Q1 2022 ICAD Inc Earnings Call
Okay.
Good afternoon, ladies and gentlemen, and welcome to the Ikat, Inc. First quarter 2022 earnings call.
At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation. It is now.
My pleasure to turn the floor over to your host Tony took us our director of Investor Relations, Sir the floor is yours.
Thank you Matthew good afternoon, everyone. Thank you for joining us today for ipads first quarter 2022 earnings conference call on the call today, we have Stacey Stevens, our president and Chief Executive Officer, and Charlie Carter, Our Chief Financial Officer.
Before turning the call over to Stacey I would like to remind everyone that we will be making forward looking statements on the call. Today. These forward looking statements are based on <unk> current expectations and are subject to uncertainty and changes in circumstances.
Actual results may differ materially from these expectations for a list of factors that could cause actual results to differ please see today's press release and our filings with the U S Securities and Exchange Commission.
I can't undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.
I would also note that management may refer to certain non-GAAP financial measures management believes that these measures provide meaningful information for investors and reflect the way. They view the operating performance of the company you can find a reconciliation of our GAAP to non-GAAP measures at the end of the earnings release with that I'll turn the call.
All over to Stacy.
Thank you Tony and good afternoon, everyone I will begin with some high level comments on our first quarter results and then provide additional granularity around the current business environment and key areas of focus for the company for the rest of 2022.
As we indicated in our pre release on April 21st Q1 has been a period of rapid change for our company as we announced the appointment of Timothy North Irish as chairman of the board of directors. He will succeed Michael Klein, who will remain as a director of the board on behalf of the board of directors and our entire management team I would like to thank Mike for his.
As chairman of the board over the past three years and we are excited to welcome Tim T offers tremendous insight and decades of relevant experience in corporate leadership and help technologies, along with a proven track record of leading innovation and strategic teams. We also recently announced that our Chief Financial Officer, Charles Carter will be lead.
The company for personal reasons, Charlie will continue to serve as CFO to assist with the transition of his responsibilities until his successor is in place I would also like to thank Charlie on behalf of the board of directors and the entire ikat team for his work as CFO over the past year. He has played an important role during a period of transition.
And for the company and we appreciate the contributions that support our company's future success.
We have previously shared that we believe we are currently at an important inflection point that offer significant potential across both sides of our business with a robust portfolio of world, leading differentiated solutions in large underpenetrated markets in the detection segment and the expansion of soft and promising applications such.
As the treatment of brain tumors and the cancer therapy segment. Our team has been laying the foundation for a path to continued success. This year, we plan to continue to leverage the strength of our robust portfolio of powerful solutions in 2022 and beyond by expanding access to the technologies in our existing portfolio Aggress.
Probably targeting broader market opportunities and offering more flexible ways for our technologies to meet customer needs based on what the team accomplished in Q1 I believe that we have the right plans and the right team in place to successfully execute our strategic vision and elevate the company and our technologies to new Heights.
Although the global pandemic continued to present challenges in the earlier part of Q1, we are thankfully beginning to return to a more normal environment as COVID-19 related restrictions are beginning to loosen in many areas around the globe because in many cases resulted in a more positive customer environment and better access to <unk>.
Isn't makers, we saw particularly positive progress in the EU as COVID-19 restrictions begin to ease and traditional business activities such as cross border travel began to open up once again.
From a supply side perspective, we proactively took a number of steps starting last year and continuing into Q1 to reduce the potential for supply chain disruption.
While this resulted in higher than anticipated cash burn we believe it was prudent to establish an inventory cushion to protect against component shortages and inflationary price increases and we believe we are now well positioned to weather any potential short term disruptions that may come the rest of the year moving.
Forward in 2022, we plan to burn substantially less cash in the subsequent quarters and we have developed plans for a range of scenarios that should allow us to conserve and ultimately generate cash in 2023.
Taking a closer look at Q1 I catch total revenue was 752 million. This is on track with the expected trajectory. We previously laid out and it's a particularly encouraging result, given continued COVID-19 headwinds early in the quarter and the fact that we were simultaneously overhauling our commercial infrastructure to position the company for.
Our long term success overall, our Q1 results provide a solid foundation to build on for 2022, and I would like to express my sincere gratitude to our hardworking and dedicated teams for their laser focus on execution and achieving these results.
Looking at the detection business the key aspects of our plan are to increase our penetration of the broader available market and to better address the needs of the emerging enterprise level customers. However, both initiatives require a different sales approaches and skills than what we have emphasized in the past and it became clear that the skills, enabling our URL.
Early success, we're not the same skills that we needed to be successful moving forward.
As a result, we have worked diligently to adjust our sales motion and have made great progress in enhancing our commercial infrastructure with new and highly successful sales personnel in key territories across the U S. Although these changes our recent they are already having a positive impact on our business.
In Q1, we saw continued positive momentum in our goal to further penetrate the broader available market and in parallel we have implemented several initiatives to continually drive our growing pipeline, we recently announced particularly positive momentum for profound AI among customers equipped with the leading provider.
<unk> of <unk> mammography systems with customers continuing to report ongoing workflow advantages and clinical superiority with ICANN suite of AI powered breast health solutions compared to other breast AI solutions. Some of these customers have been and will share their experiences using profound AI and our new.
Profound insights profound impact webinar series, which we recently launched and will run through the rest of the year.
As expected our salesforce with skill sets and relationships are proving to be a key element that is enabling us to successfully reach new customers. For example in Q1, our teams solidified an enterprise deal with one of our largest world renowned academic research institutions with multiple co locations throughout the U S. As.
Well as several other key contracts with high profile facilities across the country and worldwide. We are pleased with the early success, we are seeing and excited by what we can accomplish moving forward.
Another key aspect of our plan is to better address the needs of enterprise level customers, who are becoming a very important opportunity in the detection market. These customers are very attractive as they generally represent larger installations with longer term strategic partnership opportunities. We are seeing increased traction with these customers and.
We have evolved our sales approach and leverage the skill sets of our enhanced commercial team.
Our strategic plan also include providing customers more flexible ways to procure our technology. These efforts include expanding our legacy partnerships to now include various pacs vendors and working with AI Aggregators. We were pleased to see some of these partners contribute to our overall revenue in Q1.
As mentioned on the last call. We can't we began testing a subscription model in Q1 for some customers who prefer the operational expense approach due to budget constraints historically, the purchasing model in the detection business has been a capital investment decision and a perpetual software license purchase, but we have learned that some customers may prefer.
A more flexible payment plan the subscription model allows the segment of our customers the ability to acquire our technology when capital budget is not available and also begins to build an installed base that we believe will generate long term recurring revenue for the company.
While there is growing customer interest for this model, we still expect it to be a small percentage of our overall revenue in 2022, and we continue to lead with a capital model.
We are also making great strides as we continue to collect additional clinical data to support our leading edge profound AI risk product.
We believe that this first in kind technology not only has the potential to change the landscape of breast cancer screening and also that short term personalized risk assessment should become the standard of care for women.
The portfolio of evidence supporting this technology continues to grow with four studies currently underway. We look forward to seeing research presented from some of these studies at upcoming trade shows in Q2, including the international workshop on breast imaging, which will take place in Belgium. Later, this month and the European Congress of radiology, which will take place in.
This July .
While we are proud to report that we have a growing number of early adopters of this technology, we expect that the additional clinical data will make the use of profound AI risk even more compelling for our clinicians working to improve breast cancer screening outcomes in.
In addition, we are exploring various product and pricing combinations that could help drive adoption of this capability moving forward, including our Brenda bundled pricing model, where all of our breast AI technologies can be adopted together as a premium package.
Now turning to our therapy business revenue in the therapy segment fell short of our expectations due primarily to a restructuring of one of our dermatology partners, who is presently positioning itself to go after the <unk> opportunity in a more accelerated fashion, including adding additional sales resources there and.
We fully expect this segment to rebound considerably in Q2 and expect our U S. Dermatology business to continue to be the primary growth driver for soft in 2022. We are currently installing our first off system for skin in Florida in Q2, with our partner Derma therapies and expect to convert several more new customers in the scheme.
Market in the months ahead, we also have successfully on boarded our west coast partner Dermis here, our team and expect to see several more key placements in Q2 as a result of this strategic relationship.
With the Covid restrictions beginning to lift in many areas earlier this year I'm happy to report that we were able to attend multiple in person trade shows in Q1 that have stimulated our already growing pipeline of dermatology prospects with more conferences and events planned in Q2 in various geographic locations. We look forward to continue.
This momentum.
Additionally, we continue to advance the Glee ox trial are multinational clinical study examining the use of intraoperative radiation therapy with the <unk> system for the treatment of recurrent glioblastoma.
<unk> have now treated five patients under <unk> protocol to date at Providence, St. Johns and we expect to have at least 10 patients treated with <unk> by the end of Q2.
While concurrently, adding multiple new sites in both the U S and global markets.
For example, recently doctors at ferrous University and <unk> span have successfully treated multiple cases of recurrent glioblastoma with those off system in preparation for beginning with Lee Ox trial. This facility has also used <unk> to treat patients with brain metastases rectal cancers and <unk>.
Head and neck tumors. We are also encouraged to see more facilities, adding new indications for this off system. As it provides a practical solution that offers the potential to optimize treatment times and reduce side effects, which ultimately enhances patient care.
For example, clinicians at the Miguel Servet University Hospital in <unk> to the Spain have recently utilized soft IRR cheat and their cancer treatment regimen for Sarcomas and brain metastases, notably this facility has been using the dock system for the treatment of breast and gynecological cancers for years with now more than <unk>.
700 breast cancers in 200 gynecological cancers.
To date.
We are also continuing to see interest in forward momentum and soft in other global markets with a significant fail in Taiwan in Q1.
Now looking at our international AI business as noted earlier, we continue to see improvement in the selling environment, especially in the EU. This can be attributed in part to a reduction in COVID-19 restrictions and the introduction of our subscription pricing alternative we expect our European business to continue to contribute more revenue than it has.
Been the case in the past two years, where this geography was hard hit by Covid constraints.
We remain optimistic as we look ahead as we believe we now have a stronger commercial infrastructure in place and a solid and growing pipeline to ensure the trajectory. We are on will continue to position the organization for success and bring our world leading portfolio of innovative solutions into the hands of more clinicians worldwide.
We remain very confident and the unique value of our portfolio of technologies offers and I believe we are successfully navigating the changes necessary to capture more of that opportunity and drive growth through 2022 and beyond with that I will now turn the call over to Charlie to walk you through the financial highlights from the.
Quarter Charlie.
Sure.
Good afternoon, everyone and thank you Stacey.
Summarize our financial results for the quarter ended March 31 2022.
Total revenues for the quarter were $745 million, a decline of $1 $1 million or 13% from the first quarter of 2021.
<unk> segment revenue was $5 $5 million down three 5% from last year.
In detection first quarter 'twenty to product revenue, which to report 9 million versus a strong comparable first quarter of 2021 that was up 34% over the prior year.
Product revenue declined year over year, largely due to lingering COVID-19 impact in early Q1, 'twenty, two causing access to decision makers to be challenging, especially for large deals.
Restructuring of our commercial team in the United States did touch on service revenue was $1 $7 million up <unk>, 4% over the prior year.
The therapy segment revenue was $2 million down $923000 or 32% versus the first quarter of 2021.
Therapy product revenue was $696000 down 50% year over year against a very tough comp from last year.
Services revenue were $1 3 million down 15% year over year as Stacy mentioned, the decrease was primarily due to a restructuring of one of our dermatology partners as they restructure and are focused on quickly growing their sales and support infrastructure, we expect therapy revenue to improve in Q2 and the remainder of 'twenty two.
Moving on to gross profit.
On a percentage of revenue basis gross profit was 71, 5% for the first quarter of <unk> 42, compared to 72, 8% for the first quarter of 2021 with the reduction related to temporary lower average selling prices for certain <unk> suppliers.
A pure dollar basis gross profit for the quarter was $5 4 million as compared to $6 $3 million last year, largely reflective of the reduction in revenues.
Total operating expenses for the first quarter of 2020 to report 9 million $1 million or 14% increase year over year.
<unk> expenses in 'twenty two included a $300000 increase in the reserve for doubtful accounts, reflecting the general global economic concerns and potential elevated risk to trade receivables.
This is mostly a general reserve increase and is not related to any material no defaults.
The operating cost increase also reflects lower expenses in 2021 due to lingering COVID-19 reductions employee levels as compared to full staffing and additional costs related to building. The U S sales team capabilities this year.
The company remains committed to managing operating expenses with the selective focus on spending to support current revenue target achievement and future revenue growth, while maintaining the clinical superiority of our technology.
Operating loss was $3 $5 million in the quarter ended March 31, 2022 versus $1 $5 million in the quarter ended March 31 2021. This.
This increase in operating loss was due to lower revenues and higher operating costs in Q1, 'twenty two versus Q1 'twenty one has already discussed.
GAAP net loss for the first quarter of 'twenty, two was $3.5 million or <unk> <unk> per diluted share compared with GAAP net loss of $1 6 million or seven cents per diluted share for the first quarter of 2021. This year over year increase represents the change in operating loss offset by.
$100000 of interest expense in Q1 2021.
non-GAAP adjusted EBITDA for the first quarter of 2022 was a loss of $2 $7 million versus zero zero port $4 million in Q1, 2021, non-GAAP adjusted net loss for the quarter was through port $5 million or <unk> 14 per diluted share compared to $1 6 million or <unk>.
<unk> per diluted share in Q1, 2021, reflecting few adjustments to GAAP net loss in each period.
Moving onto the balance sheet.
March 31, 2022, the company address from cash equivalents of 29 $8 million.
Compared to cash and cash equivalents of 30 to $34 3 million at March 31, 2021, Josh and cash equivalents used during the first quarter were $4 $5 million as Stacy mentioned, our chat is derisking supply chain elongation by adding inventory.
<unk> inventory levels and the timing of the payments at a large impact on cash use in the quarter, while we do not expect to see a similar uptick in inventory levels moving forward. We do believe maintaining this increased inventory level will derisk the supply chain for the remainder of 'twenty two.
There were also some noncash impacts to our working capital in the quarter due to changes in our accounts receivable roughly half of the change was due to unbilled contract assets moving to accounts receivable upon invoices.
The remainder was primarily due to the difference in the strength of business at the end of Q1 versus Q4.
The COVID-19 related decrease in December 2021 sales resulted in a lower accounts receivable balance while Q1 2022 reflected I guess traditional money monthly pattern with the majority of sales occurring in the third month, resulting in a higher relative accounts receivable balance at the end of the quarter.
This concludes the financial highlights of our presentation I would now like to turn the call back over to Tony to lead the Q&A.
Thanks, Charlie.
Can we open up the lines for questions. Please.
Certainly ladies and gentlemen, the floor is now open for questions. If you have any questions or comments. Please press star one on your phone at this time, we do ask that while posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.
Once again, if you have any questions comments. Please press star one on your phone.
Please hold while we poll for questions.
Your first question is coming from per Ostlund from Craig Hallum.
Your line is live.
Thank you good afternoon everybody.
Let's start with.
Let's start with the efforts too.
Reconstruct the commercial effort the commercial team.
I think Stacy if I recall correctly.
You you had about a dozen salespeople on the on the detection side.
I think that we're going to be about half kind of turning over there.
Either either within or outside of the company just curious as to where that stands if all of the territories have been filled if theres anything that youre still.
Kind of in need of resource wise on that front and bigger picture.
What kind of maturation process or timeframe do you typically think about as you add new people to the organization.
Yeah sure. Thanks for that pair so I'm really pleased with the progress that we made in our kind of overhauling the commercial infrastructure during the quarter. We moved very fast we worked with a top tier sales recruiter.
We're able to attract great talent.
You mentioned, we turned over about 40% of our U S sales team and I would characterize it as we're about one higher away from having kind of a full team in place that wed like to ideally half and we're expecting to fill that last territory by the end of this month. So we're really pleased with the progress.
The new reps have all except for that one that we havent filled yet they've all been fully trained.
And they are already contributing revenue to our pipeline of opportunity. So we're really pleased that we were able to accomplish this so fast in the quarter.
A lot of these folks come from a background that make see sort of on boarding process, a little bit easier and faster theres not as much of a ramp up time some of them came from.
The same industry, so there's always a little bit of <unk>.
Time, right to get fully productive, but I'm very confident that as we move through Q2 that will have our entire team fully productive and kind of firing on all cylinders.
Okay.
Right that makes sense.
Maybe dovetailing off of that.
Alluded to it without them.
Mentioning names.
As I understand it I think there was at least you know maybe one or two.
People that join your organization from.
<unk> the leading <unk>.
Mammography OEM out there.
When you bring somebody like that.
I can't it's hardly the first company to make a competitive higher like that but you have embarked I think more aggressively in the last few months on going after that.
The OEM customer base in terms of.
Putting profound AI and over you know what.
What type of competitive offering they might have.
Yes.
In terms of that kind of timing, where youre going out more aggressively at that end.
Yes.
How important and how helpful is it to have somebody or somebody is portal coming over from from that that other organization in terms of going out and targeting those people and then maybe related to that how much sharing of best practices.
So if somebody comes over from Hologic.
And is targeting one territory is there is there any.
Kind of tacit effort to sort of share some knowledge across other territories given.
His knowledge of.
Of where that came from.
Yes, sure no great question and it certainly has been very helpful to have some reps, who sort of came from selling to the.
The same customers in the same territory right, who have been selling mammography with the leading provider of promo right. So they have had a particularly fast ramp up.
And in fact, even during Q1, we even had an order that was going to that vendor kind of changed over to two ikat right. So I think it's really great. When you have people that understand that it's important to separate the decision from the imaging hardware separate it from the choice of the.
AI software and that there are big differences in clinical performance and we've been very successful in being able to at an increasing rate convince our customers to separate those two decisions and our pipeline of opportunity in that category has increased substantially not only with some of the new reps at that key.
I'm on but also with the reps that have been in place for a while right in and we've had particular programs in place right that measure.
Every individual's reps pipeline and what percentage of what percentage of each deal is represented by the different mammography vendors. So I would say we've made progress across the board. There certainly has been sharing of information.
Between our reps and that's always been the case rate, we have a small enough team where theres always.
Even though our weekly opportunity to share best practices, among the team and and competitive strategy. So we've had a lot of that going on but I'm really pleased with the momentum and progress in terms of the how our pipeline looks not only in terms of its overall growth, but the profile of it and the mix of <unk>.
<unk> Gantries that are represented within it and we expect that to continue to accelerate going forward.
Great.
I'll ask one more promise only one more.
Bigger picture question on risk.
It's been out there a few quarters.
Do you see risk is kind of.
Almost like profound AI.
Paying out.
And just another venue and what I mean by that is I think when profound AI came came out and then you may still run into this today.
Almost selling against yourself because.
A lot of clinicians, probably we're going to be a little bit nonplussed by original CAD software and you had to educate them as to why profound was better.
These risks are the same kind of playbook in the sense that older risk assessment models.
Were not that great and maybe now you've got to kind of reeducate.
Well educated.
That user base as to why exactly profile risk is so much better than that.
How critical are these studies that are going on right now going to drive that point home.
For your target market.
Yes of course, and you know.
I think when it comes to profound AI risk of as we've said before we're really leading a major paradigm shift from what historically has been an age based screening paradigm in mammography to what we believe.
Will it become a risk adjusted screening paradigm precision screening unique an individualized for each woman's unique risk profile and we're certainly the only company that now is able to offer a short term risk solution that they can assess with around 80% accuracy, which women are likely to dip.
Breast cancer in the next year there is nothing like this on the market right. The existing models like you mentioned, our lifetime risk models that have a lot of challenges right. They number one are not very accurate there are about 50 or 60% accurate and they're also not very actionable right. What do I do if I'm told I have a 50% chance of developing breast cancer in my life.
Time, so we really believe that profound AI risk is going to make a major impact on breast cancer screening and like we have set up all of our other products, we think the key to.
To changing this paradigm is developing a very compelling body of clinical data right and so a lot of our effort in the first half of 2022 has been on collecting more data on a larger more diverse patient population to prove out the clinical performance and we've made tremendous progress since the beginning of the year.
In that regard we have four clinical studies that are underway one of them is already having presentation coming up later this month and then again at the European Congress of Radiology in July we have another one that we are in the final stages of collecting the data in about six months from now we expect peer review.
On that one and then we also have three cost effectiveness studies around risk as well so we've made a.
Our significant investment in these clinical studies, but we believe that they serve as the foundation right and are really the necessary factor to get widespread adoption and we're pleased with the progress that we've made the results that we're seeing so far in <unk> and even our attachment rate of risk is continuing to grow as I mentioned in the script, we're now sort of packaging.
We're the only company that can uniquely pull together a profound AI profound density and profound AI risk right into what really is a premium AI offering.
We're doing that now and trying to position our technology is more of a premium bundle that really cannot be matched by any other company out there and we're enthusiastic about the impact that that can have on the risk attachment rate as well.
As well you should be thanks, Stacy I appreciate that sharp here. Thanks.
Thank you. Your next question is coming from Mary <unk> from <unk>. Your line is live.
Hi, Thanks for taking the questions received name Stacey and Charlie Good luck to you on your next.
Enterprise here.
Hum.
I wanted to start with the I think Stacy you mentioned the deal that was solidified in Q1 wanted to see if we could learn more details about that some of the things that led to that success whether that revenue is.
We're going to be recognized here in Q2 or has already been recognized and then just generally any comments on the capital purchasing environment. It certainly sounded like it was looking a bit rosier, but would love to hear some more details there.
Sure sure Yeah with regard to the environment, but what I would say is that it's getting better with every months right certainly our access to decision makers is getting a lot better as we go forward every month, it's still not like pre pandemic levels right, because we still find that our customers still have a lot of distractions a lot of issues.
They're dealing with in particular staffing shortages kind of across the board.
So it makes it still a little bit sometimes hard to predict the timing on some deals but.
It's significantly better than it was right we are able to travel to meet in person again, which has been very challenging right for two years. So we're optimistic and we're really glad to see our reps out in in their accounts again, both in the U S and in Europe .
With respect to the large enterprise deal. So my first point that I'll make about that is that that is a.
Deep imaging vendor who is in that account is predominantly made up of of the vendor that is the leading tomo provider, it's a little bit of a mixed slab.
And you know the keys to closing that really where the clinical superiority that the customer found relative to profound AI right and the deployment of the technology across the enterprise was really to be able to provide all patients access to that same high quality level of care that same cancer detection accurate.
See reduction in false positives and reduced reading time.
So we're pleased with that a good chunk of the revenue from that was in Q1. However, we do have a lot of service.
Service contract revenue and things that gets recognized ratably over time in technology protection type programs. So there is more revenue to come on that but a good chunk of it did get recognized in Q1.
Okay very good so that sounds like it was a competitive win as well very good to hear.
<unk>.
Okay, and maybe I could get a little more detail on what youre seeing so far with the subscription model any details you can offer in terms of you know the range of pricing youre thinking about or the length of some of those agreements.
Would just love to hear more thank you sure. So this is a subscription kind of played out exactly as we anticipated in Q1 right. We did see a growing demand for that model right and there were some customers who we did take some orders under that model. It was a very small percentage of our business really.
Immaterial not enough to even report it out and.
We expect that to grow over time, but still overall be a small percentage of our overall revenue in 2022 and once we decide that it is meaningful enough in terms of our overall revenue, we certainly will be transparent about it and report a metric that will be easier to track.
The timing of that is still unknown.
Great about it for US is that we were really trying to sort of achieve revenue targets and have to be subscription revenue would be incremental to that right and truly be for deal. So that there's no way. We would have won otherwise right that that customer has no capital budget and it does not anticipate having capital budget certainly anytime in 2022.
So that's exactly how it played out in Q1 right. We got some customers that we would not have seen otherwise in 2022, but by offering them, that's quite somewhat flexible payment model, where they can pay over the course of a couple of years, a little bit more than a couple of years, we're able to get them into the products and using profound AI and recognizing the clinical benefit so.
That's really going to be our strategy with every quarter right is to really try to make that subscription.
<unk> group be sort of incremental to our plan, we do expect it to grow over time and towards the end of the year. We may find ourselves in a situation, where we have a higher percentage of that but our subscription but right now it's a small percentage of our business and and that's how we see it for at least the next couple of quarters.
Okay very good we'll stay tuned thanks, so much I'll hop back in queue right.
Yeah.
Thank you. Your next question is coming from Yale Jen from Laidlaw <unk> Company. Your line is live.
Good afternoon, and thanks for taking the question.
Just two questions here the first one.
As Paul academic institution, you mentioned on the opening remarks.
Operating a little bit more.
And was that the one.
<unk> mentioned the Liberty.
You have recognized most of the revenue.
Already or that sort of stuff.
And then I have a follow up.
Yeah that is the one that I was talking about right that was a.
World renowned academic research institution, a household name that everyone on this call would recognize them.
And we did.
It was deploying profound AI at a number of sites throughout the country and we did recognize a.
A sizable percentage of the revenue in Q1, but as I mentioned there are some ongoing service revenue and technology protection type revenue that we'll recognize in future quarters.
And if so is that the academic institution, becoming a one off.
Clinical and newer.
<unk> expanded the focus for you guys.
Or you already have that.
Beforehand, but probably the more we'll absolutely going slower Jay to pursue those opportunities.
It's becoming a greater percentage of our overall opportunity C. L. Right. We are seeing a larger either health systems or multi site academic research institutions larger customers right, who are recognizing that.
If you don't have the technology and all of the hospitals are affiliated centers that there is in in equity and care for patients we hear that over and over again right, where we might have started off a deal in one or two of the hospitals that are affiliated with the system and the customer comes back to US and says we don't want to offer women.
And different access to care right and there is a clear clinical value in this product thats proven in clinical study right. So so these types of larger opportunities.
Are becoming more and more a part of our pipeline and again they can take some more time to close but I feel like we're getting our arms around some of the ways that we can match.
Manage that a longer sales cycle, whether it's better understanding our I T stakeholders like the Chief information officer, better understanding the timeframe to get through the legal requirements right. So we're learning as we go and I think over the last six months, we have learned a lot about how to approach these enterprise deals and in a way that we can.
Plan for this elongated sales cycle and try to take some steps to proactively tightened it up but this is great for US right. It allows us to.
Get faster market penetration get larger average selling prices on every deal and we're really pleased with that.
Customers are recognizing the clinical value that the product has in this way.
And then maybe the a good day.
Follow up question here really is that you mentioned earlier about bundling could be.
<unk> approached that.
To increase the sales.
Could you elaborate a little bit more.
Maybe there is more.
Things that you don't want to talk about but just overall what are how should we think about this particular deal.
Approach, which hasn't been projects, but many people in many sectors and thanks.
Yeah sure.
So what we're finding is a lot of times, our customers might get capital budget once a year or maybe once every couple of years and when they do they want to make sure that they acquire the latest and greatest in sort of pull full portfolio of innovation that's available from US right. So in the past we've more subtle things all apart.
And we're finding that if we sort of position and message this differently, especially now that we're starting to get some results from the the risk clinical studies that was really important piece of this right that we're able to go in with a really powerful messaging that again no. Other company can match right. There is no other company that.
Can offer.
The level of clinical performance and profound AI plus our breast density and certainly no. Other company that has a short term risk assessment solution like we do so we're finding we're in the early stages of this.
We're just getting going with it but we're finding already a lot of interest from our customers and we're finding that our sales team is very interested in meeting with this sort of premium bundle bundle as a way of sort of maximizing our differentiation versus all of our competitors.
Okay, Great that's very helpful and congrats on all the progress yeah. Thank you yeah. Thank you so much.
Yes.
Thank you. Your next question is coming from Frank <unk> from Lake Street Capital markets. Your line is live.
Great. Thanks for taking my questions and congrats on all the progress that's sure Hi, Frank Thank you.
So let's start with the the funnel if we can funnel size pipeline. If we can talk about that a little bit more it sounded pretty optimistic like things are looking up so maybe just bring us a little bit deeper into pipeline prospects right now.
You can share with us versus how it feels right now versus maybe last quarter and versus last year and then how that plays into the expectation of a second half inflection.
In the detection business.
Sure Yeah. So we're very pleased with the progress in our pipeline as I had said on the call last quarter.
We really weren't addressing the full market opportunity.
Previously we were a little bit more reliant on some of our legacy partnerships and we didn't have full compatibility with our product line to profound AI to all of the.
Our latest generations of the mammography systems in the market now, we do and so we're able to access the entirety of the market.
And that has really made an impact on our pipeline and how its building. So if you sort of layer on the changes that we made in our commercial infrastructure with now having access to the.
The full availability of the market, we most certainly see that reflected in our pipeline quarter to quarter, even from a quarter ago to to where we stand now and we're very optimistic that we're on the trajectory that we had laid out last quarter in terms of seeing increasing.
Growth in revenue each quarter and you know, we're very pleased with how the pipeline looks right now and the results of our efforts are are definitely you know being successful.
That's really helpful. And then maybe just to follow up on <unk> line of questioning on the subscription model.
What if you were to speculate what portion of the call. It 10000, plus three D systems do you feel are most interested in that flexible payment model or what portion do you feel are more interested in the capital equipment, just kind of trying to get a feel for how.
How youre viewing the market and what different models, they may elect to pursue in future periods.
Yeah, that's a really interesting question and it might not be the answer that you would expect right. So we initially expected that maybe low volume centers are.
Smaller entities with lower budget might prefer that type of a model. What we have found so far and again you know this is a very small number of deals they've been all over the map so far right that could be a hospital they could be an imaging center chain.
We don't really have enough data points, yet to really say that there is one single profile that will fit. This particular model I think we'll get more color on that in clarity as we go forward, but right now it's too small to really classify it as any one particular type of customer.
Okay Fair enough I'll stop there congrats again on all the progress alright, Thanks Frank.
Yeah.
Thank you that concludes our Q&A session I will now hand, the conference back to Stacey Stevens, President and CEO for closing remarks. Please go ahead.
Okay. Thank you so much and I want to thank everybody for joining the call Tonight. We're very pleased with the progress that we've made in the past quarter and we look forward to providing you with additional updates throughout the rest of this year as we continue to advance our business and leading innovations really continue to drive sustained.
Market leadership and of course work to create significant additional long term shareholder value. So with that I wish everyone. A great night, and we'll talk to you next quarter.
Thank you ladies and gentlemen. This concludes today's event you may disconnect at this time and I'd be wonderful day. Thank you for your participation.
Okay.