Q2 2021 Boxlight Corp Earnings Call
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Ladies and gentlemen, thank you for your patience the conference will begin shortly once again. Thank you for your patience the conference will begin shortly.
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Thank you, ladies and gentlemen, and welcome to the bauxite second quarter 2021 earnings conference call by now everyone should have access to the press release issued this afternoon. This call is being webcast and is available for replay.
Our remarks today will include statements that are considered forward looking within the meaning of securities laws, including forward looking statements about future results of operations business strategies and plans customer relationships market trends and potential growth opportunities. In addition management may make additional forward looking statements in response to your questions.
Forward looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties that may cause the actual results to differ materially from the forward looking statements.
A detailed discussion of such risks and uncertainties are contained in the company's most recent Form 10-K Form 10-Q, and other reports filed within the SEC.
The company undertakes no obligation to update any forward looking statements.
On this call management will refer to non-GAAP measures that when used in combination with GAAP results provide additional and analytical tools to understand the company's operations. The company has provided reconciliations to the most direct comparable GAAP financial measures in the earnings press release, which will be posted on the Investor Relations section of the company's website at investors <unk> <unk>.
<unk> dot com and with that I'll hand, the call over to <unk>, Chairman and Chief Executive Officer, Michael Pope.
Good afternoon, everyone and thank you for joining our second quarter 2021 earnings call. We delivered another record quarter again outperforming both our external guidance and internal targets reporting $76 million in customer orders $47 million in revenue, 29% gross profit margin as adjusted.
Acquisition related purchase accounting and over $5 million and adjusted EBITDA for.
For the first half of 2021, we generated $124 million in orders $80 million in revenue and $7 million and adjusted EBITDA.
We also concluded the second quarter with a healthy balance sheet, including $7 million in cash $21 billion in inventory $27 million in working capital and $51 million in stockholders equity.
We are fulfilling our commitment to strong growth and improved profitability and we are making substantial strides towards our goal to be the industry leader.
We entered Q3 are seasonally strongest quarter with $48 million in back orders and we expect to generate $60 million in sales.
$7 million and adjusted EBITDA and positive net income.
Our strong growth as a result of both a robust industry and execution on our strategy to deliver best in class solutions and customer support and addition to our improving financial performance. Our progress is well documented in our case studies and white papers since our last call. We have published another 12 customer case studies, bringing the total.
<unk> to 30 success stories excuse me to 30 success stories. This calendar year, our case studies range from schools, where students with disabilities benefit from our innovative tech such as clearly in high school for exceptional children in Greensburg, Pennsylvania to multi campus institutions for higher education, such as <unk>.
<unk> in the U K.
We've also made an impact on expanding school districts like Bennington public schools in Nebraska, which is expected to open four more schools within the next few years. These case studies underscore the strong impact our technology solutions have on diverse education systems and enterprise environments across the globe Globe.
In addition, we announced a two year audio visual equipment and accessories extension agreement with the New York State Office of General services. The office of General services facilitate close to 500 centralized contracts for goods services and technology, including those needed by educational institutions are box.
<unk> products are available on this contract via our reseller partners, including both minority and women owned businesses and service disabled veteran owned businesses and.
In May our iOS Education Division joined the Google Cloud partner advantage program as a service partner so the Google cloud educators can receive specialized professional development focused on Google cloud tools.
Our U S education team understands what educators need to make teaching and learning more effective and continually design programs that benefit all districts stakeholders teachers students administrators parents and community.
Eos is equipped to provide diverse support including offerings designed to help schools meet federal relief funding criteria.
In June Eos launched their as their professional development offerings in the U S to help education decision maker support all of those involved and academic progress.
The offerings guide teachers through the best use of education technology, as well as social emotional learning strategies and ways to better connect with families.
Also in June we introduced box slight financial services, our customer financing program developed in partnership with Tech lease capital, providing customers more payment options when investing in our technologies.
Our robust portfolio of technology solutions continue to be recognized for their cutting edge innovation in April our solutions were named as finalists for six Ed Tech Hulu Two awards, including our <unk> connect blended learning platform yields educator essentials for remote and hybrid learning.
Stem mobile lab bundle my stem gets curriculum robo, <unk> printer and NIM youll clarity classroom audio system in June our menial connect blended learning platform, one that Ed Tech breakthrough award for classroom technology innovation of the year also our collaborative technology brand won the coveted best business growth for 'twenty.
'twenty Award at the Innovation Awards from innovate magazine.
With our improved market capitalization. This year in June we announced that we were selected to rejoin the Russell Microcap Index. This membership remains in place for one year and provides automatic inclusion in the appropriate growth and value style indexes.
We are better positioned today than at anytime in our history uniquely equipped with outstanding talent industry Best solutions, and a loyal and growing partner network. There has never been a better or more exciting time for our industry or our company and we are optimistic and excited for the future.
With that I will now turn the call over to our President Mark Starkey to provide additional insight into our sales results.
Thank you Michael Q2 was another record quarter for Bok slide in terms of orders revenues and profitability and I wanted to take this opportunity to thank our employees, our investors and our customers as this level of growth would not be impossible without the continued support.
As Mike stated earlier, we booked over $76 million of orders in Q2 that represents a 986% growth in order intake year on year.
The record books light.
If we include Sahara in the pro forma numbers for last year that the organic growth rate in orders for Q2 is 194%.
The growth in order intake reflects the huge market opportunity that we see both education and corporate sectors.
The value of orders booked two H, one was $124 million, which represents more than 780% year on year growth.
Some of our key orders during Q2 in the U S included $15.8 million from our distribution partner the NIH.
$5 million my partner David three.
$3.5 million.
The projections.
$3.8 million from Atlanta public schools.
$2.5 million from Central Nox.
$6 million from Howard Technology solutions.
$1.4 million of orders from digital technologies.
Outside of the U S. We received significant orders, including $2.5 billion odd units in the U K.
$3.4 million ISR solutions in Australia.
$1 billion with interactive <unk> solutions and <unk>.
With Africa.
$1.5 million from Asia to Europe ups in Finland.
$1.2 million from unit decay in Denmark, and $1.1 million.
But northern island.
In total U S accounted for 58% of our orders booked in Q2 with EMEA accounted for 36% of the rest of the world 6%.
In terms of hardware for our interactive flat panel market share we remain in the top two in the U K.
That's moved to number one very soon.
We also have the number one market share position in Ireland, Australia, Austria, Sweden.
And in Denmark.
Jim Switzerland, Pennsylvania.
And then the Spain, South Africa, and the UAE, we are top three provider by a few days.
Our biggest opportunity for significant growth remains in the U S.
We are ranked number five with approximately 6% market share in Germany, where we are ranked number six.
In the U S. We have hot that's a new sales heads in the past 12 months doubling our sales force and in Germany, where it used to recruit another two heads in the next quarter.
This investment in our sales team reflects the market opportunity that we see on the significant room for organic growth.
We are managing our inventory and working capital well and have sufficient stock on E. The seas, all in our warehouse facilities.
Our Q3 targets.
In terms of end users, we had another quarter of fantastic wins across the globe.
In California, we had a significant win with a large district, who chose our <unk> screens and more than 500 classrooms.
More than $1 million.
In Maryland, we continue to do business with a very large school district awarded more than 3000 panels in Q2 with up to another 7000 panels and stands expects it to be ordered in Q3.
In general Jeff we have started to roll out more than 600 screens to a large school district, and we expect that to grow to over 2000 panels in H two.
We have seen a stem pipeline in the U S more than double in Q2, and we see growing interest for these solutions within our customer base.
We also had some great wins in the corporate sector, including.
Including Qiagen labs, a leading bioinformatics company in the U K, who chose <unk> for their new U K headquarters and the real ideas organization Ria, who purchased a full range of our clever touch ecosystem ecosystem, including UX pro touch screens non instructive panels media.
Room booking screens.
We also had some great wins in the Blue line sector.
Leading our call touch solution unless you saw a police force in the U K. These.
These are great examples of how we can sell out and taught ecosystem into both corporate and education based customers.
During Q2, we sold more than 3300, maybe the connect software licenses for Samsung products.
These are three year term based licenses and will create future repeat software business on an ongoing basis when they all renewed.
We expect to sell more than 6000, maybe licensees during H two.
<unk> attached to samsung's hardware product sales.
In total we had $1.4 million of software sales unites one for maybe that connection octopus.
We expect software revenues of greater than $1.5 billion in H two four of these products.
<unk>.
Exploring the monetization of our clever software suite in particular links whiteboard solution.
Our expectation is that maybe I connect and links whiteboard will be the foundation of our science based solutions and create high margin annuity stream moving forwards.
In terms of new products, we will be launching ecommerce solutions in both of them give me a range and clever touch range during Q3.
These will provide solutions for both the education and corporate markets with full trucking full capability.
This is important as we see growing demand for our customers to use zoom teams and Webex interactive panels.
In summary, Q2 was an outstanding quarter in terms of order intake revenue and profitability.
Our solutions are gaining traction in the market, we continue to build out our sales channel.
Monkey States Dahlia.
Revenue guidance for Q$3.60 million with an adjusted EBITDA of approximately 12% or $7 million.
The improvement in profitability and adjusted EBITDA percentage is due to the ability of the business to leverage higher revenues and gross margins without substantially increasing the cost base.
Our trailing 12 month revenues at the end of Q3 will be greater than $172 million.
And our forecasted order intake for the 12 month period, and especially if the September will be in excess of $200 million.
With that ill now turn the call over to our CFO Patrick Foley.
Thanks, Mark and good afternoon to everyone.
To further expand on what you have already heard from Michael and Mark I would like to add a few figures to provide context to bulks life International operations.
The revenue by country and region. Our total revenue in Q2 was $46.8 million, EMEA was 39% or $18 million of which the U K was 44%.
The Americas, 56% $26.2 million of <unk>.
The U S with $25.1 million.
The rest of the world, 5% to $5 million, which is mainly Australia.
The top 10 customers represented 57% of total sales in Q2, but the single largest customer at approximately 15% and these are based across a number of markets, namely the U S. Australia the U K.
And Marc and Finland.
Just over two thirds of total sales are covered by the top 20 customers approximately 69%, which is pretty similar position to our quarter one 2021.
Well sales product mix and gross margins in Q2, although it remains the largest proportion of total revenues at approximately 18, 9%.
These are largely sales of interactive flat panel displays and represented 91% of this total.
As it relates to the accessories generating the balance of about 9%.
The balance of all total revenue coming from software services and stem solutions.
Adjusted gross margin for the quarter was 27, 5%.
<unk> margin was approximately 27%.
Would it be slightly higher however, as reported previously increased global shipping costs, where we are seeing four times normal rate have reduced margin by up to four percentage points.
We anticipate the higher costs will remain throughout 2021.
While receiving record order volume, we have experienced some supply chain challenges, including interruptions to inventory production schedules as a result, some component shortages along with continued delays in the shipping and receiving of goods.
We have also been managing cost increases for both hardware and shipping which has resulted in reduced gross profit margins.
These are global challenges and not unique to US. However, we believe we are managing better than most by extending our production planning and increasing prices to our customers.
As of today, we have already scheduled production through the end of 2021 and planning commenced on Q1.2022.
Anticipated lead times are five to seven months from certain hardware solutions, which puts additional pressure on working capital.
We have somewhat mitigated this by negotiating improved terms with key manufacturers and increased our credit facility with Sally pulse commercial finance up to $15 million from $6 million.
In Q2, 2021 education sector represented 94% of all interactive display sales with approximately 73% of these was 75 inch and 86 inch panels, which follows the trends we've been seeing as we shift to larger screen format.
I will now review our second quarter results.
Our financial results for the three months ended June 32021 were as follows.
Revenue for the three months ended June 32021, with $46.8 million as compared to $7.8 million for.
For the three months ended June 32020, resulting in a 497% increase due primarily to the acquisition of Sahara in September 2020, and increased demand for our solutions.
Gross profit for the three months ended June 32021 was $12.8 million as compared to $2.7 million for the three months ended June 32020.
Gross profit margin for the three months ended June 32021, It was 27, 5% and adjusted to the net effect of acquisition related purchase accounting.
The margin was 29, 1% as compared to 34, 4% gross margin as adjusted reported for the three months ended June 32020.
As reported in Q1.2021 gross margins have been adversely impacted by approximately four percentage points due to increased freight and customs costs caused by supply chain challenges associated with the effects of the COVID-19 pandemic.
This is anticipated to continue throughout 2021.
Total operating expenses for the three months ended June 32021 were $11.3 million as compared to $3.5 million for the three months ended June 32020.
The increase primarily resulted from additional overhead costs associated with the acquired Sahara operations in September 2020.
Other income expense for the three months ended June 32021 was net expense of $1.3 million as compared to net expense of zero point $6 million for the three months ended June 32020.
The increase in other expense was due to <unk> 1 million of increased interest expense associated with increased borrowings.
There are $6 million of losses recognized on the settlement of certain debt obligations that were exchanged for common shares and <unk> 1 million of additional gains that were recognized in 2021 upon the re measurement of certain derivative liabilities associated with common stock warrants.
The company reported a net loss of $2.2 million for the three months ended June 32021, as compared to a net loss of $1.4 million for the three months ended June 32020.
Our UK deferred tax liabilities required re measurement in the quarter. The book an expense of $2.2 million.
Following a change to the U K income tax rate in June 2021.
The finance Bill 2021 provide for an increase in the UK statutory tax rate to 25% from COVID-19% the taxpayers with profit over $250000 pounds I should say excuse me beginning April the first 2023.
The net loss attributable to common shareholders was $2.2 million and $1.4 million for the three months ended June 32021, and 2020, respectively.
After deducting the fixed dividend to series B preferred shareholders of $317000 and the fair value revaluation deemed contribution of $367000. Following the redemption amendment with the series B shareholders signed on June 14.2021.
Total comprehensive loss was $1.7 million and $1.4 million for the three months ended June 32021 and 2020.
<unk> the effect of cumulative foreign currency translation adjustments on consolidation.
But the net effect in the quarter, a <unk> 5 million gain and 0.0 million dollars loss for the three months ended June 32021, and 2020, respectively.
The EPS loss for the three months ended June 32021, with full cents loss per basic and diluted share compared to eight cents loss per basic and diluted share for the three months ended June 32020.
EBITDA for the three months ended June 32021 was $2.9 million as compared to 0.6 million EBITDA loss for the three months ended June 32020.
Adjusted EBITDA for the three months ended June 32021 was $5.4 million as compared to a gain of 0.0 million dollars for the three months ended June 32020.
Adjustments to EBITDA include stock based compensation expense gains losses recognized upon the settlement of certain debt instruments gains losses from the re measurements of derivative liabilities and the effects of purchase accounting adjustments in connection with acquisitions.
At June 32021 flight had $7.4 million in cash and cash equivalents.
$6.7 million and working capital.
$155.3 million in total assets.
$18.9 million debt.
$51.1 million and stockholders' equity of 57.8 million common shares issued and outstanding and $3.1 million preferred shares issued and outstanding.
Our financial results for the six months ended June 32021 were as follows.
Revenue for the six months ended June 32021 were $18.2 million as compared to $13.6 million for the six months ended June 32020.
Resulting in a 492% increase due primarily to the acquisition of the Sahara in September 2020, and increased demand for our solutions.
Gross profit for the six months ended June 32021 was $21.4 million as compared to $4.3 million for the six months ended June 32020.
Gross profit margin for the six months ended June 32021.
26, 7% and adjusted for the net effect of acquisition related purchase accounting that margin was 28, 7% as compared to the 31, 6% gross margin as adjusted reported for the six months ended June 32020.
As reported in Q1, 2021 voice margins have been adversely impacted by approximately four percentage points due to increased freight and customs profit pools by supply chain challenges associated with the effects of the COVID-19 pandemic. This is anticipated to continue throughout 2021.
Total operating expenses for the six months ended June 32021, with $21.9 million as compared to $7.7 million for the six months ended June 32020.
The increase primarily resulted from the additional overhead costs associated with the acquired Sahara operations in September 2020.
Other income expense for the six months ended June 32021, with net expense of $4.4 million as compared to net income of <unk> $1 million for the six months ended June 32020.
The increase in other expense was due to <unk> $7 million of increased interest expense associated with increased borrowings $3.5 million of losses recognized on the settlement of certain tax obligations that were exchanged for common shares and <unk> $2 million of additional losses that were recognized in 2021 upon the re measurements of <unk>.
And derivative liabilities associated with common stock warrants.
As noted above our UK deferred tax liabilities required re measurement in the quarter to book an expense of $2.2 million. Following a change to the U K income tax rate in June 2021.
The finance Bill provides for an increase in the UK statutory tax rate to 25% from the COVID-19% for <unk>.
Next payers with profit over 250000 pounds beginning April one 2023.
Net loss attributable to common shareholders was $7.6 million and $3.4 million loss for the six months ended June 32021, and 2020, respectively.
After deducting fixed dividends the series B preferred shareholders of $635000 and the fair value redeemed.
Revalued deemed contribution of $367000 following the redemption amendments with our series B shareholders find June 14th 2021.
Little comprehensive loss was $7.1 million and $3.5 million for the six months ended June 32021 and 2020.
Reflecting the effect of the cumulative foreign currency translation adjustments on consolidation in the neck.
I think year to date of <unk> $3 million gain and 0.0 million dollar loss for the six months ended June 32021, and 2020, respectively.
The EPS loss for the six months ended June 32021.
A 13th laughter basic and diluted share compared to a <unk> loss basic and diluted share for the six months ended June 32020.
EBITDA for the six months ended June 32021 was <unk> 5 million.
As compared to a $1.8 million EBITDA loss for the six months ended June 32020.
Adjusted EBIT for the six months ended June 32021 was $7.0 million.
As compared to a loss of <unk> $7 million for the six months ended June 32020.
Adjustments to EBITDA include stock based compensation expense gains losses recognized upon the settlement of certain debt instruments gains losses from the re measurement of derivative liabilities and the effects of purchase accounting adjustments in connection with acquisitions.
At June 32021 book flights had $7.4 million in cash and cash equivalents $26.7 million and working capital.
<unk> hundred $55.3 million in total assets $18.9 million debt 50.
<unk> $51.1 million and stockholders' equity of 57.8 million common shares issued and outstanding and $3.1 million preferred shares issued and outstanding.
With that we'll open up the call for questions.
Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that while posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.
Once again, if you have any questions or comments. Please press star one on your phone. Please hold while we poll for questions.
Your first question is coming from Brian <unk>. Your line is live.
Hi, guys Jacob on for Brian Congrats on the quarter I have a few so I may get back in the queue. After first I wanted to touch on your guidance for the third quarter I.
I was curious how much of this is from demand in the U S. And then I wanted to get an update kind of in terms of what youre seeing for adoption outside of the U S. What are you seeing in terms of funding for K through 12 schools, especially in Europe and elsewhere.
Well I could you wouldn't say I don't know if you'll be stupid.
Yes, maybe you start and I can feel them yeah.
Yeah. So look quite good question, we're seeing demand everywhere.
<unk> in the U S is exceptionally strong exceptionally strong.
But we're also getting very strong demand across EMEA as well.
In terms of the Q3 guidance I don't have the exact split in front of me.
But broadly.
It's.
Probably just over 50% in the U S. It can be similar to what we saw in Q2.
And then a slightly lower number in a beta.
The in terms of demand, we're seeing huge demand everywhere.
Yes, I think you covered it well mark so yeah. If you look Jacob if you look at what we reported for Q2, Pat mentioned that.
About 54% of our sales from Q2 were from the U S and then which flipped from previous quarters, where we had a larger percentage of our sales from the U S and EMEA was around 39% I think youre going to see more of the same throughout the rest of the year, where the U S is going to be much stronger.
Okay, and how much of the $48 million in back orders do you expect to recognize in the third quarter.
Yeah, we should recognize the bulk of that if not all of that the majority of that should be recognized within the third quarter and of course, we're still bringing additional orders and so there'll be sales beyond that backward a number that gets us to a minimum of $60 million.
Okay, one more and ill jump back in the queue.
About it a bit in the prepared remarks, but with the impacts on supply chain, coupled with investments in growth.
I was curious if you could give us a range of outcomes for you.
EBITDA margin in the fourth quarter should we expect gross margin to continue ticking upwards over the next few quarters.
Or do you foresee some uncertainty around shipping and freight costs.
Well I'll jump on that Michael.
Hi, Jacob its path.
Yeah, I think we will see the kind of margin kind of holding as they currently are we.
We have seen increased shipping cost as has the rest of the world.
But I mean can we know that that's kind of continuing and when they're likely to continue for going throughout 2021 that has been increased pressure on shipping costs as well even in the second part of the year. So far up to June. So we have been doing some mitigation as we explained to them that is actually volume kind of renegotiating some of the key.
With manufacturers and whole thing kind of doing one of the base things that she revisiting prices outside puffing their own where possible to actually maintain support and increase those margins. So we're doing what we can actually improve on that I think it will be likely similar outcome with maybe a little uptick.
I'll take that.
Yes, I think that's a good answer to that so just to add a little bit more color. So if you look at Q2, our EBITDA margin was about 12% or 11, 5%. The guidance. We provided for Q3 is about 12% EBITDA margin. So I think that's a safe number through the rest of the year and then as far as gross profit margin, we held relatively steady.
From Q1 to Q2, and I think you can use again that same gross profit margins throughout the rest of the year, we ought to be in a similar place.
Alright, Thanks, guys I'll hop back in the queue.
Thanks Jacob.
Thank you. Your next question is coming from Jack Vander Ark. Your line is live.
Okay, Great Hi, guys congrats on solid results.
Guidance again.
Thanks for taking my questions.
So just a.
First question revenue exceptionally strong both of them, obviously Sahara business was a strong contributor, but perhaps more importantly, your organic business was exceptionally strong.
In fact also just on a combined basis it looks like the second quarter total revenue was actually more than your historical 2019 revenue plus first half 2020 revenue combined all just in the second quarter. So that's.
That's quite a transformation first can you remind me what the pro forma organic revenue guidance, our organic revenue growth was for the second quarter. I think you guys said something like 140 plus percent.
Yes.
It just didn't orders the Q2 organic growth was 194% that's orders.
Got it great.
Got you Okay I appreciate the clarity there and then.
Second how do you see organic.
Growth in orders during the back half of 2021, and then would you expect.
Our robust organic growth in orders as well to continue in 2022.
Yeah.
Yeah. So Jack that the answer is we don't expect much of a slowdown we're seeing unprecedented demand for our solutions and I think we're going to see a lot more of that or we plan on seeing a lot more that we haven't given guidance on orders per se, but we did provide that guidance of the $60 million in sales for Q3, So that's as far out as we've guided.
But again I would say based on what we're seeing today, we don't expect to slowdown youre going to see continued uptick in demand over the next several quarters and that's driven by a couple of things one we've been investing in our sales team you heard Mark talk about that we added 13 more sales has in the U S. And that's one example, we added two more heads as well in Germany.
<unk> is another example of growing our sales team number two in the U S. In particular, which is of course, our strongest market and fastest growing market, we're seeing unprecedented spending because of larger budgets supplemented by federal money.
Funds coming in which are it's almost 200 billion that was allocated education, we're seeing that starting to be spent and then I would add right now we're competing quite well in the industry with our solutions. We believe in most of the categories. We compete we have the best solutions on the market. So combination of a great team is growing best solutions on the market and a lot of money in the <unk>.
System is resulting in this increased demand and it's not going to slow down in a quarter or two this is going out a couple of years and beyond.
Great Fantastic to hear and then actually just a follow up to one of the points you made on the federal funding.
Aspect of <unk>.
What can really fuel sales here is last quarter I know you guys have done.
You've made a lot of moves actually in the first half of this year in general you've made a lot of moves too.
Help your districts get educated on how to receive that federal funding to purchase education.
Technology, such as yours.
Is there any noticeable evidence or traction you can point to.
Just kind of describe how that's trending now or progressing.
Yes, we are receiving substantial orders right now where we don't want in fact, the money is coming from federal funds. So the efforts we put into play are absolutely working the support system that we have for these districts as working in supplementing.
The district's teams to be able to apply and receive funds and we absolutely have measurable results and we havent reported specific numbers or specific districts, but I will tell you that is substantial.
Fantastic and then just one more question for me and I'll hop back in the queue.
One can you just review again, what you said about the second quarter MEO and Samsung licenses that were sold and then I think you provided kind of an initial outlook our target number of licenses you expect in the third quarter.
And then I'll have a follow up.
So obviously.
During Q2, we sold more than 3300 <unk> license.
Licenses that overnights to Samsung products, so basically where licensees all being attached to Samsung.
We gave guidance for <unk>, two we expect more than 6000 licenses, maybe connect licenses to be sold again touch to Samsung.
In terms of revenues.
Total software revenues, we expect more than $1.5 million NIH too. So we are looking at how we build out the software part of our business. We are looking at developing that SaaS model.
Especially around maybe a connect and also links whiteboard.
And that will be something we work on and develop over the coming quarters.
Got it and then just as a quick follow up to that.
In terms of just how these licenses are being sold.
How the sales are being sourced.
Samsung playing an active role in terms of pushing these licenses more so than they were last quarter. Just can you talk about the sales channel dynamic of how these licenses are being sold yeah.
We are seeing significant yesterday is the bottom line, we are seeing significant opportunities.
With Samsung and some very large education establishment in the U S.
Obviously.
The hardware is Samsung, but all of the any Samsung.
<unk> sold into the education sector in the U S automatically include I'm going to be a connect software. So that's basically how our revenues will grow along with that.
We have we did and we announced last quarter, we do a deal with Samsung to effectively make sure we sell plenty of software into them. This year.
But we expect that to grow at Samsung gets more traction in the education space in the U S.
Okay, great great to hear again, that's it from me guys Fantastic results I'll jump back in queue.
Thank you Jack.
Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time. Your next question is coming from Carla Phlegm. Your line is live.
Hey, guys great quarter.
They had a hell of a quarter actually.
I just have a real quick question My man I'm asked about the.
Government funding or the release.
Do you guys know when youll be able to report revenue from that.
Okay. Thanks for the question Dan we are reporting revenue from that now so the first group of funding was the cares act. So that was the initial S. Refined that was the $13.5 billion of reality with allocated.
Back last year March of last year is when that passed those funds are being spent in fact, the initial deadline to use those bonds was that was June of this year and that got extended but we are recognizing revenue from those funds. The next tranche was Essar fund two which is the <unk> Act.
That hit <unk>.
End of last year and that was another $54 billion and we're just now hearing those funds are starting to be spent and we will recognize revenue. The last batch of course is the.
The the bite and plan that was put in place as her three which is the American rescue plan Act that was another 122 plus billion dollars and that's going to hit all the way through we believe through 2024 is what were seeing it may be extended but right now it's going to be spent through 2024, so youre going to see spending out the next several years, but we are seeing.
Funding right now that's being spent for our solutions from at first tranche, which with the cares Act money.
Awesome. Thanks, guys.
Thanks Kyle.
Thank you. Your next question is coming from Brian <unk>. Your line is live.
Hey, guys two more can you give us any updates on your relationship how that's ongoing with Trinian trucks. Following recent merger how the conversations are going there and if you're beginning to see any benefits.
Do you want take that one Michael.
Yeah, Yeah, I'll take that.
<unk>.
Yes.
With that that was a significant merger as youre aware in the industry. Both of those partners are very large partners tyranny action was our number one partner so far this year tracks wasn't too far behind and so when they merged together that was an absolutely significant event for us, but our relationship with both is still strong as those companies merge which they are doing and.
And consolidate their teams.
We've doubled down on our focus of supporting them. We are working on an agreement which is in the works to where we're going to continue to support them with our clever touch brand is the main focus there is still going to be able to sell our <unk> solutions as well, but but we're working with them to maintain exclusivity on our clever test brand in the U S, which is an agreement.
The tier and you already had in place and we expect them to put forth some big numbers and they have as we understand our nearly 200 reps across the U S. So they have a large.
Sales force and in their workforce that we want to be partnered with and so again, we expect some really big numbers out of that group and have a great relationship with them.
And then dad mark on that.
Yeah, and I think you covered it well Michael I think.
We got fantastic relationship.
We are very much engaged right throughout that business.
The exact level as well and we're expecting great things there.
Alright, you mentioned on the call also recently had some press releases clever touch sales to professional services and just curious how that market is progressing and how how much interest you're seeing there.
Do you mean, thousands Copa is that what you're referring to yes for corporate yes.
Yes.
Yeah, we see.
Huge opportunities that we don't break out the numbers separately.
We know that corporate sales were much more significantly impacted from COVID-19.
Compared with education sales.
But we've just recently invested in our U S sales force stuff a separate corporate sales team I think I actually announced that in the last quarters results.
So we're just starting in the U S that we.
In EMEA.
Hopefully you know 15, 20% of our revenues are coming from corporate.
And it has high margins and Cobra.
And you know the room.
But growth is very very significantly.
Thanks, guys congrats on the quarter again.
Okay.
Thank you once again, ladies and gentlemen, if you have any questions or comments. Please press star one on your phone at this time, please hold while we poll for questions.
Thank you there are no further questions in the queue I will now hand, the conference back to Michael Pope for closing remarks. Please go ahead.
Great. Thank you everyone for your support and for joining US today on our second quarter 2021 Conference call. We look forward to speaking to you again in November when we report our third quarter 2021 results. Thank you.
Thank you ladies and gentlemen, this does conclude todays event you may disconnect at this time and have a wonderful day. Thank you for your participation.