Q3 2022 Telos Corp Earnings Call
The conference will begin shortly to raise your hand during Q&A you can dial star one one.
[music].
Ladies and gentlemen, thank you for standing by and welcome to Telus Corporation third quarter 2022 financial results conference call.
At this time all participants are in a listen only mode. After the speaker's presentation. There will be a question and answer session to ask a question. During the session you will need your Crestar. One one please be advised that today's conference maybe recorded.
I would now like to turn the conference over to your speaker host for today Christina Perez. Please go ahead.
Good morning, Thank you for joining us to discuss Health Corporation third quarter 2022 financial results.
With me today is John Lewis, Chairman and CEO Helen.
Mark <unk> executive Vice President and CFO .
Let me.
Actual and guidance for the fourth quarter and full year 2020.
Then we'll open the line for Q&A.
<unk> Executive Vice President of security solution will also join us.
The earnings press release issued earlier today and is posted on the Investor Relations website, where this call is being simultaneously webcast.
Additionally, we have provided presentation slides on our Investor Relations website.
Before we begin we want to emphasize that some of our statements on this call are forward looking statements.
And are made under the safe Harbor provisions of the federal Securities laws.
These statements are based on current expectations and assumptions that are subject to risks and uncertainties.
Actual results could materially differ for various reasons.
Including the factors described in today's earnings press release.
And the comments made during this conference call and in.
And our SEC filings.
Do not undertake any duty to update any forward looking statements.
In addition, during today's call, we will discuss non-GAAP financial measures, which we believe are useful as supplemental and clarifying measures to help investors understand <unk> financial performance.
These non-GAAP financial measures should be considered in addition to.
Not as a substitute for or in isolation from GAAP results.
You can find additional disclosures regarding these non-GAAP measures, including reconciliations with comparable GAAP results in our earnings press release.
On the Investor relations portion of our website.
Please also note that financial comparisons are year over year, unless otherwise specified.
The webcast replay of this call will be available for the next year on our company website under the Investor Relations link with that I'll turn the call over to John .
Thank you Christina and good morning, everyone.
Let's begin today on slide three.
We executed well in the third quarter and exceeded quarterly expectations for a fourth consecutive reporting period.
Mark will discuss our financial performance later on this call, but at a high level, we delivered $63 $6 million of revenue in the third quarter above our guidance range of $58 million to $62 million up 14% sequentially and down 8% year over year.
Gross margin was 32, 9% above the guidance range of 31% 32, 5%.
We delivered $8 $6 million of adjusted EBITDA above the high end of our guidance range of $3 5 million to $5 million and a 13, 5% adjusted EBITDA margin.
Lastly, we delivered 10 cents of adjusted EPS.
Now, let's turn to slide four we'll I'll provide an update on the TSA pre check expansion program.
On October 18th the Transportation Security Administration issued an authority to operate <unk> as pre check system, marking an important milestone for another long term program for our company.
In the near term, we will be providing TSA pre check enrollment services for a soft launch trial period to a limited population of applicants in order to validate systems and processes in advance of full implementation.
Once the trial period has been successfully completed to the satisfaction of TSA.
Tell us will launch enrollment services to the public more wisely.
We are pleased to have finally reached this long awaited milestone.
If you turn to slide five you can see additional business highlights and successes achieved this quarter.
Turning to exacta, we receive renewals with several key customers, including the National Security Agency. The Federal Bureau of investigation, the Central Intelligence agency the <unk>.
Defense Intelligence agency the office of Naval Intelligence the National Archives.
Social security administration and Oracle.
We are also continuing to build on our partnership with IBM.
This relationship will enable us to broaden our reach into the global marketplace for sales of our exact that solution to drive future growth for Telus.
Value an exact as native obstacle ask Ralph format <unk>.
Inheritance, and adaptive mapping across regulations will drive IBM, Intel success and customer perceived value in the combined IBM Ags <unk> solution.
We were also awarded key contracts with large cloud service providers and data as a service providers to expedite the Ato or authority to operate process.
And our automated message handling service.
And designated Aviation Channeling services continued to perform well.
Near term, our focus and strategy for the ghost product line will be the embedded security element of customer and tailored solutions.
All development product enhancement and expansion efforts are aligned with this evolutionary products strategy driven by customer mission requirements.
We're confident in this direction as evidenced by the GCI ghost product positioning.
And our advanced cyber analytics or HCA solution launched earlier this year continues to evolve, including strengthening its cyber and analytic capabilities enabling.
Enabling an enhancement of our market position via the growing value of intellectual property in the platform.
We continue to enhance HCA through new features and by integration with other technologies.
We are confident that HCA will continue to gain sales momentum due to its unique capabilities to scale seamlessly and deliver to customers near real time, cyber situational awareness by harnessing the power of integrated cloud data science and actionable threat intelligence insights.
We are proud of the meaningful progress we've made across these business segments this quarter.
In other parts of our portfolio, we are experiencing challenges that are weighing on our near term outlook.
Revenues in some large programs and security solutions will likely begin to step down in the fourth quarter.
And our secure network segment has not generated sufficient new business wins.
So far in the second half to backfill revenues from large programs have been winding down and coming to successful completion over the course of 2022.
The combination of these factors will result in lower than previously expected revenues in the fourth quarter of 'twenty, two and potentially lower revenues year over year in 2023.
Mark will provide additional details on the fourth quarter and 2023 outlook later on this call.
Needless to say I am not satisfied with our near term outlook, we have significant room for improvement.
Board and I are laser focused on taking the necessary actions to improve our performance by optimizing and streamlining how we serve our customers and pursue new business opportunities for long term sustainable growth and success.
While we are clear eyed about our near term outlook. We are confident in the foundation and long term potential of our business.
The core fundamentals of our company remains strong our robust and recession resistant and markets well funded customers and decades long track record of serving the world's most security conscious organizations provide a solid foundation for the future.
And our strong balance sheet ensures significant financial and strategic flexibility.
Finally, we have a leadership change to announce.
Brendan Malloy executive Vice President of secure networks has notified me of his intention to retire at the end of 2022.
For over 26 years Brennan has provided exceptional service and commitment to tell us and our customers.
I want to extend my sincere thanks for his dedicated service and wish him a happy and healthy retirement.
I will now turn the call over to Mark who will discuss third quarter 2022 financial results guidance for the fourth quarter and some high level direction on 2023.
Mark.
Thank you John and thank you everyone for joining us today.
Let's turn to slide six.
As John mentioned, we executed well in the third quarter.
Delivering results that exceeded the high end of our guidance range on all financial metrics.
We reported revenue gross margin and adjusted EBITDA above the high end of our third quarter guidance range.
Total revenue was $63 6 million up 4%, 14% sequentially and down 8% year over year.
Performance above the high end of the guidance range of $58 million to $62 million was.
Really driven by favorable timing variances on preexisting higher margin programs and security solutions.
Secure networks revenues performed in line with our guided expectations.
Uh huh.
Security solutions sales were $32 $4 million up 5% sequentially and down 6% year over year due to the completion of the U S census program in 'twenty, 'twenty, one and quarterly variability of perpetual license sales.
Secure network sales were $31 2 million up 25% sequentially and down 10% year over year due to the ongoing wind down of large programs coming to a successful completion as expected.
Our program management teams within secured networks continue to successfully navigate a complex supply chain environment.
To deliver major programs on time and as forecasted in our guidance.
Turning to profitability and cash flow.
Third quarter gross margin contracted 313 basis points to 32, 9%.
Performance above the high end of our guidance range of 31% to 32, 5% was primarily due to better than expected sales contribution from our higher margin security solutions segment as.
As well as margin outperformance within secure networks.
Security solutions gross margin contracted approximately 850 basis points to 48%.
Primarily due to higher investment and a single large program as well as the previously mentioned variability of perpetual license sales.
Secure networks gross margin expanded approximately 170 basis points due to performance on major programs and favorable mix across the portfolio.
Adjusted EBITDA was $8 $6 million.
Performance above the high end of our adjusted EBITDA guidance range of $3 5 million to $5 million was primarily the result of gross profit outperformance.
And lower below the line expenses, resulting from cost cost reduction actions.
Adjusted EBITDA was approximately flat year over year, notwithstanding year over year declines in gross profit primarily due to lower below the line expenses.
Adjusted EBITDA margin expanded 80 basis points to 13, 5%.
Free cash flow improved significantly from $1 $3 million during the first nine months of 2021.
The $10 $7 million during the first nine months of 2022 as a result of favorable working capital dynamics.
We continue to return free cash flow to shareholders through share repurchases.
During the third quarter, we deployed $4 $7 million to repurchase nearly 500000 shares and.
And since announcing our share repurchase program six months ago, we have deployed $7 $7 million to.
<unk> nearly 860000 shares.
Now, let's turn to slide seven to discuss our outlook for the fourth quarter.
For the fourth quarter, we forecast sales in a range of $43 million to $47 million.
Denting, a sequential decline from the third quarter.
The midpoint of the fourth quarter revenue guide implies approximately $19 million sequential decline include.
Including approximately $4 million from security solutions and $15 million from secure networks.
The $4 million sequential decline in security solutions includes nearly $2 million of revenue on a pre existing program that pulled forward into the third quarter and drove the guidance beat above the high end of the third quarter guidance range.
The other $2 million represents a short term slowdown on a different preexisting program.
The $15 million sequential decline in secure networks is primarily the result of a single program, which ended in the third quarter and we will not recognize revenue in the fourth quarter.
Lastly, as John described earlier.
<unk> networks is not one sufficient new business so far in the second half of 2022 to backfill declining revenues on preexisting programs in the fourth quarter.
To be clear secure networks has won approximately $37 million of new business. So far in the second half of 2022.
But those programs will either convert to revenue over a multi year period of performance or in the case of some quick turn programs. The speed of revenue recognition will be constrained by supply chain limitations.
There are still some large opportunities in the new business pipeline that could be awarded in 2022.
But those opportunities if captured will benefit 2023 and beyond.
We expect gross margin to be down approximately 300 to 450 basis points year over year, primarily due to security solutions mixing lower <unk>.
Partially offset by higher margin security solutions contributing a greater proportion of total company revenues.
We expect secured networks gross margin to be approximately flat year over year.
Adjusted EBITDA is expected to be approximately breakeven to $2 million.
Now, let's turn to slide eight to discuss the resulting outlook for 2022.
For the full year, we now expect total revenues in a range of $213 million to $217 million and adjusted EBITDA in a range of 14 million to $16 million.
The midpoint of the revenue guidance range implies a topline reduction of approximately $19 million from our prior guidance to our updated guidance.
$14 million of the $19 million is primarily due to lower than expected new business wins and secured networks.
And also partially the impact of supply chain constraints on delivery of that new business.
The other $5 million is in security solutions and is spread across software sales a step down in large programs and TSA pre check.
In the aggregate security solutions is still expected to deliver full year revenues within the original guidance range that we communicated at the beginning of the year.
The entirety of the reduction below the bottom ends of the original guidance range is due to a shortfall in secured networks new business wins.
And lastly, with respect to 2023 and is far too early to provide much specificity at this point, but we can offer some high level color on headwinds and tailwind.
Within security solutions, we have large programs that will potentially slowdown and door turn off sometime around the end of this year or the first quarter of next year.
Those programs will be partially offset by the ramp of TSA pre check over the course of next year and potentially by at least one new long term business opportunity that we will compete for in the second half of next year that is larger on a run rate basis than the.
Grams that will potentially turn off.
We have strong past performance qualifications that position us well to compete for this new opportunity.
Within secure networks, the wind down of large programs in 2022 will create a year over year headwind into 2023.
But there are opportunities remaining in the pipeline for 2022 that have the potential to offset that headwind if awarded.
We believe these opportunities are lower probability.
So as you can see there are a number of moving pieces that will become more visible before we provide 2023 guidance on our fourth quarter earnings call in March.
In the meantime, the range of potential outcomes is quite wide.
But from where we sit today, it's possible revenues could be down approximately mid teens year over year in 2023.
But again I will emphasize that even a single large win in the next few months could meaningfully improve that outlook.
We will provide 2023 guidance on our fourth quarter earnings call in March.
With that I'll pass it back to John who will wrap up on slide nine.
Thank you Mark to summarize we exceeded quarterly expectations for a fourth consecutive reporting period and delivered results above the high end of our guidance range on all financial metrics.
Lower expenses and favorable working capital performance has driven strong free cash flows that we're returning to shareholders through share repurchases.
We are pleased to have received the Ato from the TSA for the <unk> pre check system, marking an important milestone for another long term valuable program for Telus.
That said I am not satisfied with our near term outlook and I recognize we have much work to do to improve our performance.
The board and I are focused on taking the necessary steps to maximize the strong foundation, we already have in place to create value for our shareholders.
As one would tell us this largest shareholders for more than 30 years.
Clearly disappointed with our recent new business conversion and wish we had greater visibility into the timing of critical program Awards.
We have and are continuing to take immediate action to improve our performance.
Having said that I've never been more committed to driving long term success for all tell us stakeholders and I am heartened by the track record we've built over decades of service to the world's most security conscious organizations.
Our solutions continue to resonate with new and existing customers. Our progress to date has not been linear and there have been speed bumps over the past three decades as well get tell us is consistently emerged stronger and we expect this period to prove no different.
With that we're happy to take questions.
Operator, please open the line for Q&A.
We've asked the call participants to please be mindful of others in the queue by asking only one question. Thank you.
Thank you, ladies and gentlemen to ask a question you will need to press star one one on your telephone keypad.
One moment, please while we compile the Q&A roster.
And now first question coming from the line of.
Dan is with Wedbush Your line is open.
Sure.
Yes, thanks, Rob.
I mean, my question just being coy honest.
What would give investors confidence that there's not more execution or some moves ahead.
Feels like last year and a half.
It continues to kind of Q1 disappointment after another.
And I'm just curious I mean, I'm, just curious on that incremental right.
Dan. Thank you for your question.
First thing is I would say that our solutions are widely adopted and they're recognized by our customers and those give us reasons to be optimistic for the future.
The other thing I'll say is that we are very clear eyed about the near term outlook, but we're confident in the foundation of our business and that that foundation provides a solid core for us. Despite some of the macro headwinds that we've discussed on this call.
But is there something execution, what I mean.
Or is it something fundamentally wrong with the business.
So we continue to just have the groundhog day.
So.
I'd say two things to you Dan to the rest of the people on the call here.
The first thing we've learned is we've expanded commercially and then to the channel is that it's a longer sales cycle than we expected due to the need for additional training and education.
And so that's one major change we decided to make is to consolidate our business development and capture functions to go after the same kind of solutions that we discussed previously as it relates to the large.
Confidential healthcare customer.
There are a tremendous amount of opportunities in the in the federal government around cloud cloud migration and cyber security that the combination of both sides or tell us bidding on I think provides a very big opportunity for the company going forward.
As it relates to the the.
The business expectation as to the fundamentals are there and sometimes things happen that just beyond our control.
So what we're trying to do here by giving the.
The puts and takes as to what we see in front of us as of today.
That will.
We hope that will change by the time, we give actual guidance out for 2023 Dan.
Thank you one moment. Please go our next question now.
Next question coming from the line of Zach Cummins with B Riley Your line is open.
Yes, hi, good morning, Thanks for taking my questions.
Is there any way you can give more insight into the headwinds that youre seeing in the security solutions business.
Any sort of additional insight there would be helpful, especially considering some of the other positive things that could be contributing to growth in that segment in 2023.
So mark you're asking about headwinds in security solutions sure.
Hello Vivek.
The headwinds in security solutions, primarily you have to deal with.
The.
<unk>.
Zero Trust architecture in the car.
Combination as John mentioned of taking our solutions.
And instead of point of sale solutions looking at more of a centralized combined solution and positioning those on some of the larger contracts. So the headwinds primarily has to do with transition from point solutions sales to enterprise solutions sales and we're seeing some slower adoption in those areas based on.
Some of that activity.
And Jack it's Mark here. So just to clarify the question are you referring to the 2023 headwinds that I referred to the few large programs that we might experience some headwinds year over year into 'twenty three.
Okay. Thank you.
Yeah.
I don't want to give me a little bit of color on the small cluster of large programs that I referenced.
One other one other point.
On several of our contracts the volumes on those contracts go up.
And we get more revenue in some cases the volumes go down and Thats the headwinds that we're talking about so it's seasonality on several of the contracts and the volumes on those contracts that are creating headwinds into 'twenty three.
The volumes between now and then obviously increase.
Then the headwinds will be mitigated, but right now.
We're looking at is if those headwinds will be lower volumes and thats what were projecting.
Thank you one moment. Please for our next question in queue and our next question coming from the line of Rudy Kestenbaum with D. A Davidson your line is open.
Thank you for taking my questions Mark I want to be clear in Q4 and secured networks. You had previously talked about these one time programs that were high Sixty's millions revenue in 2021, we're going to be low forty's millions in revenue in 2022 is that still the expectation or is that number falling for 2022 I'm trying to figure out.
How much in Q4.
The shortfall in secure networks is from.
Maybe a faster wind down then expecting those onetime programs versus just business underperformed some of the new business front and then secondly on security solutions.
I won't belabor the point on the revenue side, but the gross margins on security solutions. It looks like you're guiding to about 43, 44%.
That's over over.
Over a 10% decline from late last year in Q1 of this year, it's pretty abysmal, what has driven such a substantial decline in the gross margins above security solutions as well.
Sure Rudy So a couple of things first unsecured networks.
Each year, I think youre referencing a year when we gave our original guidance, we talked about a few large programs within their networks wind down over the course of this year and coming to completion.
That is roughly a $25 million headwind to those programs that about $70 million of revenue last year about 45.
This year, so $25 million headwind this year.
And then next year that $45 million of revenue will further wind down to about 10, so that's another $35 million headwind year over year into 2023.
With respect to the fourth quarter.
The difference on secured network.
It is entirely related to <unk>.
New business wins.
And it's a combination of.
Combination of lower volume of new business wins here in the government buying season since our since our last earnings call.
Bind with the nature of those when those wins being.
Wins that will convert to revenue over a multi year period of performance.
And for the portion of the wins that are quicker turn.
Revenue recognition on those we're going to be constrained by our supply chain.
Then.
With respect to security solutions in the fourth quarter, it's really a couple of things.
Primary driver is a single large program.
With an IV.
That is the good news is converting from more of a more of a pilot program to more of a.
A long term permanent program.
Which is requiring some investment.
In the short term here and so we're seeing a pretty meaningful step down in margins here over the short term.
Driving margins.
Margins, lower and therefore submissions Laura but.
But should not have an impact disappointment.
Yes, we think so just.
Okay.
Scott.
Yes.
Okay, well I guess I'm incredibly gross margins, but I guess.
As a follow up to that if I could I mean that secured effort. I mean, you are basically saying youre missing your mark in Q4 by 15% to $20 million unsecured networks due to not hitting our new business targets, that's a pretty massive.
Relative to the size of your business in one quarter and sorry, if I may.
And maybe just reiterate the questions asked earlier I, just how can anybody get any sort of.
However, in your ability to execute against your target longer term given that massive.
Mrs.
Yes.
Its actually Im sorry.
<unk> 14 million dollar mix in the fourth quarter on new business. The lion's share of secured networks new business comes in.
Round this time of year.
That was the case this year as well about 70% of all the new business that they've won this year came in since our last earnings call.
Pretty that's pretty typical it's just that this year, both the composition of those new business wins.
Didn't support of fourth quarter revenue recognition very well, it's more of a multi year revenue recognition and then for the other shorter term quicker.
Quicker turn piece.
Their supply chain constraints, there, but let me see if John has anything he'd like to add no I think thats those are hitting on the head.
Thank you Noah.
Next question in queue, one moment please.
Next question in queue coming from the line of Alex Henderson with Needham. Your line is now open.
Thanks, I was hoping you could go through some of the key.
Mechanics that you talked about.
At your IPO I think the first one being.
The exact sales staffing. Thank you were talking about going from eight to 16.
<unk>.
I think you've cut back on some of those hires.
Subsequently.
Where are you on that.
Margaretville handle that once we Hello, Alex.
Mark Griffin.
The sales staff at this point is about half of what we previously reported we are in the process as we mentioned on the Q2 call of continually refining that staff clearly to date, we have not been happy with the progress or the performance of the sales staff as it relates to the ramp of those activities.
We're in the and the.
The process of re looking at that and additionally, hiring different sales staff to come into that equation from a BD and capture point of view to strengthen that and to refine that efforts on those behalf. So to date, obviously, we haven't been happy with the success, we're going to adjust and move forward.
So just just the numbers I think it went from eight to over 60 and now youre back to around 30.
Yes.
Okay and then the other mechanic for exactly was supposed to be AWS and Microsoft reselling the product.
It doesn't look like anything has happened on either of those.
Is that.
Accurate and B y.
So I think the I think it is accurate that the cloud service providers have not been we've.
We've not been able to sell through them. However.
However by enlarge use the product to get to their own Etfs.
Where we are seeing more sell through is with the service providers Alex.
IBM as an example is creating a very a very healthy pipeline for us where they are absolutely selling through their sales force around the world.
So that is a very bright spot for us so far.
We have meetings with them biweekly.
And their pipeline is steadily increasing and continues to increase I think that as I mentioned earlier, the one factor that we werent taking into consideration as it relates to exact to HCA and ghost is the amount of education and training of our partners that we have to do that.
<unk> said I do see a large opportunity continuing with the channel play, albeit not yet through the cloud providers as it relates to for exact but as it.
Rates to HCA, and ghost, where we actually consume cloud resources.
It does become an opportunity for us with the cloud service providers.
If I could just ask one more question on the commentary about <unk> 23.
You gave the indication that it could be down 15%.
Look back at the expectations around TSA pre for the first full year, you were talking about as much as $100 million.
And TSA pre revenue so.
Can you help us bridge between.
What youre thinking on TSA pre and what you're thinking on the rest of the company to offset that kind of ramp or is it just.
A pretty just significantly lower ramp.
Relative to the TSA pre <unk>.
<unk> cut prices is that something that will impact your prices.
Hey.
Alex It's Mark Vanda here, let me start with overall TSA pre and then I'll turn it over to Mark Griffin on pricing.
So we've got a couple of things first in the appendix we've provided a slide.
The sell side and the buy side model TSA pre going forward.
But we believe that.
Total market.
For TSA pre from a net revenue perspective.
We got $100 million.
Remember this net revenue now versus the gross revenue that I think we.
Those prior numbers Youre, describing what were based on approximately $100 million total market. So call. It roughly 34, our pro rata market share.
And then that will that will ramp over the course of next year. So of course, we wouldn't get a full run rate market share next year, so it'd be something mean.
Meaningfully less than that in the first year ramp.
I'll, let mark comment on process.
Yes, Alex on the pricing front, you are correct <unk> did lower their pricing for new enrollment.
And certain renewal pricings down to $78.
We still believe very strongly that the consumer will pay for convenience.
And.
We have modeled what our view of those pricings are in the slide deck that Mark just talked about so.
Convenience outweigh price reductions.
As our physician.
Thank you and our next question in queue coming from the line of Mahalo, Chelsea with Northland. Your line is open.
Okay.
Yes. Thank you.
Mark.
The key large program in the pipeline.
One in security solutions, one unsecured it works I believe you had described the secured networks opportunity as low probability.
Would you characterize the probability of winning the one in secure solutions.
Yes, that's a mark Griffin's organization ill, let mark comment on that.
Hello, Brad.
Now excuse.
Excuse me in the Hall.
Greater than 50% probability so high in our in our business high probability we're confident our past performance and our relationships with the end customer are very strong. So we're very confident we will.
Have a high chance of success.
Okay, Great and then were there deals that you expected to win and security solutions, but did not win or.
I know that the weaknesses and secured networks that you've been citing for.
Both the initial 23 potential as well as what's going on at <unk>, but just wanted to make sure that.
Have there been deals that you did expect to win a security solutions, but you didn't win.
Sure. This is Marc Griffin again, there are deals that have been deferred out of this year into next year. So a combination of deals not one but deferred but as with an ongoing business pipeline and business development activity. There is always deals that you hope to win.
But maybe you have not positioned correctly. So yes, there is always deals that we do not win.
But for right now the pipeline and the backlog that we're building we have not lost anything that we had expected to win at this point they've just been deferred.
Thank you and our next question in queue coming from the line of Bradley Clark with BMO. Your line is now open.
Hi, Thanks for taking my question I wanted to ask about the big military capability to manage around margin AD revenue continued to be under pressure.
<unk> had been able to.
They would come below the line.
Throughout the year beyond expectation, but on a go forward basis.
Hey, guys.
<unk> opportunity and need to be taken.
To get to.
Could you accurately how do you think about your ability to fund.
Managed basket and what makes sense for the business.
Yes over the last couple of quarters, we've made references a couple of times to cost actions managing below the line costs, our head count is down 5% since the beginning of the year.
And we are running below the line expenses in the second half of the year or several million dollars lower than the first half of the year. So we have been taking actions consistently over the course of the year.
In recognition of the topline and we will we will continue to do that.
Having said that to your point, Brad We will also continue to make sure that we make investments where we see the top line yield.
Thank you I'm showing no further question in queue. This will conclude today's question and answer session. I will now turn the call back over to Mr. John Locke for closing remarks.
Okay.
Thank you operator.
So first of all I just.
Just want to thank our shareholders for your ongoing patience and support.
And I'd like to just reiterate that the board and I are laser focused on taking the necessary actions to improve our performance and we are confident in the foundation that we have and the long term potential of our business.
So in the end our business is robust and recession resistant or end markets are the same way, we are well funded customers and decades long track record of serving the world's most security conscious organizations.
Tell us as a strong foundation for the future.
Core fundamentals of our company remains strong and as I mentioned, we were going to we will be making sure that we go after more of that business.
We have talked about in the past the so called confidential healthcare customer, where we've combined both the business development in the capture management capabilities of both sides of the company into one and pursue much more of a cloud and cyber related activities that are very very available in this.
Marketplace, while we continue to string out and bring out the value of our channel and our commercial side.
So thank you very much for your time everybody.
Alright.
Ladies and gentlemen that does conclude our conference for today. Thank you for your participation you may now disconnect good day.
The conference will begin shortly to raise your hand during Q&A you can dial one one.
[music].
Okay.
[music].
Perfect.
[music].
Okay.
Thank you.
[music].
Yes.
[music].
Sure.
Yes.
[music].
Okay.
[music].
Great.
Sure.
Sure.
Yes.
Sure.
[music].
Okay.
[music].
Sure.
[music].
Okay.
Okay.
Okay.
[music].
Okay.
[music].
Okay.
Yes.
Yes.
[music].
Yes.
Thanks.
Okay.
[music].
Okay.
Yes.
Sure.
Yes.
Yes.
[music].
Okay.
Yes.
Yes.
Thank you.
Sure.
Right.
Thanks.
Okay.
Yes.
Okay.
Okay.
Yes.
Yes.
Sure.
Thanks.
Yes.
Yes.
Thank you.
Okay.
Okay.
Yes.
Yes.
Okay.
Thank you.
[music].
Thank you.
Thank you.
[music].
Okay.
Yes.
Okay.
Yes.
Okay.
Okay.
Yes.
Okay.
Great.
Thank you.
Yes.
[music].
Sure.
Got it.
Yes.
Okay.
Okay.
Okay.
[music].
No.
Okay.
Okay.
Okay.
Okay.
Yes.
Thank you.
Okay.
Okay.
[music].
Okay.
Yes.
Okay.
[music].
Okay.
Okay.
Okay.
Okay.
Okay.
Yes.
Great.
Okay.
[music].
Okay.
Okay.
[music].
Okay.
Okay.
Okay.
Yes.
Yes.
Right.
Okay.
[music].
Okay.
Okay.
Yes.
Okay.
[music].
Sure.
Okay.
Yes.
Okay.
Okay.
[music].
Sure.
[music].
Yes.
Yes.
[music].
Okay.
Okay.
Thank you.
Okay.
Yes.
[music].
Okay.
Yes.
Yes.
Okay.
[music].
Okay.
Thank you.
Sure.
[music].
Perfect.
[music].
Okay.
Yes.
Okay.
[music].
Okay.
[music].
Okay.
[music].
Yes.
Thank you.
Yes.
Okay.
Yes.
Yes.
Yes.
Yes.
Okay.
Yes.
Yes.
Okay.
Yes.
[music].
Yes.
Yes.
Okay.
Okay.
Sure.
Yes.
[music].
Okay.
That's helpful.
Yes.
Sure.
Yes.
Okay.
Okay.
Okay.
Okay.
Yes.
Okay.
Okay.
[music].
Okay.
[music].