Q3 2021 ION Geophysical Corp Earnings Call

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[music].

Greetings and welcome to the I N O G. A physical third quarter earnings conference call.

At this time all participants are in a listen only mode.

Question and answer session will follow the photo presentation.

If anyone should require assistance during the conference. Please press tied interior telephone.

As a reminder, this conference is being recorded.

And is now my pleasure to introduce your house, Rachel White, Vice President Investor Relations. Thank you you may begin.

Good morning, and welcome to eye on third quarter 2021 earnings Conference call. We appreciate you joining us today as indicated on fine too awkward today or Christmas <unk>, President and Chief Executive Officer and Mike.

Executive Vice President and Chief Financial Officer, really you think black to accompany today's call, which are accessible via a link on her website I onto your dot com. There you can also find a replay of today's call before we begin let me remind you that certain statements made during the call may constitute forward looking statements. These statements are subject to various risks and I'm.

Certainties, including those detailed in our latest 10-K and other S. U T filing which may cause I recall tooker foreign to differ materially from those projected a new statement.

Ah remarks today May also include non-GAAP financial measures.

No details regarding your song how financial measures, including reconciliation to the most directly comparable GAAP financial measures can be found in our earnings release issued yesterday I'll now turn the call over to Chris will begin on slide four.

Thank you Rachel good morning, everyone and thanks again for joining us.

And they will discuss eye on financial results are progress diversifying into market segments with higher returns and I look for energy and Maritime time operations industries, we target.

Our third quarter results improved considerably largely due to the successful execution of our three D strategy and we expect to have a strong finished of the year, we delivered $44 million revenues, an increase of 125% sequentially and $22 million of adjusted EBITDA up significantly from last quarter.

Second significantly larger phase of our mid North Sea high for D. Program was completed ahead of schedule and a third fully funded an extension began our team also continue to advance our diversification strategy imports and offshore logistics through our climate Smart Maritime Digitalization solutions.

April elaborate shortly on the progress we've made in the evaluation of strategic alternatives and the additional cost reduction program announced last quarter.

So this is a good gesture to express hopefully if I am with the whole ion teams third quarter performance and their fulsome demonstration of how we can punch above our weight everyone has been through a lot over the last 20 months of disruption in transition and hard work and focus deserves do credit.

So thank you.

Let's start with the market dynamics and our strategy succeed in the rapidly evolving energy and maritime operations industries, but the global economy in commodity prices rebounded above prepandemic levels in the last year, Brent crude has risen over 125% to about $85 a barrel historically rising commodity prices correlated closely with increased exploration spending.

However, despite generating near record profits energy companies exploration spending has become decoupled from oil prices is cash flow is directed towards dividend share buybacks paying down debt and accelerating investment in energy transition related strategies, although supply of tightened analysts anticipate seismic spending will remain muted near term is budgets are allocated to existing development.

At the expense of future oil and gas projects, which still have a discretionary profile <unk>.

Energy transition has narrowed are client focused and magnified the importance of precision around our future investment decisions. As we have said for some time, we expect data purchases will largely be aligned with lower risk high return strategy is focused on stable regulatory environments proven basins, lower carbon and the infrastructure, let exploration that leverages existing nearby facilities.

Strategically investing in programs, where we believe capital will continue flowing throughout the Mg translations, such as the North Sea in Brazil.

Meanwhile, investment in the energy transition is rapidly approaching that of traditional oil and gas opposing clear challenges. The energy transmission has also created new opportunities for the geophysical industry.

Our data will help customers efficiently locate and develop energy resources with lower emissions and environmental impact whether it's more traditional sources or renewable ones. For example, there are potential seismic applications that offshore wind carbon capture and storage geothermal and more original base and expand data is already helping to identify and evaluate potential carbon storage fairways.

Across the Gulf Coast in Gulf of Mexico to help mitigate emissions that impact climate change.

But with respect to our core business, even in the most aggressive energy transition scenarios offshore oil and gas is expected to remain an important part of the energy mix required to meet global demand for at least the next few decades, we expect the size of the market will continue to improve as the major settle into their new strategies, which includes near infrastructure exploration and national oil companies continue expanding beyond their home Zhu.

<unk> in particular, we believe that our strategic decision to participate in about three D New acquisition Multiclient market.

With some select ion Differentiators will enable us to continue to capture market share, even with limited recovery and industry conditions.

That said, we're also focused on rapidly diversifying outside of energy into much larger markets, where we can increase the stability and share of recurring software revenue in our business. We are targeting port management energy logistics and maritime digitalization markets. Our strategy is to empower industrial and government clients do sustainably operate in the maritime environment at lower cost with reduced image.

<unk> and with actionable intelligence around their marine resources. These large capital intensive ecosystems present significant digitalization opportunities.

And our E&P technology and services business revenues improved over 200% sequentially, primarily due to the successful execution of our <unk> strategy. This portfolio pivot from two D to three D shifts, our new product investment closer to the reservoir, where clients spend tends to be more consistent and programs have larger scale revenue and earnings potential.

Even in a challenging environment are multiclient market share increased approximately 50% through a purpose will focus on new three D assets more than half of the revenue generated this quarter stemmed from our three D programs from the two new acquisition campaigns in the North Sea to RMS Artfully remastered re imaging program offshore Brazil.

Our team not only completed the larger second phase of men North Sea high ahead of schedule, but also launched a third fully funded extension nearby.

Especially pleased with this new program allowed us to expand our strategic foothold in this promising north sea sector. In the same season is our phase II program.

The mid North Sea High program covers one of the few remaining underexplored areas offshore the UK, we're relatively low development costs closer sure make it attractive for future investments data collection for the aforementioned 700 square kilometer third phase is expected to wrap up mid November over the next year multiple exploration and appraisal wells will test new prospects in further quantify.

Nearby discoveries based on the outstanding subsurface image quality demonstrated in phase one we expect to provide a regional perspective with fresh insights for developing the entire UK Ukase Eckstein play. This program is a great example of how new high quality data can unlock the potential of new acreage.

In addition to the North Sea, we are continuing to expand our highly successful <unk> re imaging data set offshore Brazil, Brazil remains one of the hottest exploration spots globally due to the low development costs of its reserves with some offshore projects breaking even at 28 $35 per barrel during the quarter. We book strong sales of the Kania face fix our newest addition to.

This data asset.

One of the largest contiguous surveys in the world Pecan, you spend 175000 square kilometers of seamlessly re image data due to Ah remastering and re imaging emphasis and highly efficient proprietary software infrastructure, our carbon footprint per dollar of revenue is much less than any of our data library peers.

We also have a compelling revenue.

Dollar per competing petaflop due to approve and very modern high performance computing software infrastructure building on that proprietary expertise in parallel scientific computing. We're in the final phases of delivering our new imaging anywhere cloud made a platform that will provide ion state oppressing team to access the flexible and scalable compute capacity at an affordable cost.

Imaging anywhere enables breakthrough geophysical development speed combined with optimize performance that will deliver superior imaging results and greatly reduce turnaround times. This cloud software infrastructure will also enable integration of customer and partner proprietary technologies within the overall workflow. We are exciting to be excited to be working with AWS to bring this to market in early two.

22, while exploring different commercial models redeployments technology.

However, a key driver to imaging effort is the input data and the industry continues to converge on the value that lower frequency seismic source energy provides two geophysically challenge proprietary and Multiclient projects are Gemini enhanced frequency sore seems to be in pole position is the only commercially proven technology solution at this juncture, where it is sold technical spec.

On a range of promising energy company tenders for early 2022, and look forward to redeploying our existing capacity very soon.

And operations optimization revenues continued improving during the third quarter seismic tender activity is increasing primarily for production focus proprietary projects, the multiyear command and control subscriptions and routine equipment spares and repairs business from our substantial installed base lend stability of this business segment, we are working more closely than ever with our coach streamer is seabed Aqua.

<unk> customers across both devices and software to deliver the operational flexibility inefficient efficiencies required in the field E&P and customers increasingly require complex survey configurations to address their objectives and ion solutions are integral to meeting those demands and a recovering seismic services market.

We continue to advance our diversification strategy and new maritime markets across software and devices.

As part of our recent cost streamlining we have suspended our naval defense initiative and devices given the long wavelengths.

Wavelength nature of business development and funding in the sector. We also continue to assess the near term commitment that emerging regulatory environments have for monitoring solution requirements, such as our well alert offering for plugged into abandoned wells and paste or prototype efforts accordingly.

And software are diversification strategy into ports in offshore logistics is building momentum with an increasing pipeline of nearly 80 active prospects. We recently added a new priest sales process to efficiently handle the large volume and wide variation of potential clients and ultimately send qualified leads to our sales team to close following our business development expansion in the Americas I am pleased by on his <unk>.

Cured, it's first port engagement in the U S. B initiative initial 60 day trial will convert to a commercial contract pending satisfaction, a pre determined customer performance criteria.

Iron was recently recognized for a role in reducing ports impact on climate change our climate Smart platform Marlin Smart Port was featured in gateway to growth of British Sports Association program, highlighting ports vital contribution to society and the innovation shaping their pathway to net zero Marlin smart enables operations to be smarter safer and greener by Digitalizing process.

As in connecting stakeholders to critical data. The program features client testimonials on the positive impact Marlin Smart Port has had on their operations and can be viewed on our website.

In September we received a grant to advanced Port the carbonization through Marlin Smart Board. The grants supports the Uk's plan to address climate change and help achieve the country's net zero emissions targets by 2050 today approximately 90% of goods are transported by sea and global shipping accounts for nearly 3% of global C. O. Two emissions. The six month pilot study will validate whether vessel.

Fuel usage and carbon dioxide emissions can be reliably estimated in and around ports using the international Maritime organization Global standard.

We also continue to enhance our platform with new valuable client driven functionality. Our team recently launched two new modules that drive automation and efficiency partner portal enables agents and vessels to access a wealth of real time information and directly book Port calls delivering automated processes increased efficiency and enhanced communication, our billing management module captures a timestamp of all.

Available toward activities that can be integrated into existing financial systems to automatically generate accurate and voices.

We are pleased with our port by poor customer acquisition to date, but a key pillar in our software growth strategy is to engage governments on countries scale solutions for their offshore economic zones that address maritime traffic challenges across ports illegal fishing environmental monitoring and more we continue to work closely with the U S government proposed comprehensive digital solutions and to secure a third party.

Dancing alternatives for customers, where necessary to augment that strategy, we signed a partnership agreement with a UAE Royal family office to drive business penetration in the GCC countries and to provide.

<unk> finance capacity for our Africa Digitalization program. Our initial engagement is focused on coastal Africa. We have met with over 20 African Nations explored multiple third party financing options and submitted our first multimillion digitalization proposal with that I'll turn it over to Mike to walk us through the financials, and then I will wrap up before taking questions. Thanks.

Thanks, Chris Good morning, everyone. Our third quarter revenues of 44 million improved 125% sequentially approximately 175% from one year ago.

I just did EBITDA was 22 million Sniffily up from a 100000 last quarter do two or three key strategy modest market tell lynds and our cost reduction efforts.

E&P technology and services segment revenues of $36 million increased by over 200% sequentially, primarily due to strong sales of our newly re image three D data offshore, Brazil, and the operational execution of the second and third phases apartment Mursi hives three D Multiclient program.

Operations optimization segment revenues of 9 million approved 7% from the second quarter.

Backlog, which consist of commitments for multi quite programs.

Terry Imogene reservoir services work was $12 million a quarter and.

Sequential decline was largely driven by the completion of the acquisition stage of Midlarsky high base too.

While replenishing backlog is a key focus we're comfortable with the current levels as we aim to select the wind secure attractive new three D programs that are <unk>.

One to two per year.

As a result of our lower first half revenues, we expected to consume passed during the quarter.

Our cash balance is 24 million a quarter and including 19 million, we drew on a revolver last year.

The total liquidity defined as a combination of our cash balance and the available borrowing capacity on the revolving credit facility improved $2 million to $35 million, mainly due to borrowing based improvements.

Last quarter, we disclose the going concern issue due to the significant Lee lowered plan first half revenues, which is has an impact on our second half task elections necessary to fund our operations and meet our fourth quarter that and the other obligations, even though we experienced a significant improvement in our third quarter revenues are seeing.

[noise] modest tailwinds for the fourth quarter, we have not changed our Goin' concern issue disclosed last quarter.

We continue diligent efforts to strengthen our financial position and right sides of the business.

Our strategic alternatives process with sooner Pickering Holton company is I'll go over them as we evaluate all options to improve liquidity and address our balance sheet.

Our team has made great progress on the cost reduction program with approximately $16 million annualized cost savings identified building on the over 40 million eliminated in 2020.

Nearly 9 million short term savings has been executed while we progressed the remaining longer term real estate rationalization.

Although some savings will be realized in the fourth quarter. We expect the majority of the short term savings will take effect in early 2022.

With that I'll turn it back to Chris.

Thanks, Mike and energy, we are seeing some modest market tailwind and expect the seismic sector to continue gradually improving exploration spending has always been highly discretionary and therefore continues to be the most unpredictable as our customers navigate their new strategy strategic landscapes.

While the timing of a classic market recovery remains uncertain. We are confident about a strong finished the year due to conversion of existing backlog in a robust sales pipeline. We do believe the tide will ultimately turn on the chronic underinvestment in critical seismic data that we've seen in recent times.

Although the ultimate seismic recovery timeline is uncertain, we're focusing where we believe we can make positive inroads such as a selective <unk> strategy and large scale ESG focused software opportunities iron is an innovative asset like global technology company, whose data of software analytics turn information into insight demand for our offshore data and digitalization technologies is growing.

Empowering clients to operate more efficiently and sustainably we are pursuing projects that scale targeting unaddressed customer needs leveraging partner technologies and aiming to replicate prior ion energy sector success in Africa. Our team is laser focused by continuing to execute the strategic initiatives that are delivering results such as improving three D multiclient market share.

And moving to country scale maritime visualization solutions, while supporting our existing businesses with that we'll turn it back to the operator for Q&A.

Thank you ladies and gentlemen at this time will be connected in question and answer session.

You have a question please press one.

Or your telephone.

Is your question has been answered or you wish you move yourself in the queue.

<unk>.

First question on Sir Geoffrey Campbell.

With the alliance global.

Oh good morning.

Chris.

Instance, on lower costs and emissions suggests ions really reminds us Marlin argument and the reference to our first multi million dollar countries nail digitalization proposals also.

Decision Marlin and a different zip codes in our past discussions.

Wondering if you could talk about the evolution of this novel.

Yeah, So great question and well observed.

Yeah. So we've been having success in the imports mainly in Europe and now America.

With smartcore it but those are fairly those have been smaller poor customers and so we're at the lower end of our revenue subscription level. So it takes a lot of those ports to start really growing the revenue the way we'd like although we're very happy with that kind of customer acquisition and penetration of about 20 ports now.

And what you saw from some of the from some of the comments is that we're getting a lot of accolades around our ability to help the ports not only improve operations, but also.

Reduce emissions, which in.

Which in Europe, and also California.

A really big issues.

So we're getting validation that way, which is great, but we're just like how do we accelerate the scale of this.

This opportunity with Marlin, and a very maturing infrastructure and the ability to bring in other partner solutions as well as add modules to upscale the revenues by delivering more value in the ports.

But we decided to do is really go beyond just support so.

As we went into Africa doing pork trials and say.

Some of the some of the larger portion Africa, we realize that there's a larger opportunity there that those countries are challenged not only with port efficiency and getting a critical goods from the hinterlands out to the porch and then off to China and elsewhere.

They needed something like smart part in there, but beyond that they have a huge challenge in their offshore economic zones in.

Right.

Sovereign waters, where there's things like illegal fishing trafficking, all sorts of things going on that they're they're small coastguards fertile to deal with and require more information so given.

Given the Marlin infrastructure also for simultaneous operations monitoring and just general surveillance, we've been pitching at the government level, the ministry level with U S Embassy support and introductions to to basically 20 countries in Africa to say Hey, we understand your challenges we've listened to you and we can use this.

Port installation breech head with the infrastructure to also start monitoring your offshore sound, particularly illegal fishing, which is a huge drain on their resources in a huge strain on there well Ah Miss on their potential revenues from fishing. So we've been pretty successful are getting at least sitting around the table. These people to fine tune their problems I'll start, making proposals which also.

<unk>.

Would have some kind of donor financing or other financing that we secure through X M Bank because most of these are these country.

Countries as customers don't have the financial budgets, unless you're a kenya or south Africa, or whatever maybe nigeria to to afford the solution. So it's kind of pulling all those things together to drive our our Marlin revenues salt bigger problems on that scale and it's fully capable of that and robust enough to do that so we're pretty excited.

Now that'd be at the stage, where we're actually we have the interests were submitted these these proposals and we're starting to move through.

That process and just just to give a sense instead of maybe a few hundred thousand annual subscription for just a smart port and a small port somewhere.

These countrywide you know all the portion of the country and then the offshore.

Economics on monitoring these are kind of $40 million to $50 million kind of proposals over multiple years, I mean, that'd be like a three to five year deployment depending on.

What the problems are so we're pretty excited about approaching it kind of a country scale now.

Yeah that sounds like a really meaningful step up in revenue potential.

Uhm snapping back stepping back from Marlin, a bad How's the energy logistics offering progressing I'm just wondering if better.

Better commodity prices were helping that effort it anyway.

That's been that's been an area of interest and it's been really slow.

Clearly demonstrated that we can save on operational costs and clearly on emissions of supply vessels and we've had we had a big trial last year, which has been taken forever to convert.

We actually have been told we've been verbally award verbally awarded.

A pretty chunky logistic support the platform kind of.

Fortuity that would be good revenues over a few years with that one so probably we should know that it by the end of the queue for exactly how that's shaping.

Shaping up and hopefully we can announce that we can announced about a word.

So.

Several other and several others in the middle East, it's worth, noting where we've been percolating those opportunities to and we've started to have the thing. That's changed is we've been putting in these kind of logistics proposals with big.

Construct offshore construction operators those bits have been really slowly moving through the pipeline in the middle East, but we're not starting to get operators that have worked with us before come back and say hey, we'd like to reinstall Marlin for the logistics side of things and.

And the Gulf of revenue Gulf States. So that's looking to pick up a little bit too. So I think the slightly improved.

Economic situation in oil and gas is.

Starting to move that again.

Well I I guess.

I thought when I hear that it's.

At the end of the day the.

And the industry still needs to emphasize cost reduction wherever they can get it so.

This first award and you're able to.

Demonstrates an actual cost savings in real time do you think that's going to help you with some of the other ones that are sort of on the fence.

Absolutely I mean, we have also been able to kind of demonstrate what we learned from the pilot without naming the customer with other with other potential customers as well. So that's been great to be able to demonstrate those values.

Looking at them through our dashboards and things like that so it has created a lot more engagement. We've also got another opportunity in Alaska, which we hope to be able to announce soon as well.

Come from that kind of work flow and that kind of demonstration.

Okay and for my last question I will just turn it back to three D. Seismic I just wonder has been Kenya.

Program progressing.

The economy is going great I mean, we continue to have.

We continue to create new phases to that very large asset.

And parts of it are more or less sold out, but we get steering from the customers, telling us where would that they would like us to go next and then we'd go back and we buy the tapes from the government, which again is Kenya, Kenya, sorry about.

Did you say pecan, you or Kenya.

And yet.

Kenya, Okay, Yeah, Kenya is on the fee side by side. So we have the right there too.

To do the three D exploration, but we really are assessing the interest there. Although we have the governmental rights that doesn't seem to be a part of an area.

For investment.

Brazil, but I was just talking about so and going back to kind of what it said on the on the script is we're being very selective about where we deploy our.

Are <unk> and where we use.

Use customer underwriting to do those projects. So if there's not a hot interests. Then we're not doing it. So I think Kenya is kind of watch this space rather than.

Spend the company money in customer money on on developing <unk>, they're so it's really the UK in Brazil, as we're we're focusing that right now.

Okay, well I'm sure investors appreciate that discretion, thanks very much into the car.

Yeah. Thank you Jeff Tears.

Our next question comes from.

Okay.

Right no onions nothing.

Thank you good morning, everyone I appreciate you taking questions.

With respect to your you know operating costs.

Targets for good I'm Gonna do my could you give us any color on you know what we should expect relative to.

How much lower good operating goes to come in next year.

Yeah No I appreciate the question so.

We we said we identified the date and then execute it the date 9 million of costs.

<unk> on top of what we had done.

Of last year majority of those that 9 million will take effect really in January.

Or at the beginning of 2022.

We're still hurting and always executing the others, but that that will in fact have them at 9 million that 9 million is really it was it's really spread across kind of all of our operating expenses, including our cost of services, but that will come into play in the beginning of 2022.

So I am submitting for that and you know with respect to the strategic alternatives that you are considering.

Nine four when you may have.

Options to present doing lessons.

Yeah, there's not an absolute deadline, but we're trying to do is we're obviously pretty focused on getting that completed quickly given that there's extra costs.

Building on your cost question any cost savings, we make are kind of offset to some extent by this expenditure with outside advisers I think we can all appreciate it's good to have professional help but it's not for free so so.

So yeah, we're pushing that as hard as we possibly can we are in the middle of that process, where near the end of a major phase of that looking at what the opportunities there and some of that is looking at what.

As you probably remember we've had some of our homegrown ion initiatives to look at divesting non-core assets and those are the kinds of things. We're looking at now is kind of a broader a broader and stronger process.

So hopefully to be able to report on that fairly soon.

Okay. Thank you and with respect to Ya.

I'm a marlin software.

Work related issues in the news right now so if my gender related stuff.

Software address any of those challenges the.

Segment is facing or you'll focus more on your regular operations and improving you know that they did a connection.

Yeah, that's a great question and a lot of people that's.

That's in the news heavily so people often ask that question.

So I think we.

We do believe we have an impact on relieving some of that congestion, but a lot of the but a lot of the congestion you see with like in La and elsewhere is not really down to the ability of the port to move the cargo through it per se and get these people into anchorages I will say that our birth management.

Offering which is the court. This in the core of Smart Port right now does help that a little bit because you are able to optimally schedule, we're getting the vessels in and out of the birth within the ports as soon as possible and get things unloaded and reloaded, but the bigger challenge in one of those guys are sitting there anchored it's the <unk> and all these other logistics companies.

That are having a bottleneck both within the ports on the larger parts they've got facilities inside the poor and then they've also usually got distribution centres outside of before area as well and those are where the problems are their congested they've got issues with getting truckers and access to trains and all this so it's really the distribution network, that's really gummed up if you will.

And we don't address that.

So, but other areas, we could address I mean, you've got kind of a knock on effects of all those vessels being in anchorage, and the and the potential anchoring snag that.

Huntington.

Oil spill from that from Snagging pipeline I mean, those are things, where marlin not not not the smart part part, but the actual surveillance apart.

Understanding the length of the anchor changed and all that in our Gis capabilities of understanding where fixed infrastructure like pipelines could be is another use case, where we can help people understand.

Send that alert, saying don't anchor near that you're too close to the pipeline or whatever so you can kind of geofence that from that alerts and that could be something that the.

The infrastructure companies like the pipeline company, there as well as the ports.

Could benefit prominent you've got to find out who is actually responsible for each part and then those are the potential customers. So we're looking at that to her in our engagement with California ports.

They're heavily interested in the environmental aspects of port operations and other things around it. So we're working hard on looking at whether we can help that part of it.

But yeah I don't think we're going to solve the huge logistics quagmire at the moment.

Yeah, but it could still be a little bit of a catalyst for these sports to consider even though you're offering you an efficiency improvements in other sort of benefits.

What transpired right I'll basically right.

Yeah absolutely.

Certainly help us get into more discussions and then we can let me explore with their operations people in the ports exactly.

Exactly what benefits, we have for them and they all have different challenges some of the smaller parts in California actually are clogged up at all amazingly just.

Off the coast.

From.

La is a small port called out where niemi, where I went to visit about a month ago, we had a kind of a military exercise there as well as a port visit in the same port and.

They are actually only a few vessels anchored off shore and they way, they're organised, they get kind of a county municipal port and they get all their stuff through super efficiently.

But they are still interested in smart port for improving their birth management. So.

But it is interesting every parts of different perhaps different challenges.

That's a long ways I think membership okay. Thank you.

Thank you I mean, it's good to hear from you.

Our next question comes from column Oppenheimer.

Oh. Thanks, so much guys could you just walk us through the time in on collection with the receivables as long as they're Unbilled receivables, how those are gonna follow through with the cash flow statement.

Mike you want to take that.

Yeah, No I'll take it a good good question, obviously saw the increase in our our yard from the Q3.

The majority of those.

Did you see our Latin American revenues are up.

Shaded with Brazil, so that does have a little bit of timing, they're kind of big and chunky. So I'd expect those and those are time to to really later this month beginning.

Of the December timeframe. So I expect most of those would be harvested later into this quarter.

Okay. That's super helpful. And then promised spending perspective as you did you look at growing Marlin sounds off for and and getting adopted into somebody's additional sports what sort of <unk>.

Messenger, you really needed to make contact allergy perspective, and the walls from sales perspective to try those things along.

Yeah. That's a good question I think.

The investments we need to make in that area right now are not are not large there they're adding.

We've had a huge benefit from adding one or two.

Subject matter expert to come from the Port Arena and understand so for example, the North America pork community, which is different from the European one.

R. R. BD person has been on the ground for four months and has made a a huge in road and getting our message out there are offering out there organizing demos and actually moving forward on the on the Port We mentioned that we are in the the trials that should flip over to commercial arrangement, so and some other stuff.

Coming in the pipeline. So we're very pleased with that and those are we should probably have more of those were looking at Latin America as well.

But those are you are talking about 2345 kind of beady folks, but and we added a b D person in Africa, which is really.

Which had been an agent and is now a full time employee that's really driving the government levels engagements were having their so those those smaller small investments are making a big difference right now because the product is actually really really mature and its core phase and it's a question of investing in the development resources to add incremental functionality can again those are not huge Chuck.

Thanks.

They are modest and obviously, we've also got us through the phase of costly employee reductions and all that so you're trying to balance that with making sure. We have the right coverage in the right places so.

So yeah it's.

We need to see if it's the crossing the chasm thing that we've got.

Stable platform, we have the ability to add new stuff quickly, we need beady people to get that message out to people.

But we don't want to invest a lot more to accelerate things until we see the the revenues coming online and.

The other the other thing would be marketing I mean, we haven't we've reduced our marketing SG&A overhead in the quarter of the Q3, but at the same time, we need to be more focused on getting the message out.

Through digital through digital processes media et cetera on what we have to offer in those communities because we're a relatively unknown brand, it's kind of a new market as well and some of the space is certainly the government level stuff is of absolutely new market. So.

Really grateful to the the U S U S.

For an office in Commerce and all this for supporting Us with getting embassy level introductions, where you can get right to these.

High level people that make the decisions and have been a responsible for solving these problems at the government level. So without that we wouldn't our brand would be unknown in Africa. So.

But a huge step change there, but that's relatively inexpensive process as well and it.

Taxpayer dollars being well spent and we're leveraging that.

Excellent the.

Harlem for me since around seasonal dynamics historically, there has been some budget flushing and the fourth or it seems like that so I need to break down a little bit I guess.

You guys will look at you know the demand profiling kind of what's out there from an organic perspective on a multi year basis versus some of the spending that's happening just around the budget allocation. Yeah can you give us a sense of what that looks like them and how you are thinking of you know that spend coinsurance fourth quarter. Almost here I know you guys don't guys I'm just trying to get some new answer on that.

Yeah, So I think.

In the past you've always had a big.

Spare budget.

If the E&ps didn't.

Didn't easel, they're drilling funds they'd with bought use their spare budget up on buying data.

And then we saw that laughed a little bit over the last couple of years, I think a little bit of that might be coming back I don't know whether that in a real trend or it's just going to be this year that the ioc's have gone through this huge energy transition flushing out of there.

Traditional staffing and reconfiguring them to the energy transition, but there is a core group of exploration put people in departments that are still there and they are not seeing that you know.

Because of all sorts of supply chain issues in getting people fired back up again in the oil field services size that they haven't been able to drill the wells that they thought which is leading to some spare budget and we do believe some of that will be spent on seismic from what we're hearing from say the EVP level.

And some of the large ioc's. So I think there might be a modest modest upside there that we probably don't even have in our forecast yet, but what we do have is the activity of the nsc's, which is slow and steady and that's really where we've seen things come together in Q3, a lot of that buying has been from nsc's, who have strategic interests and new geographies outside of their home.

Countries and we're seeing that also for Q4, but we're also seeing activity with the majors in queue for that we didn't see as much in Q3. So I think there's a few things coming together in queue for that gives us the confidence guidance, but it's.

It's strong optimism about the quarter.

Beyond that next year will it be the same shape, there's always the first half a bit lower than the the second half and I think thats imprint shape imprint will still be on the revenue profiles of us in our peers, but I hope it is at a higher level that.

That has been in 20 2021, and so forth so.

But I do think at least on that Q4 effect there'll be a little bit of that this year.

Okay excellent thanks, guys.

Yeah.

Further questions in the queue I like to hand call back.

Closing remarks.

Yeah. Thank you so much I really appreciate everyone joining the call today.

Pleased with our with our third quarter in many respects.

And some of the things that are shaping up so yeah.

I really just want to thank you for joining thank you three for your good questions and.

Sure, we'll talk to you all individually as well and others afterwards so.

Yeah have a good rest of the day and all the other calls you're joining the earnings season.

We'll see you next time.

Ladies and gentlemen.

These teleconference. Thank you for your participation give me now disconnect. Your lines at this time have a wonderful day.

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