ryan Koontz from Needham and company. Your line is now live.
Thanks for the question and thanks for all of the color on the Microsoft ecosystem.
Any within that area of you've seen any shifts in the competitive landscape.
The landscape received new vendors get approved and then second question on the on the product side are you seeing any shifts toward more of a SaaS model there or is it or is it still more of a.
License approach. Thank you.
Sure So Jeff.
The you know there are not too many new commerce right, we've seen announcements from companies like ebay shrink central and vantage.
Offering our services like that crowd nothing more than that so all in on in terms of providing a full technology stack for themes I think we do not see much competition at this stage.
Sorry, the second question related to.
Im going to address changes on that.
On the product model are you seeing just for of a license model yeah, more obviously, yes the whatsapp.
Alright, actually we did deploy actually I'm glad that you mentioned is because in the first score we have deployed the new service that we call life essential on Azure. This is a completely you know SaaS solution. The were going to owe for you know management solution is the service et cetera. The trend again is indeed to move.
Substantially more are from services and managed services into SAS solutions, yes.
Oh, thanks, so much.
Sure.
Thank you we reassured about the question answer session I'd like to turn the floor back over to management for any further or closing comments.
Thank you operator, I would like to thank everyone for attending our conference call today.
With continued good business momentum and execution in the first quarter of 2021 and previous course, we believe we are on track to achieve another strong year of growth and expansion in 2021.
We look forward to your participation in our next quarterly conference call.
Thank you all have a nicely.
Thank you that does conclude today's teleconference. You may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation today.