Q4 2021 Digimarc Corp Earnings Call
Good afternoon, and thank you for participating in today's conference I will now turn the call over to Chief Legal Officer, Bob Chamness. Please go ahead.
Okay.
Welcome to our Q4 conference call Riley Mccormack, our CEO and Charles Beck, Our CFO are with me on the call.
On the call today, we will discuss Q4 financial results and provide a business update including an update on the integration of the everything acquisition that closed on January 3rd.
This will be followed by a question and answer Forum.
We have posted our prepared remarks in the Investor Relations section of our website and will archive. This webcast there.
Before we begin let me remind everyone that today's discussion contains forward looking statements that have risks and uncertainties. Please refer to our press release for more information on the specific risk factors that could cause actual results to differ materially Charles will now comment.
On our Q4 financial results.
Thank you, Bob and Hello, everyone.
First off I want to provide an overview of Q4 financial results for legacy <unk>. Please.
Please keep in mind. These results do not include the financial results of everything as the acquisition closed on January <unk>.
The financial results for everything will be included on a prospective basis, starting in the first quarter of 2022.
Revenue for the fourth quarter was $7 1 million up 28% from $5 6 million in Q4 last year.
Subscription revenue increased 37% from $2 7 million to $3 6 million, reflecting the sale of 10 non core patents for a onetime fee of $1 million during the quarter.
Service revenue increased 21% from $2 9 million to $3 5 million, reflecting higher commercial services related to the Holy Grail two point no projects.
Total commercial bookings in Q4 were $2 6 million up slightly from Q4 of last year.
First year commercial bookings in the quarter were up 39% year over year.
For fiscal 2021 total commercial bookings were $10 9 million up 20% from fiscal 2020.
First your commercial bookings were up 27% over the same period.
Operating expenses for the quarter was $13 2 million up 1.5 million from Q4 last year.
The increase reflects $1 million of nonrecurring legal and accounting costs incurred during the quarter associated with the everything acquisition.
Excluding these costs operating expenses were up 4%, reflecting higher consulting travel and marketing costs.
Net loss for Q4 was $8 2 million or <unk> 50 per common share versus a net loss of $7 8 million or <unk> 51 per common share in Q4 last year on a comparative basis.
We ended the year with $41 6 million in cash and investments, we used $10 9 million of cash and investments during the fourth quarter, including a $2 million loan to everything and we paid 600000 of nonrecurring costs related to the everything acquisition.
Backing out these costs during the fourth quarter, we used $7 1 million to fund operations and 300000 to fund capital expenditures.
We also have 231000 warrants outstanding with a strike price of $36.56 that expire on March 27.
As a reminder, these warrants were issued in lieu of shares to cover everything is cash closing costs related to the acquisition.
If all of the warrants are exercised by everything shareholders. It would result in $8 5 million of additional cash to ditch work.
If none of them are exercised it would have the effect of reducing our purchase price by $2 5 million.
For further discussion of our financial results and risks and prospects for our business. Please see our Form 10-K that will be filed with the SEC.
Next I wanted to provide some inputs to help you with your modeling of our business given the effect of closing down and be everything deal.
We expect the acquisition to add approximately $1 3 million in Q1 subscription revenue and approximately 200000 in Q1 service revenue.
We expect everything Standalone subscription gross margins to be around 70% and service gross margins to be around six 5%.
As a reminder, we believe that we will be able to increase everything standalone product gross margins over time into the high Seventy's at current revenue levels and higher still as a product cloud revenue growth.
On the operating expense side, we expect everything to add approximately $3 5 million in operating expenses in Q1.
Finally, the everything business is currently using around $2 million of cash per quarter.
But the operating expense and cash usage numbers are before any nonrecurring legal and other deal costs, which will add approximately 800000 to opera expenses and cash usage in the first quarter.
As is the case with the Standalone <unk> business with extremely high product gross margins and the everything business. If we were able to increase product subscription revenue from current levels cash usage should decline declined significantly.
Before I turn the call over to Ravi you want to cover three more things.
First I wanted to provide a preliminary update on everything projected product annual recurring revenue or product error as of February 22022.
We are working to close the books for February So we do not have a final number yet however, we anticipate the project will end up slightly under $5 million.
If product there are <unk> 5 million or less than there would be no second consideration payment in September under the terms of the share purchase agreement.
Second as we have mentioned is a key tenant of our transformation. We are applying a intense focus to every part of our business.
After careful thought and consideration we have decided to sunset our piracy intelligent product offering for E book Publishers.
The market opportunity is just too small.
Not growing fast enough and doesn't provide it in a high margin opportunity to justify allocating any of our valuable resources to this market.
In 2021, the piracy intelligence product generated $2 2 million in bookings and $2.5 million of subscription revenue and was neutral to cash flow.
We expect to complete the wind down of the piracy intelligence product by December 2022.
To provide visibility into historical bookings and revenues for this product line. We have included a table within the script showing 2020 in 2021 piracy intelligence bookings and revenues by quarter.
Lastly, we opportunistically took advantage of the future of work uncertainty caused by Covid and entered into a sublease and lease extension for new corporate office space less than one mile from our existing office in Beaverton, Oregon.
The new space was recently completely redone by the previous tenant in order to provide the functional and collaborative benefits modern office space allows.
It is also 40% larger than our existing space, providing optionality on our future needs.
We were able to negotiate this lease with no incremental cost to us for the next 26 months and Moreover, this move eliminates the multimillion dollars of capital expenditures that would have been required to update our existing office space.
We intend to market our existing office for sublease once we move out March and depending on our success with that this move could actually end up being cash flow positive over the next two years before giving any benefits from the capex cost we had now avoided.
The new lease will run through September 23.
We will record a large asset liability on our balance sheet, starting in Q1, reflecting the net present value of the contractual lease payments. Additionally, our noncash lease expense will increase given the 26 month free rent period at least expenses required to be recognized ratably over the lease term.
Reilly will now provide a business update.
Thanks Charles.
Over the past few quarters, you've heard us repeatedly say that we are undergoing a transformation.
Most of this work has been internally focused as we question Didnt re imagine to every element of our company starting with the basics of what we do and how we do it more.
More recently, we started mapping that work to how we will reengage the outside world post transformation and why.
All this work will never truly be complete as tech companies. It stagnate quickly atrophy I'm thrilled to share with you today that the foundational work of our transformation is largely complete.
Our being on the cusp of re engaging as a transformed company is best captured by two words that are now driving activity across our company.
Hello World.
Our transformation took a giant step forward with the acquisition of everything which closed on January 3rd I won't repeat what I said on our last earnings call and that expanded upon at the Needham Conference about why this deal is so important to where we're going but I do want to note that even here our focus hasn't just been on integration, but also on transformation.
Group by functional group, we are taking the opportunity to not only align people processes and technology, but are also being intentional that in doing so we are diligently carrying forward the best from each business.
We will emerge not just as one company, but one company better than either was stand alone.
Charles My as Charles mentioned, while the numbers are not yet finalized we believe legacy Everything's February 28 product <unk> will be slightly less than $5 million.
Important to note. This is exactly why we structured the deal the way we did.
As I mentioned, a few quarters ago. It is extremely difficult for a company. So early in its S curve of growth to try to predict specific revenue levels at a specific moment in time because by definition. The number of deals is relatively small and the average size of those deals when compared to existing revenue is relatively large.
Accurate forecasting requires a smooth distribution curve at both current customers and future customers something pre inflection companies just simply don't enjoy.
I Didnt are concerned about signing delays caused by the acquisition announcement itself, especially coming so close to a year and you can see why we insisted the results themselves decided the price.
There were three major headwinds that impacted everything's headline AOR growth. These headwinds almost perfectly offset the AOR growth came from new signings and an interest of context and transparency I believe they're worth sharing.
First one customer terminated an internal initiative as a result of larger organizational changes and as a result terminated their contract with everything.
We can't get into the specifics of it to the details of the specific situation. It is instructive to note that we are in talks with another division at this very same customer for our product cloud offering.
Second a contract we knew was unlikely to continue for reasons completely unrelated to it everything platform did in fact and.
And third upon our deeper dive into the nuances of every deal. We have concluded that our previously attributed to one contract was overstated due to an extended term reviews closet extends the potential duration of the deal and thus lowers the amount of revenue we can recognize in each year.
Important to note. This change in <unk> is purely an accounting matter the timing and amount of cash payments that we will receive our unchanged. Moreover, if this isn't engagement, we know very well since everything and did you Mark where partners on the steel pre acquisition.
We feel comfortable in stating this class will likely end up being irrelevant as it is highly likely this customer will be back for more product cloud capacity as well as more watermarks well before that Clos kicks in.
This customer is still represents mixing mix mid six figures of annually recurring revenue, even with the lower accounting much more importantly, based on what the customer itself has shared with US. We are only in the very low single digit percentage points of penetration of the ultimate opportunity this customer represents.
So while the headline number it looks flat over these past five months the reality is much different.
More importantly, looking at everything as total pipeline instead of just the portion that had the potential to close by February 28.
And 5% of the total dollar value has dropped out of the funnel since the end of September which is a low number in general let alone for a company that has been acquired.
The remaining 95% plus of the September 30th everything pipeline is still progressing towards close just not on the tight tight timeline everything originally envisioned.
In addition, new deals are better at the funnel and one final data point. We're sharing this total pipeline number is multiples larger than the 5 million a day or that would have taken everything to the high end of the range.
The fact, we have gained the people the product and the Standalone as well as a combined opportunities that this acquisition has provided us without any further material payout is that's not only the result of a thoughtfully constructed deal, but just another example of the vagaries of forecasting based on the small end.
In this case and because of the way we constructed the deal those vagaries will work to the benefit of existing did remark shareholders.
This theme of a small N skewing results as president of legacy <unk> Q4 bookings as well, while Q4 was our third highest commercial bookings quarter ever, albeit aided by the patent deal Charles mentioned in his remarks, if you moved the beginning and ending dates out a few weeks to the right. The bookings result would have been much higher still I offer this not as an excuse but simply.
Illustration.
A few weeks into 2022 we had already closed well over $1 billion of bookings that we had originally expected to close before yearend Mauro.
Moreover, one of these deals close with a higher <unk> than we had internally forecasted but it is a tradeoff came with a smaller than forecasted day one booking.
Thus a few weeks into the new year, we were better off than we would've been if things had played out as originally thought and frankly, we consider that a win because that's where our focus is and always will be dates come and go creating enduring shareholder value is a continuous journey.
One of the deals that closed early in Q1 was a six figure contract related to our recycling efforts in Europe .
While we and some other participants believe recent results from Holy Grail too have proven beyond a reasonable doubt that our technology works. It's also important to note that in addition to this very public validation of our technology.
Holy Grail Trudeau has helped the industry realize that saving the planet is only one of the benefits that adoption of our digi macrocycle product will enable.
Moreover, and very recently stakeholders from an industry outside of plastics are also waking up to the benefits of our technology can provide to their products and have taken our suggestion to engage in a holy Grail two dido as it means to potentially obviate the need to run their own industry wide trial.
This is a suggestion we're carrying to other interested stakeholders as well.
But despite all the positive momentum from Holy Grail, two we believe we know it is incumbent upon us at all times own our own future and we believe that however, fast one can move drifting with the current one can move that much faster paddling like mad and using that current as a tailwind.
As I will mention a bit later in Q2, we will begin to engage with budget holders at brands and retailers as well as their suppliers to finally get the digi Macrocycle flywheel going.
Our plan is to lean in against any potential industry inertia that might result from waiting for HD H D to Davos conclusion.
We no longer see any valid reason for delay and thus we wanted to get started immediately on helping to save the planet as well as unlocking the other benefits the industry will get from <unk> recycle.
Another win that came in Q1 instead of Q4 was a 300000 plus error did you Mark brand integrity deal.
And it's as an aside and as you will see shortly very publicly did you Mark brand integrity as a product name for what we were internally, calling our product authentication anti counterfeiting or pack offering.
This deal is that this deal is with a single division of a top 20, CPG that has well over 100 different divisions.
We expect our second divisional win with the CPG to occur in Q2 and are currently engaging with still other divisions that this global brand.
Important to note.
As all of this activity involves just the legacy did you Mark brand integrity offering and that doesn't yet include the much improved functionality that our combined product will offer the opportunity to accelerate penetration of a single customer with our combined offering as well as to revisit. These early divisions, we have already signed up these huge Moreover.
Moreover, there was more brand integrity business to be one even with the products. We are already or soon will be protecting which will not only provide better protection for this brand and their consumers, but will of course be another lever of monetization for us.
Interestingly a completely different division of the same C. P. G became a product cloud customer in Q1 utilizing other functionality of our platform Besides brand integrity.
For those of you who listened to our Needham presentation, one of the guiding principles of our transformation is that we need to be easy to begin doing business with and an excellent guiding customers along there did you Mark journey to the adoption of additional <unk> products.
This large multinational CPG my dad might end up being a wonderful case study as we have entre across different divisions on multiple continents with both watermarks into product cloud for two different use cases.
We now have the opportunity to cross sell and up sell across not only the divisions, we've already landed but the hundred plus we have not.
This single customer could end up being a very large customer for ditch mark outside of its size as I mentioned as a top 20 CPG, there's nothing one off about this opportunity.
Sticking with brand integrity. Another six figure <unk> deal that closed early in Q1 is a follow up deal we signed with a large pharmaceutical company that was already a brand integrity customer, albeit for a limited number of Skus.
Importantly, the second contract also includes a framework that would allow for quick and easy adoption of brand integrity, even more skus. Besides those covered in the first two contracts we.
We estimate the first and second contracts combined cover less than 1% of this company's products.
As this customer like the CPG customer I. Just mentioned is also rolling out our legacy brand integrity solution.
Our focus will be on gaining further penetration as well as circling back with our soon to be released combined brand integrity offering.
Besides also having the potential besides also having the potential to be a very large customer even just using one of our products, which is not where we believe any customer should have there did remark journey. This customer represents a vertical outside of where we have historically had success.
As we continue to expand from our very early foothold at this customer it could also act as a foothold into a giant industry as well.
One last deal worth mentioning is different than those than these previous three because while we expect it to close any day it hasn't closed quite yet.
And it is a deal from the legacy everything pipeline and that's an example of the timing vagaries in which I had already mentioned I've already touched.
While the initial deal was in the low six figure are a R. R range. This customer could easily represent $500000 or they are in the next few months.
You can see everything has two contracts in front of this one customer.
Unlike the previous deals mentioned.
The customer is a channel partner, who would who would in turn be reselling our technology to its end customers and is soon to be product cloud channel partner is a customer legacy did you Mark also knows well it is a partner of ours and servicing a large CPG customer that just recently passed the 100 million unit per year milestone of watermark products a figure.
Which represents low single digit percentages of the Cpg's annual production.
Based on the expected ramp of adoption by the CPG. This partner should represent around $500000 of Ey are by year end at the watermark inside of our business too with more growth expected in 2023.
While the combined $1 million per year a R. This partner with US represent is of course, great business. It is important to note. It is also one of the largest companies in its space the Upselling and cross selling we will be able to do via this partner as well as the many other channel partners. We're in much earlier stages of monetizing should keep our channel teams as busy as it is.
Disease, our direct teams will be.
The fruit of a lot of hard thoughtful work is coming together and even before we officially transition transition this work to Hello World.
Already seeing signs of something we've constantly reminding each other as we've taken all the time necessary, but not a second more to perfect. Our transformation the world is waiting for our solutions.
We are finishing up our combined did you Mark brand integrity offering as we speak and this product along with select European engagements with Digi Macrocycle, we'll be the beneficiary of our new company wide focus on focus in Q2.
These two products will be the products the sales team will be focused on selling starting April one.
Our newly combined sales team is nearing the end of its integration and organizational work in order to hit the ground running hard in Q2, and I can't wait to see the results.
We'll of course be supported by a lot of foundational inspired work from marketing, including a thorough messaging refresh a website relaunch and of course revamped and targeted collateral and campaigns all of which we will be rolling out over the next few months.
And these will just be the more obvious outputs as we near the conclusion of the internal internal internally heavy part of our transformation work and get ready to say Hello World by actively re engaging as a as a company transformed in so many ways.
Across the company. The work has been just as profound in just is amazing.
I wanted to give a shout out to my 300 teammates whose work continues to be as inspired as it is inspirational if it were easy to change the world anyone could do it it is time to ascend the mountain.
There was one last point I want to cover before opening up the call to questions and like previous calls, we'll be taking any and all questions.
You've all heard me say multiple times, we expect you to do nothing but judge us on our results.
<unk> focused culture as necessary to truly impact profound change in.
Compensation as a key tool that allows companies to reinforce and reward the right performance and behaviors.
Everything that starts at the top.
So in a break from over 25 years of tradition.
Coming proxy you will notice a market change to executive compensation at did you Mark all.
All executives will have a large percentage of their compensation at risk. If we don't perform against the aggressive goals, we have set for ourselves, but it will also enjoying upside if we outperform.
These targets measure a few different outputs over both the one and three year period, but by far the two biggest drivers are our product subscription revenue and.
T S ours compared to a group of almost 200 software and services companies.
This is a change from how things have been historically and I bet. The executive team as happy as happily making not just on the massive opportunity ahead of us but on the 300 person team that will drive our company to Crazy High Heights.
The question I am most often asked is now that I've been CEO for 10 months and my more excited or less excited than there was on the outside looking in.
You'll soon notice and the proxy I've chosen to put 100% of my compensation at risk and if it pays out I'm going to take 100% in stock.
I like the executive team believe actions speak louder than words.
But we also know and even more basic truth results speak loudest of all.
We can't wait to show you why to show you all why we're so excited about what we've been up to.
Hello World.
Holly were now ready for Q&A.
Thank you, ladies and gentlemen, if you would like to ask a question. Please press Star then one on your telephone keypad. Once again that is star one to join the question queue.
And our first question is going to come from the line of.
Chris <unk> with Needham <unk> company.
Hey, Chris.
Hi, Hi, Thanks, and congrats on the results.
Just on on Holy Grail too. It was my understanding that the phase two was going to ramp at the end of Q4, and then there was going to be.
<unk> into Germany, with Tom Tom around machine, just wondering if you could provide any color on how.
That's proceeding and I think theres actually predict perhaps one more country as well that there was going to expand into but just any additional highlights or color you could provide there would be great. Thank you.
I wish we could as we mentioned before a Holy Grail two is not our trial. So if you go back to the Needham presentation. We tried to include as much publicly available information as we can you know this is.
There is a wonderful just picking back on 25 years of technology I can't think of any other time were 160 organizations have gotten together to do a POC on one one software program right. So there is a wonderful list. The problem is it's not our program we can't talk about it.
Unfortunately, you have to stay tuned for updates from from the group themselves.
Okay, Thanks and.
Do you expect.
Incremental investment in Opex in the near term to support.
The the.
Rollout of the brand integrity and recycle later later this year.
Yeah again.
I encourage you you know we did a.
Pretty big refresh at the Needham Conference I would encourage you to go back there and listen to that but we're gonna be investing for the next 10 years, if not longer with the opportunity ahead of us in or one of the areas. We do need to invest is product we have a wonderful product team, there's just not enough of them.
So.
I don't know if that answers your question, but but yeah, well probably near term and for the next two decades, we're gonna be investing in our team.
Got it.
And on the brand integrity win with the CPG customer what other technologies did they consider and what did you mark apart for that win.
Yeah, we have a unique offering right I mean, there arent any other covert invisible codes that.
That can scale like weekend, we have Oh now we're and again this was just on a.
Our legacy digital art brand integrity offering right now we're gonna bundle this with.
R R.
How do we got for the product cloud from everything acquisition, which is a whole another level of.
Our functionality and value right in and legacy everything had brand integrity customers or their own where they were marked ignostic, but using the back into the product cloud.
Gonna have we already had a front end differentiator with the watermark now, we're being able to bundle that with a differentiated product cloud.
I mean not.
Hey, you know what I would say is one of the upcoming deliverables will be product marketing and you can see a lot of the differentiation versus the other competitive competitive technologies, but.
I don't know I'm trying to say this because I'm sure I'm going to get some grief tomorrow when at what they say this but I don't think we you know.
We have a wonderfully unique offering and I guess the question is why people would consider other offerings.
Great. Thanks, very much I'll hop back in queue appreciate it of course.
And our next question is going to come from the line of Harvey <unk> private investor.
Hey, Harvey.
Good.
Good. Thank you on the everything transaction.
How many shares did they get for their $50 million.
Charles do you have that number I haven't estimate I don't know the exact number.
I believe it was 770000.
And my daughter.
1000 parts.
I'm sorry repeat that please.
And then there is also the 230000 warrants.
Okay and am I to understand that the September 15 million may not occurred.
They won't occur.
It will not so that's a dead issue at this point okay.
Servicing.
Let me just let me just caveat that we have not we don't have the final numbers February 28, with a couple of days ago, but our best guess as of right now it's going to be slightly below $5 million.
So if there is any additional payment Harvey it's gonna be.
But our best our belief right now without having the time to you now.
I have a final audit on those numbers as you know that will not be a second payment.
Okay last time, we spoke our income was 61% was from our bank note counterfeiting.
39% was from commercial sale of which Walmart was 13%.
Walmart's percentage has gone up or down.
You got to wait for our 10-K Harvey.
Okay.
On our partnerships.
It looks like between collaborating and strategic partner, there's about 80 of them.
Has that which half of them are global companies.
Has that changed at all or that still roughly 80 partners strategic.
Strategic partners.
Where are you getting that number from.
One of your list that you published it showed.
So with all of your strategic partners.
Added them up and.
Yeah, I don't have a current I I don't have a current list or number for partners across the organization already.
Okay, and one was called a platinum strategic partner, what does that designation indicate.
Bob do you want to do that.
I assume Harvey is talking about a pack or.
Thank you.
Yes that was it.
Gartner designation for some of the divested heavily in the.
Research and co development.
Okay great.
There have been three announcements hey, Harvey can you get back in the queue I wanted to start there's a lot of questions I just wanted to get it over to others. So I'm, sorry, I'm happy to get back in queue. Thank you.
I'm sorry.
And our next question will come from the line of Robin Knipp with Janney Montgomery Scott.
Thanks.
Really looking and this is back of the envelope math, so bear with me on this but looking at cash balances at the end of September .
52, and a half million dollars at the end of this year. We're now at the end of the year. We're now at 41.6, so call. It roughly 10 million burn per quarter, which means we have basically one year's worth of cash left.
Help me get comfortable with how youre going to address that.
Yeah, well you don't need to do the back of the envelope right. We Charles gave you some numbers about.
Backing out onetime things from Q4, but everything is going to do but let's get to your I think your bigger question, which is what are our options for cash and it hasnt changed Robin over the last couple of quarters. There's three options right. We have extremely high contribution margins. It doesn't take that much of an inflection of the business to decrease the cash burn to the point where that doesn't become an issue secondly, theres other ways.
Is that we can raise capital outside of of accessing the capital markets and then third we can access the capital markets I am the largest shareholder of this company I will be by definition most impacted by dilution. It doesn't keep me up at night.
Something I spend a lot of time worrying about so those are the three options and they haven't changed in the last couple of quarters. Okay. And then can you can you dial in on on option to a little bit more when you say other things outside of the typical.
Equity financing debt financing markets, what would you be referring to them.
Yeah, I mean, not something we can really be talking about but I mean I'll give you a very this is not what I'm talking about will give you a very small example, we sold 10 non core patents now $1 billion is not.
It moved the needle right, but theres a lot of things that this company that have.
The value of it so without getting into specifics there things being contemplated but.
That hasn't changed.
Same answer for the last couple of quarters as Robyn.
Fair enough. Thanks.
Yep.
Once again to come into the queue Press Star one our next question will come from Jeff Van <unk> with Craig Hallum capital.
Yes, Aaron on for Jeff a quick couple of quick questions for me. So you mentioned on last conference call kind of areas of focus and use cases going forward.
Counterfeit online brand protection digital class or product cloud and then recycling. Just curious you know you gave a lot of good data points, there, but anything you're seeing on the online brand protection side, that's encouraging so far.
Yeah, I mean, I told you what we're focused on for for Q2, right, which is the brand integrity and Digi Macrocycle.
So that's that's where we're where we're focused on for Q2.
As I also mentioned in the past and I think it's important so online brand protection as a as a product. We have is not a go to market focus it doesn't mean that it's not a focus it's not a go to market focus in Q2, but there's also a pipeline of other products right and this is the wonderful thing about the universal applicability of our of our technology is I think that's going to be the case for years.
And the reason I bring that up is it's purely a sequencing issue for product right. So its product has this wonderful.
Technology. They have this wonderful way of inbound interest to vet potential ideas. So it's just purely a matter of sequencing one of the things that I believe legacy digit market.
Different or what we're doing differently today than I think legacy did you Mark has done in the past is focus on focus let's start with a few things start with some things that eventually we can get to everything.
Fair enough that's helpful.
And then as far as pipeline also gave some good commentary there, but seeing any synergistic effect, so far as far as the pipeline of everything plus did you mark.
Being greater than just those two individual components together.
Yeah, there's a lot of excitement across the industry for the combination of these two companies right. I mean, this is something that we had joint customers.
And joint sales processes in place before the acquisition. This makes a lot of sense to people to have a one stop shop makes the customers life easier right because in essence, what we're gonna do is do the integration work once.
So the 2000 customers don't need to do it themselves.
And.
Especially when I also turning to silicon digit Macrocycle right. We spent some time at the Needham conference talking about this but.
This really completes the offering and I I think I said it there I forget if it's there in the last conference call where.
It must've been need them because it was soon after the acquisition closed we started engaging with some of the thought leaders and saying. This is what we got now got it makes a lot of sense.
So.
Helpful. And then last one for me and maybe just a question for Charles and I. Appreciate the Q1 kind of modeling inputs on everything but any way to think about the growth rate at everything throughout the fiscal year, and then does that margin profile kind of opex profile going to be sustainable throughout the year for everything.
Yeah, I don't want to get into forward guidance on bookings and revenue for the reasons that I already laid out with the impact of small and timing and all of that but yeah. I would expect that at our current level that we can support a fair amount of growth there.
And obviously growth will help on the margin front, there may be some incremental investment with growth around opex, but I don't anticipate significant needs there.
Perfect. That's helpful. That's it for me guys.
Thank you Sir.
Thank you and our next question is a follow lepton being one can private investor.
I again.
What kind of what.
What kind of patents did everything brings to the table.
Many are we talking about.
I don't know the specific number I think it was between patents or patent pending it was low double digits.
To answer your question.
Yes.
Oh I had seen.
Lease several announcements.
Walmart came out saying that they were going to be doing for stores that are E Commerce laboratories.
Republic services.
They're going to be the first integrated.
Plastic recycling in the U S.
And science diet, just came out with something saying plastic labeling for sustainability scale do you have anything to do with any of those things.
Harvey.
We don't talk about customers, we don't talk about prospects, we don't talk about people by name.
And I didn't follow that last one you mentioned.
So.
Okay.
Thank you.
Thanks Harvey.
You bet.
Thank you and with that I see no further questions I would like to turn the call over to Riley Mccormick for closing comments.
Well. Thank you everybody for your time.
Any questions you know how to follow up with us and until we speak again.
Thanks, a lot.
Thank you for participating on today's conference call you may now disconnect.
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Yes.
Okay.
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Okay.
[music].
Thank you.
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