Q4 2021 Glimpse Group Inc Earnings Call
Greetings and welcome to the glimpse group fiscal year, 2020, One financial results conference call. At this time, all participants are in a listen only mode. Our COO.
And the answer session will follow the formal presentation.
As a reminder, this conference is being recorded before we begin the formal presentation I'd like to remind everyone that statements made on today's call and webcast, including those regarding future financial results and industry prospects are forward looking and maybe subject to a number of risks and uncertainties that could cause actual results to differ materially from those described in the call.
Please refer to the company's regulatory filings for a list of associated risks and we would also refer you to the company's website for more supporting industry information.
I would now like to hand, the call over to Leon bench of them President and CEO of the glimpse group you were on the floor is yours.
Thank you operator, and thank you everyone for joining us I'm pleased to welcome you to the <unk> group's fiscal year 2021 financial results for year, ending June 32021 conference call.
This is our first public earnings call I want to take this opportunity to provide a quick overview of the Greens groups to anyone who is new to our story.
The <unk> is a diversified virtual reality and augmented reality platform company.
Price of multiple wholly owned integrated VR in our enterprise focused software and services subsidiary companies, providing investors an opportunity to invest directly into this emerging VR in our industry. They are diversified platform.
We created blends with the vision of cultivating companies in the emerging V are a our industry simplifying the challenges they face, creating a robust ecosystem covering wide IP, while creating scale and cost efficiencies where are we seeing an early stage industries and mitigating grid for the investors and the entrepreneurs.
<unk>.
Fiscal year 2021 was our fifth year of operation and a pivotal year for <unk>.
Highlighted by several achievements as we look to continue to establish.
Yeah.
Our unique business model and strengthen our market position in the rapidly growing immersive technology space.
We successfully completed a $15.0 million bore initial public offering and the lifting of column shares on the NASDAQ stock exchange, establishing ourselves as the first pure play NASDAQ listed diversified virtual and augmented reality software and services company.
Although our fiscal 2021 was impacted by the pandemic. We still saw continued strong topline revenue growth, 76% year over year. This growth was for your county, and a result of new customer engagements in existing customer follow on engagement, including several multi year commitments.
Our software license revenue grew by unfortunately, 100% year over year, our pure software and related service revenues, which does not include our VR and air projects grew by approximately 240% year over year and now comprise approximately 60% of our total revenue.
During fiscal 2021 both our EBITDA loss in cash flow from operations improved significantly year over year as we continue to manage our growth efficiently.
In conjunction with continued organic growth select accretive acquisitions are a core part of our growth strategy.
An example last month, we acquired a 10 subsidiary company of a provider of augmented reality software and services.
This acquisition expanded glimpse into a new vertical in the architectural engineering and construction ADC segment and allows us to establish our footprint in Australia.
We expect to close on additional acquisitions of various sizes in the coming months.
We also added to our intellectual property portfolio with the issuance of our four patents.
We have an additional nine patents previously filed and in the process with the patent office.
We're striving to capture very wide and far reaching concepts with significant potential when the industry matures.
We improved the composition of our hoar by expanding the number of directors and adding new independent directors with significant industry expertise.
With a clean capital structure, approximately $13 million of cash and no material liabilities, we have the ability to capitalize on the significant growth opportunities in this emerging market and are well positioned for further organic and inorganic growth.
After the recent acquisition of on the group's group has 10 subsidiary companies that are serving a diverse set of industries ranging from health care at the corporate training on financial services to therapy and supports for media and entertainment to education.
We are constantly looking to add high quality companies that will expand us into new industry segments increase our scale further diversify and deepen the glimpse ecosystem or enhance and strengthen our positioning in existing markets.
We are very proud of the caliber and diversity of the partners and customers. We are working with and we look forward to continuing to expand these relationships and add new ones as we continue to grow.
The diversity of our subsidiaries and of our customer base is evident from some of the recent announcements we've made over the last few months.
Our learning and corporate training subsidiary company of death, Pixar announced a multiyear partnership with higher education disruptor studio to integrate its VR platform elevate Intuit studios curriculum and build a unique immersive virtual accomplish that would be the heart of our studios educational activities.
In July we announced an innovative collaboration with Swiss Shelly.
A recipe company, which is one of Canada's largest full service restaurant companies.
To gamify the experience of the takeout sharper and connect them with the brand and the restaurant experience.
Yes.
Early adopter, our K 12 education subsidiary company announced the extension of its multiyear relationship with avenues won't school to bring a new dimension to the experience of its students teachers and parents using our common room product, which allows students to present their work in augmented reality.
Our subsidiary company Foretell reality announced a multiyear license with Northstar care to integrate these virtual reality support group a solution with MST is innovative addiction telehealth treatments.
Our subsidiary company for going as we are announcing a third year of working with temple University to use expensive, depending primarily platform to broadcast live interactive classes to students around the world.
And our subsidiary company Q real announced its status as a preferred augmented reality partner all snap working in partnership with the snap thing to use curios lifelike air content to bring dozens of brands to life on Snapple lenses.
These are just a few examples and we hope to share more of the work of our subsidiaries and their partners with you over the coming months.
Yeah.
Overall opportunities in the immersive ward can be categorized into four distinct buckets.
The first one that is gaining significant early traction these marketing brands.
Brands are seeing great success, using augmented and virtual reality to connect with a younger demographic of shopper building brand awareness engagement and immersive connection.
Immersive technology is a natural medium for learning and education.
Though early we can see success in the full spectrum of learning from K 12 through higher education to corporate training for both soft and hard skills as well as medical professional training.
One of the advantages of the XR technology is that it allows us to visualize anything and everything.
For buildings that have not yet getting built two products. We don't have in our hands all the way to visualizing complex data in new insightful ways.
But the end game for immersive technologies is the meta horse.
And it's in infancy. The meta first has the potential to bring them to life, a new dimension dramatically changing the way we work and play.
In time, the meta horse will open up a new three D digital world, enabling us to work in virtual offices.
Hosting virtual worlds learning virtual schools and shock in virtual stores.
We believe that the Bliss is positioned positioned to play an enabling role in the development of the med averse as it evolves.
From its concept to a business reality.
And as other emerging technologies AI computer vision blockchain potentially call us together with V RNA all over time.
With that I will now turn it over to Mcdonough rock little glimpses, CFO and COO to review the financial results for our fiscal 2021.
Uh huh.
Basically wrong I will limit my portion to a central review of our financial results. Our full breakdown is our is available in our 10-K.
In the press release that crossed the wire after market close today.
Please note that I'll refer to adjusted EBITDA and other non-GAAP measures with the calculation of adjusted EBITDA and other non-GAAP measures. Please refer to the MD&A section of our 10-K filing which you can find on our website under SEC filings.
Total revenue grew 76% to $3 four 2 million for the year ended June 32021, as compared to 1.95 million.
In the previous fiscal year.
The increased revenue was primarily driven by the addition of new customers and increased business with existing customers.
Our software services revenue category comprised of our projects and software related services was 3.08 million for fiscal year 2021, compared to 1.78 million for the year ended 2020, an increase of approximately 73.
<unk>.
Our software license and SaaS revenue were approximately.
0.3, 4 million in 2021, and 0.1.7 million in 2020, an increase of approximately 100% as.
As the V are in our industry has continued to mature we expect our software license and SaaS revenue to continue to grow on an absolute basis and as an overall percentage of total revenue.
For the year ended June 32021 D. R. A our software and related services revenues not including V. R&R projects was 173 million compared to 0.5.1 million for the prior year, an increase of approximately 239%.
Sent.
For fiscal year 2021, non project revenue accounted for approximately 54% of total revenues as compared to $26 one in the previous fiscal year.
Gross profit increased to $196 million or 57, 3% of revenue in fiscal year 2021, as compared to a gross profit of 0.8.1 million or 41% 41, 5% of revenue.
In fiscal year 2020, the increase was primarily due to an increase in our software license and SaaS revenue improved software services project management and higher utilization of our internal staff.
Our cash basis gross profit margin, excluding stock option based cost of revenue expenses was approximately 74% for the year ended June 32021, compared to approximately 53% for the year ended June 32020.
Yeah.
Operating expenses for the year ended June 32021 were $6 $13.0 million compared to $78.0 million in the prior year. This was primarily due to increases in research and development and G&A expenses, partially offset by decrease in sales and marketing.
For the year ended June 32021, net loss from operations was $75.0 million compared to a net loss from operations of $4 nine 2 million for fiscal year 2020, an improvement of approximately 4% period to period.
Primarily primarily driven by increases in revenues and profit margins, which outpaced an increase in operating expenses.
Net loss for the year ended June 32021, 6.09 million, an increase of 22% compared to a net loss of approximately $103.0 million for the year ended June 32020, primarily driven by an increase in other expenses, which were onetime in nature relating to.
The July IPO.
As it relates to cash flow, we look at two main parameters.
Net cash used in operating expenses for the year ended June 32021 was approximately $1 to $1 million compared to approximately 2.02 million for the year ended June 32020, an improvement of approximately 40%.
Fiscal year 2021, adjusted EBIT loss, a non-GAAP measure improved by 0.4 dollars 7 million to 1.51 million an improvement of 24% from $1 nine 8 million in fiscal year 2020.
We have net operating loss carryforwards Nols of approximately $14.0 million.
We ended our fiscal year with a strong balance sheet of $13 million in cash after our July IPO with no material cash liabilities, no preferred equity outstanding and no convertible debt.
Financially our company is in a strong position with a strong balance sheet, our low cost structure relative to our growth Tech company.
Fundamentals of our operations are very positive, we remain well positioned for future growth.
With that I'd like to pass it back to layer on to offer some closing remarks, after which we will begin our Q&A session.
Yeah.
Thank you Mike.
Looking ahead, we are well positioned to create long term value for our shareholders with the immense opportunity presented in the developing a RMB our industries through the prudent management of an integrated group I'll say worse subsidiary companies.
Our team is committed and focused on the steady execution of our growth strategy as we look to solidify our leadership position as the only pure play NASDAQ listed diversified enterprise focus we are a our software and services company.
Look forward to providing our shareholders with further updates in the near term as we continue to diversify our platform and build economies of scale.
Thank you all for calling in and now we'd like to handle the call over to the operator to begin our question and answer session operator.
Thank you Leon. Thank you Leon at this time, we'll be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue for.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Yes.
Our first question comes from the line of Daryl zones with a private Investor you May proceed with your question.
Hello, gentlemen, loan beta and congratulations on a wonderful year in May we have been in.
In the future I wanted to start with the recurring.
Recurring revenues, which I didn't see it broken down in the press release about what percent was recurring revenues as opposed to know.
Yeah.
So there are we.
My.
My comments and in the.
And in the press release, we view the.
Yeah.
The software services.
And the or the non project software services and the.
Software license.
SaaS revenues as our recurring revenues.
So they're now.
There are about 50% of our revenues.
In this fiscal year compared to approximately 25%.
In the year prior and expectation is.
That will grow.
Overtime on absolute level and as a percentage of.
Of revenue.
Okay.
Wanted to know what a bit more about your sales cycle regarding projects.
From let's say our inception textually completion.
Especially concerned about 50% where projects how does this work.
So there's a large variability in the sales cycle.
It kind of it.
Like all of our new projects varies between three months and 12 months between kind of initial kind of a relationship and finding Vanessa W. And then usually the execution piece is varies between three months six months. So that kind of gives you a full coverage.
Sometimes you will have projects that kind of mistake three months too.
And then three months to execute on and that's the fastest you can probably do for a project and sometimes they can take a long time to get them done through.
The system again, we work with mostly large organizations that have a long internal process to closing.
New projects.
Okay.
Typically are curious about the VR campus.
How long do you think it takes to actually create this or how far have we gotten so far.
Yeah.
So the VR campuses actually finished.
And we are deliberate that's two at studio actually.
This month, so that's the good news and Theyre planning on using the VR campus in there are forced to force the necessary in October.
Now is this that's considered a project and now they have the campus and that's all the revenue or is there a maintenance fee I hadn't improvement how does that work.
So this is actually not a project, but a license. So we've delivered a license for them. They actually licensed both are.
The campus software as well as elevate which is the software in depth depth XR are learning company has to kind of to integrate within kind of a learning.
Opportunities.
And there will continue to pay for those as they grow they won't pay more and more licenses based on the your generalization. In addition to that there is projects that relates to additional features that they wanted that are not part of the platform that those were separately kind of capture those projects.
Oh, great do we have a handle on backlog are you able to at least that of probation.
So as of the.
End of June our backlog.
Which for us are projects or licenses that we've either delivered.
Or will deliver in the coming months and.
And we expect to collect on those so that the general range of that tends to be somewhere between one and a half or $2 million.
Okay.
Margins improved nicely are we going to see a continued improvement in margins is there a goal for a what kind of profit margins we're expecting.
So at Hearts are companies are software.
Companies that software business models, whether its a license or snacks.
Everything has to be taken in the context of early stage.
Industry, So it's going to take some time before as I can say.
$1 million or $2 million that contract comes around.
So in the long term.
We should be seeing.
Software.
Type of margins, where they're at 70 and ready to go or whatever that ends up being but that's longer term, we're building towards that and that's why I'm seeing our gross margins.
Improved year to year because again.
Increasing portion of our revenues are software.
And services and we're managing the projects.
Great. Okay. That's that's all I got for now one Scott. Thank you for taking my questions and congratulations on the year.
They're already.
Thank you. Our next question comes from Kevin data with H C. Wainwright you May proceed with your question.
Yes.
Thank you, it's Kevin D D.
As Iran. The I think the overarching issue is one of the synergy and I was just wondering if you could walk us through how you see bolting together now.
With your 10th acquisition.
Developing synergies throughout the organization.
That's actually a very good question, Kevin and thanks for joining us so when we brought all Dan.
Obviously kind of that's like bringing a new member to the family.
Immediately they started working with some of our companies.
They are cooperating with post reality, one of our other augmented reality companies on trying to connect their back ends for example, and getting the best features that all have had in their back end combined with the features that post reality has in their back end to try and benefit both companies, they're working with curio.
Our another of our augmented reality companies too.
Kind of benefit both companies. So curious specializes in creating lifelike assets and they're already in multiple discussions are working supporting the Austin and are working together to kind of a.
Deal with customer needs that both teams have expertise in so that's just kind of with one month of them being integrated into groups and.
That's the type of opportunities I'll give another kind of by line is one of the Gms had a business contact that has nothing to do with their business that they have already introduced the.
The G M on August two and they are exploring a business opportunity and as you can see the synergies are quickly.
Captured by US once we bring a new company.
And.
In the past we've talked about this you.
Commented on part of the power of amalgamating all these separate companies.
In developing a software platform.
Can you speak to where you are in that development.
How far along you think you'll need to go before I mean in terms of time before you'll be able to attract.
No external entities and how you think that will correlate with the development of sort of a commercial actually pardon me a consumer VR AR market.
So.
What youre, referring to is what we called the chassis, which is the platform that we're building and that takes all of the basic building blocks that a VR solution needs that were developed by four of our VR companies and combining them into one platform that initially is serving those for internal.
Glimpse subsidiaries, but the thought is as we move forward and in terms of a timeline, that's probably a kind of a 2022 timeline opening those up.
To V are companies that want to produce and build them via our solutions on top of our chassis platform. One of the things we're actually in discussions we're talking with a large technology company that services. The VR AR base to see how we can connect the chassis directly to their self.
Four and therefore kind of creating this solution that creates a win win for us and for them.
Awesome, Okay. Thanks, so much.
Thanks for taking my questions.
Operator.
Okay.
Tom.
Hi, This is mark stronger it looks like the operators, having some issues. So we will take a few a write in questions for you guys.
Got a couple here what what's what's your plan in terms of medical and legal Dr.
Interactions and can you comment on just what you see and how far along in this path you are.
Well so on the medical side, obviously kind of immersive health group ISG our subsidiary is working.
In developing and selling kind of solutions for training in medical space. So that's active and happening and it is definitely part of what we're doing.
On the legal side, we've looked at working with both law firms and.
Universities, but we have not found yet.
Winning use case that makes sense.
Given where they are right now, but we're constantly in discussions about exploring this.
Okay, great Thanks and.
Yeah.
We've got another one here are you planning on.
Developing a via RNA or an F T or are you planning on partnering with someone in that domain.
So we put out a press release, a few weeks ago about some of the efforts that we're doing on the NFC side. We think we have a collection of unique technologies across multiple of our subsidiaries that will enable.
To bring NXT is into the E. R. In aerospace what we're doing is we're looking and we're in active discussions on partnering with a variety of players that are already playing in the space that are needing our VR and air technology to try and work with them to greatest solution that will allow people.
Or in the NFC space to visualize and Eh and manage Darrin if fees.
Yeah.
Okay, great. Thanks, Laura.
And I guess one more here.
Are you looking into proof of view blockchain technology with your D. R&R.
I am not sure kind of that D. J Smith, our chief Creative officer is leading the charge on that.
So I assume he is but I'm not sure.
Okay.
Okay No that's helpful.
So loan it looks like our operators still are having some technical issues so with that one.
John are you there.
Yes, I'm here can you hear me Okay. Yes, you want to proceed with the dial in Q&A, Yes apologies on the technical difficulties. Our next question comes from Christopher garage, when our with New York Life. You May proceed with your question.
Hey, guys congratulations on the quarter.
And the year my my questions about the low hanging fruit, so I'm kind of wondering I agree with your installed base.
Existing customers.
What's the opportunity for kind of being more value added for them. So maybe you're going from trial to two one license or software as a service what kind of the opportunity there.
That is when Christopher Thank you for joining us and for asking that is a great opportunity and that is definitely a major driver of our organic growth as we go into existing customers. Initially almost all of the initial introduction is some kind of proof of concept.
And usually that comes with some project element and some minimal license element.
As a relationship grows the thought is and we've done this with many many of our customers to date and we're continuing to go along that path and with others.
Those kind of the licenses become larger as they expand the base of the users and there's more projects as they continue to dwell into additional use cases across their company. So that's definitely a major part of our organic growth strategy.
And I would just add to that.
Every case project or not project, we own the underlying technologies.
No.
There is growth and traction with a certain company.
That could lead to similar.
Type of situations with other companies in that industry or other.
Other tangent not necessarily in that industry utilizing you'll similar.
Technologies.
That's helpful guys and good luck.
Thanks, Karen next quarter.
<unk>.
Thank you Christopher.
Yeah.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if he would like to remove your question from the queue for participants using speaker equipment. It may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Yeah.
Our next question comes from the line of Jeff <unk> with Diamond Bridge Capital You May proceed with your question.
Hi, guys congrats on a good year.
Just curious about.
Maiden about you said the recurring revenue I when I look at the the license.
Revenue, it's roughly 10% of your total so I think you said.
It was higher than that.
Clarify, yes, yes, because there's two elements of our current services. One is the pure software software licenses or SaaS and.
And other are.
Services related to that software or a recurring services agreements and so when you lumped together.
Software license.
Flash SaaS.
And you add on top of that the recurring services. That's how you get to that 50% number. When you were alluding to is just the software and services sorry, the software license.
<unk> SaaS.
Directly without the services.
Okay, Great alright, thanks for that clarification, and then also about gross margin you say in your press release that excluding stock options. Your gross margin was 74% and you said your you expected gross margins to eventually get to 70% to 80%, so that 70% to 80% of that comp comparable to.
The.
The 57%.
This last year or.
Sure.
Well as as we have an increasing.
The level of revenues from direct software.
Or some of these services than those require less.
Human intervention right. So just by that we're going to get to a number that's higher than where we are today.
I'm sorry.
When you take when you take out.
The equity.
Then we will get to a level. That's similar I mean, if long term, we can get to gross margins in our.
70.80 per.
Percent.
And we don't have to cut out.
Or exclude.
The equity portion is equity portion doesn't really exist on those revenues is theres not.
Human.
Element in it then we will be better off.
But right now while those are equity cost theres no cost and so.
The true true gross margin is closer to that 50, 560%.
But we thought it was important to carve out the portion that impacts the actual cash.
On the business.
Sure, Okay that makes sense.
And as far as your.
Your patents and as more patents are filed.
Does that.
Unleash much.
Greater potential for you to then go to the market and say Hey, we've got this technology.
Now, let us to some projects for you or have the patents more just kind of instrument incremental protection of of the work that that's done in the background and.
And it doesn't necessarily.
Open up a lot of white space for you to to generate a lot of revenue.
So we will look at the patents as more of capturing a piece of the future.
So when we look at our patenting strategy, we're not trying to patent today and definitely not trying to patent yesterday, because the industry is moving forward quickly or trying to position ourselves. So when this industry gets to scale, we've captured some significant junctures death.
Will allow us to monetize those patents. So they don't have short term impact on our business, but I think that can have pretty significant long term impact on our business.
Okay.
And then also about your your cash and your acquisition appetite is there any guidance you could say to investors about how much you will be spending.
Using your cash to make acquisition.
Those historically.
We have not made acquisitions of cash every.
Everything was.
Equity based and earn out base and it's been a.
Highly highly accretive.
As we go forward there will be a mix of.
More of a type of acquisition some of that acquisition types that we made in the past meeting smaller companies that have significant growth potential.
But also larger companies or.
Larger relative to.
To the industry.
Were there we expect there will be some cash components to.
Through the acquisition.
So it's hard to say at this point exactly what that mix will be in and which will utilize cash in which will not.
What I can tell you for certain is that.
We're.
Lord owners in the company.
Now we have to be very careful with how you know who we bring in and how we bring in a restructure these things so everything needs to be accretive we tend to work with earn outs. The company you've had too as they perform.
They get paid yes, there's some upfront payment.
And so we're we're very careful with our with our acquisition strategy.
Got it alright, thanks very much for your help.
At this time, we have reached the end of the question and answer session I would like to turn it back over to Lee Roth for any closing remarks.
Thank you operator.
I'd like to thank each and every one of you for joining our earnings conference call.
We look forward to continuing to update you on our ongoing progress and growth.
If we're unable to answer any of your questions. Please reach out to our IR firm MZ group, who would be more than happy to assist.
You have a nice evening.
Thank you everyone.
Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
Yeah.
Okay.
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