Q1 2022 Digimarc Corp Earnings Call
Yeah.
Good afternoon, and thank you for participating in today's conference call now I will turn the call over to Bob Chamness, Chief Legal officer. Mr. Chamness. Please proceed.
Thank you.
Welcome to our Q1 conference call Riley Mccormack, our CEO and Charles Beck, Our CFO are with me on the call.
On the call today, we will discuss Q1 financial results and provide a business update.
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.
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 Q1 financial results.
Thank you, Bob and Hello, everyone.
As a reminder, the acquisition of everything closed January 3rd 2022.
In order to provide transparency I will reference the impact the acquisition had on both of our both of our revenue and expenses in Q1 2022.
We're also starting to report non-GAAP financial measures in our Form 10-Q and earnings release to improve comparability between periods.
These non-GAAP financial measures, including non-GAAP gross profit.
non-GAAP gross profit margin non-GAAP operating expenses, non-GAAP net loss and non-GAAP net loss per common share.
We are introducing these non-GAAP measures given an increase in the number and magnitude of nonrecurring and noncash items that impact comparability between periods as well as bundled the underlying performance of our business.
These non-GAAP measures exclude noncash expenses like depreciation expense amortization expense.
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They also exclude non recurring items like transaction costs associated with business acquisitions, and other nonrecurring items that may arise.
I will reference these non-GAAP results in my prepared remarks, as well as specifically highlight the relevant amounts.
While we believe these non-GAAP results provide the truest measure of the underlying performance of our business, we want to provide the information necessary for every investor to do their own analysis.
We've included a reconciliation of each non-GAAP financial measure to the mostly directed directly comparable GAAP financial figure within our earnings release, which is available on the Investor Relations section of our website.
First your commercial bookings were $3 8 million during the quarter up 50% from Q1 2021.
Everything contributed 600000 in first year bookings during Q1 2022.
We are breaking out everything bookings this quarter, but as we now sell combined products. It will not be practical to provide a full breakout in the future.
As I mentioned on our last earnings call. We also decided to sunset our piracy intelligence business, which resulted in 200000 plus bookings in Q1 2022 in Q1 2021.
Excluding everything in the piracy intelligence business first your commercial bookings increased 900000 or 42% from Q1 last year.
We remind investors that first year commercial bookings are the best leading indicator of future revenue growth.
Revenue for the first quarter was $7 4 million up 11% from $6 7 million in Q1 last year.
Everything contributed $1 5 million of total revenue for the first quarter of 2022 financial results.
Please note that similar to bookings it will not be practical to provide a full breakout of everything revenue in future periods, although we won't try to provide color where possible.
Subscription revenue increased 30% from $2 9 billion to $3 8 million with everything contributing $1 2 million.
Excluding the impact of everything subscription revenue was lower by 300000 due to 500000 of upfront revenue recognition on a two year contract in Q1, 2021, partially offset by the impact of new customer contracts.
The revenue impact of Sun setting the piracy intelligence business was marginal to Q1 2022 revenue, but the impact will increase through the year as contracts expired.
<unk> in a meaningful way in the second quarter.
Service revenue decreased 4% from $3 8 million to $3 6 million with everything contributing 300000.
Excluding the impact of everything service revenue was lower by 500000, reflecting the timing of program work with the central banks, which accounted for 300000 and less revenue from professional services work.
The recycling contract that we referenced on the last earnings call I had no revenue impact in Q1 due to timing of the project, but we anticipate it will have significant impact on Q2 service revenue as the project is now underway.
Gross profit margin for the first quarter was 45% compared to 65% in Q1 last year.
The decrease in margin reflects $1 2 million of amortization expense recorded on acquired intangible assets that were recognized in the acquisition accounting for everything.
These assets are required to be recognized in our U S GAAP and amortized over their useful life.
<unk> and amortization expense subscription gross profit margins were 73% and service gross profit margins were 49% Q1, 2022 versus 73% and 59% in Q1 2021.
Service margins were negatively impacted this quarter as we incurred additional professional service hours above the hours that were billable on one of our service contracts.
We expect service margins to improve to more normalized levels next quarter.
non-GAAP gross profit margin for Q1, 2022 was 66% compared to 69% in Q1, 2020 one.
Operating expenses for the quarter were $21 4 million up $8 8 million from Q1 last year.
Everything added $4 6 million of operating expenses in the first quarter.
The remaining increase of $4 2 million largely reflects $1 2 million of higher compensation costs due to higher head count and annual compensation adjustments.
Higher legal accounting and tax costs of 700000 related to the everything acquisition and financing activities.
A 600000 noncash impairment charge to write down our lease right of use assets from our prior corporate headquarters.
Higher consulting costs of 500000 related to acquisition integration and other corporate initiatives and 500000 higher travel and conference costs.
The majority of these costs are nonrecurring costs with the exception of compensation costs and some of the consulting and travel costs.
non-GAAP operating expenses for the quarter was $17 million up $6 8 million from Q1 last year.
Everything added $4 million and non-GAAP operating expenses in the first quarter.
Remaining increase of $2 8 million reflects higher head count and annual compensation adjustments higher legal and accounting costs related to financing activities.
Higher consulting costs and higher travel and conference costs again, the majority of these costs outside of compensation costs, and some consulting and travel costs are nonrecurring.
Net loss per common share for the quarter was $1 three versus 50 cents in Q1 last year.
Everything incurred a loss of $4 6 million in the first quarter, which included $1 5 million of amortization expense on acquired intangible assets.
Excluding everything net loss per common share would have been 76 cents.
non-GAAP net loss per common share for the quarter was 69 cents versus 34 cents in Q1 last year.
We ended the quarter with $24 9 million in cash and investments.
In early April April we raised $58 3 million of capital through a registered direct offering whereby we sold 2.25 million shares of common stock at a price of $25.90.
Adding these gross cash proceeds to our quarter end cash and investment balance would've resulted in $83 2 million of cash and investments.
We used $16 7 million of cash and investments during the quarter, which included $4 million to pay the closing costs on behalf of everything and another 3 million to pay outstanding payables owed by everything net of 500000 of cash acquired.
Excluding these nonrecurring items, we used $10 2 million of cash and investments during the quarter quarter compared to $7 1 million in the first quarter of 2021.
For further discussion of our financial results and risks and prospects for our business. Please see our Form 10-Q that will be filed with the FCC.
Rather he will now provide a business update.
Thanks, Charles first off as we announced in December Bob Chad missile would be retiring at the end of this quarter. So Bob I want to recognize and thank you for your years of service and wish you much happiness in your new journey.
Behind the wonderful legacy and we promise you we got it from here.
Alright, so now onto the quarter from the beginning to the end Q1 was an eventful quarter. The quarter began with the January 3rd closing of our acquisition of everything.
Ended with the March 30th release of Holy Grail Phase II results.
In between these two milestones we posted organic first your commercial bookings growth of 28% versus the prior year. The prior period, a year ago, a number which jumped to 42% backing out our piracy intelligence bookings for both periods.
The quarter also saw us, finishing up the foundational work of our transformation work that culminated with the early Q2 launch of our first two integrated products did you Mark recycle a digit mark brand integrity.
I want to use these prepared remarks to talk about where we stand with recycling in light of the phase II results in part because I know this is an area of heavy investor focus and in part because of what I think these results will mean for our business as well as the planet.
But before I get to that I wanted to go back to our Q1 2021 call a year ago, My first as CEO, where we laid out the transformation upon which we were about to embark vita.
We talked about the need to and the benefits of becoming a product led company.
We mentioned the gap, we were looking to fill in data.
Talked about having the discipline to say no or no more to short term distractions that aren't obvious accelerants to where we're going.
And we mentioned that we were more focused on the pots of gold at the end of the Rainbow instead of trying to pick up every gold coin along the way.
We talked about the fact, we requested and every assumption of being patient to come up with the right answer and we mentioned how 2022 and beyond would be better. If we took the time to do things right acting with the freedom to plant not react.
I wont list all the actions taken sense that year ago call, but for those interested we do with some of them in the our strategy section of the recently released proxy.
I fully understand transformations don't make for very interesting conference calls transformations arent measurable at least real time and on a quarterly basis and they share our tangible at least by themselves only the results. He ultimately ultimately produce are.
On the Q1 call. It last year I made the analogy we were planning to swap out our edge in mid race and hoping to do so in a way that if we didn't tell you. We were doing so you would've just noticed the outcome. We expect this upgrade to have which is an enduring inflection to truly scalable high margin customer informed and customer driven solutions company that is changing the world in many different ways.
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And with that engine swap recently completed I can tell you that it is still exactly what we now expect to deliver.
On a personal note it has been energizing to be spending the vast majority of my time. These past few weeks.
Go to market initiatives and prospects as opposed to be more internally focused in process heavy work it has been necessary to affect our transformation.
A feeling I know it's shared by all of my teammates who are similarly heads down focused on delivering against this goal.
And I can also tell you that while 42% organic core first your commercial bookings growth is objectively strong we expect a lot more out of our new engine.
And I was excited to be in the position to be spending upcoming earnings calls talking about tangible results as I'm guessing. Many of you are to be seeing and hearing about them.
So well so while transformations might not make for very interesting conference calls while they were occurring it is important to recognize that every foundation upon which interesting conference calls are built.
For the rest of this call I'm going to talk about how we're positioned with Digi macrocycle.
Before we get to that it's important to keep in mind that a year ago not only did did you mark recycled not exist it couldnt have existed.
A year ago, we had the ability to license watermarks, but watermarks alone would wouldn't would not have enabled the complete functionality that is needed for recycling adoption at scale functionality now available to the industry and our turnkey product did you Mark recycle.
Moreover, even on an individual component basis. The watermarks, we were in a position to license a year ago wouldn't have enabled the valuable unlocks a full data granularity robust data security and easy cross product adoption that are secure digital watermarks can offer.
Which means a year ago, neither we nor our customers would've benefited from the easy on ramp to the dual platform did you Mark Tech stack, but did you mark recycled now enables.
And thus did you mark recycle would've been able to act as a top down driver of additional product adoption is now positioned to be.
But even more fundamentally a year ago. The fact, let alone the pace of Digi Macrocycle adoption wouldn't have been in our control and knowing what we know now it would have been far out in the future because a year ago. We look we would've been reliant on others to build up.
To build out the required full stack functionality.
That is required before we were able to sign a single deal.
The same could be said for any of our for their products. We are currently in market with namely did you Mark brand integrity did you Mark consumer engagement did you Mark digital images and did you Mark platform.
And the same will hold true for the other products, we will launch in the months quarters and years ahead, including the product candidate I've mentioned recently that could act as another top down driver of adoption similar to Digi Macrocycle.
Thus as we move into 2022 and began to benefit from the amazing work. The team has been hard at work executing against these past four quarters I wanted to acknowledge that while I understand transformations don't make for interesting conference calls because transformations don't equate to results.
Formations do what enabled results.
And everything we deliver from here on out will be the result of the nebulous tough to characterize every three months.
Work the team has been doing the team has been hard at work doing these past 12 months.
I want to thank you all for your patience and I want to thank my 300 teammates for all their amazing efforts that began a year ago. When we first started by questioning every assumption and then being patient to come up with the right answer.
For the last year, we've been consistent in saying, we expect you to do nothing but judge us on the results. We are finally on the cusp of you being able to do just that.
Okay. So now on to our performance in Holy Grail Phase II.
As a reminder, phase two tested our technology in a semi industrial setting, meaning a replication of real world conditions in every regard possible without actually being life.
The items were crushed dirty torn and otherwise mutilated to replicate what trash looks like looks like when it reaches a waste facility.
These items were then mixed with real real world waste and dropped on a conveyor belt running at three meters per second.
In every regard the input and throughput represented routine industrial operations.
We detected at 99%.
Other tests were performed alongside the validation test to stress test worsen routine real world settings.
Items were crushed soiled and otherwise mutilated suite, even greater extent than the validation test and the belts beat was the belt speed was increased to four and a half meters per second.
To help you visualize how extreme this last condition is imagine the impact just the laws of aerodynamics habit and empty chip bag for cylindrical bottle dropped on a treadmill belt running at over 10 miles per hour.
And even in these extreme conditions there was no loss of performance.
In fact based on the planning and rigor of phase two it might be these are the most accurate and precise measurements, we will have and how our technology performs in a real world setting at least until post mass adoption.
As a closed loop nature of phase two increases the ability to accurately measure results to a level that would be extremely hard to replicate in the real world.
Thus as a result of Holy Grail did you Mark recycle enjoys a level of testing and measurement few multi stakeholder system technologies will ever have prelaunch.
Our technology has been tested against an ever increasing degree of difficulty.
Surpassing damage likely to be encountered in the real world by an ever increasing number of participants representing multiple industries all.
While the whole world.
All the while with the whole world watching and it shined at every step along the way.
Having had the benefit of the preserving the individual tests, we've been vocal recently in saying this technology works and there is no longer any reason to delay moving to adoption.
Accordingly, with this data out aggregate aggregated and validated the course is getting louder for more and more stakeholders.
Behind the scenes as we've been waiting for these results to be published.
In the world to realize why we're so confident in our technology's performance, we've been working to proactively address other potential barriers to adoption. So that when it becomes incontrovertible that technology works like it is now we are in the position to start signing contracts.
Informing this work.
We know we must not only highlight all the benefits of all the benefits Digi Macrocycle unlocks, but also incent those visionary companies that are willing to adopt first.
As I mentioned, we would be on our last call. We are now officially in market with Digi Macrocycle.
There are three paths, we are taking to get the flywheel of adoption going and it is key to note our belief that our belief is that it will indeed be a flywheel.
Also key to note that below three pass are and not or roads to adoption.
Roadster rapid adoption.
First we are meeting with companies on a one on one basis.
Our initial conversations are going well and prospects are beginning to understand that the benefits to their business go beyond just increasing the quality and quantity of recycling to include among others access to a unique and highly valuable data set that provides benefits across the organization better alignment with a direct connection to end consumers action.
About ESG insights progress towards sustainability commitments, the potential to avoid harm from and instead benefit from regulatory actions and of course, an on ramp to product Digitization and all the additional unlocks that come from traveling that road.
Second without losing focus on the opportunity directly ahead of US. We're also engaging with other geographies beyond Europe as well as other substrates beyond plastic.
Did you Mark recycles value proposition isn't limited to a region or a substrate and the results from phase two proven and harsh conditions and arguably the toughest substrate are encouraging.
Have encourage engagement from others in search of a solution to an ever growing front of mind and global problem.
And then finally in addition to knocking down barriers on a micro level prospect by prospect. We're also working on ways to speed up time to broad adoption by knocking down barriers on mass.
Because we know we have a solution that can make a real impact on the global a global crisis.
One of the best parts of working out a complex project like this is meeting and spending time with people, who truly want to make an impact.
Visionaries, and doers, who don't give up on space with the inevitable inertia that comes with complexity, but instead double down.
On this last front I'm excited by the potential that exists to really speed the pace of adoption by knocking down barriers on mass and thankful for those that are of a similar mind and more importantly, a similar will stay tuned.
Operator, we're now ready for Q&A.
Thank you sorry to ask a question you will need to press star one on your telephone to withdraw your question press the pound key please standby while we can tell.
Terry.
Our first question comes from the line of Jim.
Needham and company. Please proceed with your question.
Hi, first question is just with respect to.
Test underway in Europe , what are the next phases of this and how do we think about.
This further progressing there and then I have a follow up question.
Yeah. So.
If you if you go to the website, Jim and we talked about this in the past digital watermark Saudi U.
You can see that the plan.
From wholly grill.
The original plan was it was a three phase trial, we've completed phase two.
So the.
The industrial scale pilots are they now set to begin later this year.
Is that am I could not talk I.
The Holy Grail is not our trial I know, it's frustrating for a lot of people.
Can only talk about.
What they've talked about and share what they've shared is not our story to tell.
I can share results once your public like for example.
You know like I mentioned, we.
We were very excited when the phase II results are able to be shared publicly I can't talk about their planes I can't talk about their currently up to.
Okay.
Can you elaborate on the comments you made about the potential for you to leverage this in other geographies and other geographic regions. Besides Europe as well as dealing with the materials other than plastic others types of substrates, where are you with respect to that for Digi Mark recycle.
And you can say.
Anything we could possibly say in a public way, but trust me, we would say it we are having conversations there is the the.
Theres been awareness of Holy Grill, the phase two results I think we're so shockingly strong maybe.
We didn't think they were shockingly strong we were expecting that level, but I think people were so.
Yeah. They were eye opening results is the best way to put it and so conversations we've been having.
You know got more serious more people have reached out it's a it was a wonderful wonderful awareness event and that was only six weeks ago. This is a massive problem. This is a global problem. This is front of mind for.
You know governments brands consumers.
And and I think the valley.
Validated.
The phase II results show this as a real solution. So there's a lot of people who are interested in exploring what that could mean for.
Is it geography or them as a substrate.
And as.
I you know I I understand you're asking the right questions. Great. Obviously are our goal is to deliver results and so they're just times. We can talk about things in times, we cant I think everybody would agree they would rather US you know get what we need to get done.
You guys as opposed to talk about it ahead of time, when we shouldn't be.
Fair enough.
Tracy I understand it's frustrating Trust me I wish we could talk about this.
Okay and last question for me is just saying I'm not sure. If kratos is product timing as there is the right term, but what you've done with D. G Mercury cycle and as you start thinking about these other products.
That you're working on.
Have you do you feel like you've accelerated you're in a position to accelerate this process with these other initiatives you have underway.
You mean other things besides the generic recycle right right when you're talking you're absolutely right there and that's what I'm getting to you whether you earn something and you can accelerate this process with these other products.
Yeah, well did you Mark recycle.
We had to put the components together right a big part of that was everything acquisition.
And so that's benefited other products as well.
You know did you mark.
Recycles, a little bit unusual because you know every technology every product has to go through normally the phases of proof of concept than a pilot and widespread adoption rate most of the time, that's done prospect by prospect customer by customer they will never be a better proof of concept in 170 organisations.
A very public trial right. So we I.
Getting to.
25 years that I've been.
Following the tech industry I can't think of it as a software P. O C that was ever done with so many stakeholders in such a publicly it's such a big way.
But that also you know where we're beholden to the timetable of of that POC.
But for the other products.
Yeah, I guess I'm not 100% certain on your question about you're saying is it could it take a longer time to launch.
You make a good point I guess, what I'm thinking of bad on with these other it.
Products that you're working toward.
They already are commercialized, but I'm, just trying to get a sense as to how you're going to be what the timeline is where we might see.
You're going to market more aggressively with some of these other initiatives I mean, you've got several that you've got a bunch of things underway Riley we know that.
I'm trying to get a sense and say okay. What are the next several crowd projects products.
Efforts, you're making and how can we judge the progress you're going to you anticipate Avenue King with these other yeah, yeah, Yeah, I'll tell you booking I mean this as you know this is as Charles mentioned in his part of the script right bookings as a leading indicator of revenue bookings as a metric that's important for everybody to watch we believe because.
Bookings are a sign of new business, how those flow into revenue based or based on revenue recognition rules and and other things. So so we are reporting a first year bookings number.
And and we give you.
That is.
That is business that is going to be recognized in the first year.
And that is why when I say we.
We expect you guys to judges in the result at that everything we're doing is trying to get to that where we're not in business to run interesting trials are or it's.
To grow bookings that they have really big booking so.
The to answer your question, maybe a little bit I.
I think I'm trying to answer your question, maybe in a different way that he asked a bit but let me know visits the what you're asking we.
We need to get to bookings growth I mean.
Accelerate we have bookings were 42%.
But we expect more out of it and.
That is a result, you should be monitoring how we're going to get there is having products, having clearly defined products clearly defined value propositions traditional marketing material. This is why we're better for this and the competitors right. These are the benefits you get from adopting this product and doing it on a one on one customer basis.
The difference with the other products versus did you Mark recycled Digi Macrocycle, everybody gets a window into P. O C. Because of P. O sees done enough.
Relatively publicly I guess, maybe you guys don't get real time view, you get views after things happen.
But everything else did you mark great integrity or.
We're having these conversations with customers.
Right. So we're in market with the products I talked about.
We are having conversations with customers because at the end of day, if the customers who are going to deliver the revenue and that's going to show up in bookings.
And where the bulk of the bookings that you've seen are related to digi, mark recycle or where you're seeing the bookings and some of these other areas is that the next step is you're going to be where youre going to show hopefully growth in bookings or are you going to be providing some granularity as to where it's coming from.
Yeah, so so except but for Q1 were the bulk of I mean do you realize again it was beginning to use Q2, where we were in market with our first products.
So Q1 was sort of a hodgepodge of different things there that we could map them to they were the legacy everything in the legacy the generic pipeline right and then going forward absolutely.
The expectations is that they will they will still be some of the legacy deals that were in the pipeline that will continue to advance for the tools.
But what will really drive the inflection of bookings going forward is going to be selling clearly defined product.
Got it thanks a lot.
Thanks, Jim.
As a reminder.
I ask a question at this time simply press Star then the number one on your telephone keypad.
Next question comes from the line of Robyn.
Janney Montgomery.
Hey, Rod thanks for taking the call.
Yes, when I talk to you a number of months ago. I asked you. The question about the sales force that you all have in place now and you know again, when you're when you're trying to come to market with new products and you've completely retooled the sales force.
Can you give us a little bit more color on how you've done that geographically by design by.
Structurally.
You know I, just like to have a better understanding.
Yeah, absolutely. So so you're absolutely right we have reordered.
Reorder, the salesforce or or or.
Reorganize them, so they're organized by verticals with a geographic overlay.
We are forming part so that the sales team will have a dedicated S. C. R.
Pre sales consultant.
So where were.
Focusing the sales team on verticals they will sell all products.
And then there is a geographic overlay to those verticals and then there's and then in addition, there's a whole channel team.
That is focused on the channel. They are also global in that regard we do have one dedicated SME salesperson and recycling who is this is a subject matter SME meeting subject matter expert.
As well for ditch macrocycle.
Okay. So then are all of these including the SME quota carrying salespeople.
Yes.
Okay.
And then I guess, if you could quantify for me going back to your 42% organic core for sure commercial bookings, how does that equate to dollars.
Charles broke it out Charles do you ever done on.
Andy.
Yeah.
Total bookings were $3 8 million.
600000 of it was everything and there was about a 200000 variance from the piracy intelligence business.
Yes, so Robert if you're trying to do.
We reported.
Yeah. The base was $2 5 million last year, Okay. Thank you.
That's helpful.
Thanks.
Your next question comes from the line of Tacoma with Foreign Bank capital.
Hi can you provide any color on the final acquisition costs for everything and if there'll be a second payout tranche.
Charles you want handle that.
Yeah. So the the transaction cost that we paid on behalf of the everything shareholders was $4 million.
And we do not believe that there will be a second payout.
The product a R. R. A minimum was not hit.
Okay. Thank you.
I will point out, though that there are shares that were held back for working capital adjustments and indemnification about $1.5 million those likely will be released in the future.
What's the criteria are finalized.
Got it thanks.
Your next question comes from the line.
With Craig Hallum.
Hey, guys turn on for Jeff.
Couple of questions for me first.
Accelerating bookings just curious you gave a little more color about.
Kind of a target for those bookings area you know what you would like to see internally kind of from a longer term road map.
The cash burn that's going on right now.
Yeah are you asking like for a specific point guidance or directional.
Yeah directional.
I know you probably won't give guidance directionally yeah.
So with the opportunity we have ahead of us with the uniqueness of our product set.
With the mind share of that we have.
We expect multiple years of very high enduring revenue growth, but bookings growth right. So.
The.
42% like I said is objectively strong number it's so really small numbers right and so we believe we're at the beginning of the S curve of our growth.
So that is I guess directionally I would say we're at the beginning of our S curve and so you can probably you know we expect accelerating over time, we're not giving any point guidance here on a quarterly basis, but looking out longer term.
We would expect higher revenue higher bookings growth and 42%.
And it's it's the speed, but it's also the duration of it right. So what we're setting up here is a.
Product led company, where we have our five initial products, we hope to have more soon.
And then.
We become not just a land is Atlanta and expand right. So we have a product we get a customer that has adopted an existing product. There was a product there's a roadmap at our customer journey. They can they can travel well.
We're adopting a second or a third or fourth or fifth day generic product.
Adds value from that adoption of that new product that also adds additional value to the existing products arity take.
So what we're looking to build here is a multiyear when I say during I mean multiple years.
Very high growth very high margin.
Got you that's helpful.
And then next one.
Obviously, a lot of focus on the recycled product just curious how you think.
King.
In terms of.
Adoption and getting to a point where.
The solution is really meaningful.
Yeah.
Yeah.
Important from the standpoint of the Recycler is there.
Kind of a target.
No.
Our level of threshold.
Heat.
Of.
Packaging.
Yeah.
Okay.
Really drive that wider wider.
Wider spread adoption.
Yeah, what's the value of any network technology right I mean, the value of the cell phone. When they were 10 cell phones was lesson. There was when there was a billion I'd say with the value of the Internet. So there will there will always be increasing value.
The more products are and the more facilities that are online and Alex stand is actually beyond just the geographic region like Europe right because a lot of these brands are multinationals and so are multi continent. So.
So this is the this is the journey we have to get.
There will always be increasing value Aaron the more products that are watermarked and more facilities that have scanners to both sides the value of the network.
Got you that's it for me.
Thanks.
At this time.
A question and answer session I would now like to turn the call back over to Mr. Mccormack.
Please proceed.
Well thanks, everybody for your for your time today, and we look forward to connect again thanks.
This concludes today's call. Thank you, ladies and gentlemen for joining us today for our presentation you may now disconnect.
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