Q4 2022 Haivision Systems Inc Earnings Call
Ladies and gentlemen, thank you for standing by the.
The conference will begin shortly thank you.
Yeah.
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Good afternoon, My name is Emma and I will be your conference operator today.
At this time I would like to welcome everyone to the high vision fourth quarter and fiscal year 2022 earnings conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again press Star one thank you.
<unk> Chairman CEO and President of hydrogen you may begin your conference.
Thank you Emma.
And good afternoon, everyone.
And thank you for joining us I'm thrilled to be back today.
Scott.
Well it seems like a long time ago, but our Q4 and last year's fiscal year results.
As demonstrated by the results, we announced earlier today the press.
Relief on demand for our products remains strong and our business fundamentals have never been stronger.
Now the company achieved record Q4 revenue of 37 $9 million represents actually a 41% growth over the previous Q4 and 2021 as we continue to deliver on our promise to increase topline growth.
The company also achieved a record fiscal year revenue.
$125 7 million, which represents a 35, 8% growth for fiscal 2021.
Now we have been working diligently since September on our.
Fiscal 'twenty, three planning and realigning, our combined product roadmaps and identifying integrate scenario of the Western Division teams.
We have implemented all the necessary changes during our Q4 to realize the full acquisition synergies.
We have also been several head count by approximately 10% with all associated costs being recorded in our Q4 financial mentioned in the earnings release earlier today, Dan will go into a lot more details later on the call.
And we continue making good progress in our hydrogen MTS, formerly known as Senate office integration and feel we are ready to reap the benefits of this acquisition.
In 2023.
We'd have liked to be integrated sooner, but many of the government and full guide processes. Unfortunately do take time.
Our continued focus on the U S government defense and civilian agencies was further strengthened.
With our recent hub fulfillment announcement just last week.
The culmination of several years of development and working with our key partner the United States Department of Veterans Affairs to qualify our high vision hub as the.
Fed ramp and your network service for connecting agencies together and two.
Public cloud services.
Cloud service allows agencies to securely share live content between teams and facilities and safely deliver live broadcast so public CDN online video platforms enterprise video platforms and social media platforms.
It's further separates hydrogen from all of our competitors will enable high vision to deliver a much needed cloud based secure products to the government and commercial clients globally.
I mean security is one of the main concerns for all Cio's worldwide, given the ramp it attacks on systems and their confidential information.
We're very happy to have achieved a significant milestone to demonstrate high visions core strengths and delivering secure performance based mission critical networking technologies.
Let me give you a little bit update on our house of worship the connect business.
One of the most important decisions we took back in Q4 of last year.
Well.
And the physician.
Of the house of worship managed services market.
It served us very well the past eight years and delivered approximately $8 million in revenue in 2022.
However, it.
There's never really been a strategic fit for our business there was more opportunistic vertical and.
Good increase to our recurring revenue of course.
Are we still at least $3 million of the services revenue during the current quarter and Q2, but then it dropped to zero after that our transition is progressing smoothly together with our clients and partners and expect the last remaining clients to be moved over by the end of March to mid April .
Yeah.
As we rationalize our two current acquisition and mapped out operational efficiencies to streamline our new market focus was time to move out of the hustle Busch of vertical.
And the declining cost of bandwidth the fierce competition from free streaming services.
Fact that the Outsourcer vertical was always our lowest gross margin vertical maintenance decision clearer.
And honestly it was all of the challenge to explain why high vision is in the house of worship market need we.
We really need to focus on what made US successful all along and that is the high value mission critical markets all require high performance low latency security quality reliability and most of these really don't apply to that market and moving forward.
It's a much clear message.
And we have also taken actions back in Q4, the sunset some aging of legacy products, given our new combined portfolio, which would result in further development synergies throughout 2023 and beyond.
Let's talk about some of this some of these changes within the development and the engineering reorganization and all with completed.
A significant reorganization of the entire development and engineering teams to reflect the new product priorities and focus.
But what I like to call the new high vision.
Hi vision today is not the same company we were two to three years ago not at all today, we are approximately 400 people.
Seven R&D offices in five countries, we're all focusing on being the leaders.
In mission critical video networking for the video collaboration.
And our broadcast contribution markets.
A far cry from being an encoder vendor.
It's important to understand our focus our mission to be the best company in these two growth areas.
Well, we have restructured our development and engineering essentially into three main parts as well.
All of our native cloud and broadcast development is under one leader.
All of our global quality assurance quality engineering depth Black ops is under one leader.
And all of our ISR government video management of visual collaboration development is under one leader.
So it really helps us structure for growth.
In addition, we recently hired Zombocalypse team as our new Chief product officer to be responsible for all product direction product management marketing documentation product design and UI UX experience. This will enable fast and effective decision making.
<unk> product strategy.
While working closely with the development leadership on priorities and execution.
I mean, John Max knowledge, and deep experience will be instrumental during our next stage of growth for.
For hydrogen.
A couple of few highlights I just wanted to note.
We recently launched our next generation critical digital collaboration platform called hydrogen command $3 60.
As an innovator.
Z to use and easy to install mission critical and yet powerful secure platform for all enterprises and governments.
On the new platform is already being well received in the marketplace and our expansion internationally taking off in fact, the official international launch of commencing 60 is taking place during the ISC show in Barcelona next week.
We are very excited by the international markets embracing our secure visual collaboration solution, including several significant customers and names that we can't get mentioned.
We have now also simplify our offerings and market focus to be the best in broadcast contribution as both wired and wireless.
And mission critical visual collaboration for governments enterprises globally.
Focusing on our core strengths, our security quality reliability and performance that are all required by these markets.
And the company's new branding launched during Q3 of last year has also been very well received and speaks well to our core value of the security reliability quality and performance inherited all hydrogen solutions and services our customers have come to know and rely on.
Yes.
And we expect that all the actions taken back in October .
It will result in significant Opex savings during this year during 2023.
It really sets us up for the growth and profitability we are projecting.
And we continue to have a strong focus on EBITDA.
And they've made that a corporate priority for this year. The entire company is focused on efficiency and execution to make this happen.
In closing despite the economic headwinds and continued supply chain challenges, we expect our Q1 to be consistent with our strategic plan and feel comfortable with our 2023 direction.
And we will of course continue to review our performance quarterly while maintaining a very strong pulse on the industry and market conditions I would say we are cautiously optimistic given the current economic environment.
We are very confident in our direction and I expect to show good growth in our revenue and profitability in 2023.
That's it for me that it's all yours.
Thank you Marco.
No.
Once again, our revenue for this fourth quarter of fiscal 2022 was $37 9 million.
An increase of $10 8 million or 41% in the same period in the prior year.
This recent fourth quarter is a revenue record for the company having exceeded the next best quarter that would be set second quarter 2022 by an impressive 26, 8%.
Revenue for the fiscal year 2022 was $125 7 million.
An increase of $33 1 million or 35, 8% from prior year.
This recent fourth quarter represents a record and has been.
The case for much of the year.
The year over year growth can be attributed to recent acquisitions.
We closed the high vision Mcs transaction in August of 2020 win so fiscal year 2022 results included high vision M. C. S performance for the entire year.
We closed the Abbvie west transaction in April of 2022 to fiscal year 'twenty. Tony two results included Abbvie worse performance for only the last seven months.
As suggested on our last call.
We seem to be reverting to our historical seasonal pattern, where our first quarter is traditionally our smallest quarter, representing about 20% of our overall annual revenue and our fourth quarter, which is commensurate with the U S. Government year end is traditionally our largest quarter representing about 30% of our overall annual re.
Revenue.
Our business remains healthy and we expect overall revenue to continue to grow from these levels, albeit with the previous caveat that revenue in our first quarter of each fiscal year is typically our smallest and it's typically down from our previous fourth quarters revenue.
Recurring revenue, which we define as our cloud solutions and maintenance and support was $7 1 million and was slightly ahead of last quarter's performance.
For all of fiscal year 2020 to a recurring revenue represented 21, 5% of total revenue compared to 25, 1% of total revenue in the prior fiscal year.
Recurring revenue as a percentage of total revenue is expected to decline in the near term.
As Medco had mentioned part of our recent restructuring exercise, we decided to discontinue our focus on the house of worship market.
Revenue related to the house of worship offering is dependent on the price of bandwidth transcoding and the lights and the competition is getting fierce including free offering from Youtube and alike.
These competitive offerings, including free offerings are putting downward pressure on cloud revenues and putting downward pressures on gross margins.
So it caused a positive is that our managed services offering tended to be our lowest margin offering.
And we'll talk a little bit more about other restructuring later in this presentation.
On the other hand, we do believe that we have an opportunity to increase our maintenance and support revenue as we continue to conform our high vision, Mcs and Abbvie west maintenance and support offerings.
For this quarter.
Gross margins were 68%.
An increase from the 66, 1% realized last quarter, but down from the 78% realized for the same period last year.
Gross margins for fiscal year, 2022 was 68, 7% compared to a gross margin of 74.9% to the prior fiscal year.
As we've discussed in past calls, we've always anticipated margin to flip from historical experience as margins for how high vision Mcs and Abbvie west.
Are below our historical margins.
Nevertheless, we continue to meet our customers' needs for mission critical systems.
It hasn't been without cost to high vision, which amounted to over 500000, this quarter and as much as 1.8 million on a year to date basis.
With that said, we have digested about two thirds of the total exposure exposure incurred during this component shortage.
Now to address what we believe to be a fundamental change in supply chain, we have imposed a price increase effective October one.
We expect that this price increase will enable us to maintain our historical margin profile, while still delivering industry, leading price to value offerings to our customers.
Further.
Since we've decided to discontinue our offering to the house of worship market, we should see some margin improvement as our house of worship managed services offering tended to be a below the average performance in terms of gross margin and gross profit contribution.
I'll discuss a little bit more about our supply chain initiatives later in this presentation.
Total expenses for this fourth quarter were $26 2 million that represents an increase of $6 5 million when compared to the same period in the prior year.
But it was only an increase of $1 8 million when compared to the last quarter.
Our third quarter represented the first quarter operating on a consolidated basis with the full cost structure of both acquisitions.
During that quarter, we took the opportunity to identify significant synergies in terms of product offerings synergistic sales opportunities and back office processes.
In this fourth quarter, we underwent a reorganization that resulted in a one time nonrecurring restructuring costs of $2 3 million.
This restructuring costs represented the severance cost and benefits for those impacted by this recent reorganization.
We believe the savings, resulting from the reorganization to generate about $8 million and reduced opex.
Total expenses also increased.
Also included increases in certain noncash expenses, largely the result of the Abbvie West transaction.
Instance, amortization expenses and incremental depreciation expenses added about $700000 to our quarterly opex.
On a year to date basis total expenses were 91, and a half million dollars.
That's an increase of $16 7 million when compared to the prior fiscal year.
Fiscal year 'twenty two not only included the full cost structure of high vision M. C. S.
Compared to only three months in the prior fiscal year.
But also included the cost structure of Abbvie west for seven months compared to no such costs in fiscal year 'twenty one.
Total year to date expenses included noncash expenses such as depreciation.
That added 1.2 million amortization that added $4 3 million.
And these expenses than we are.
<unk> offset by the $14 $1 million reduction in share based compensation.
Nonrecurring fiscal year 2021 expense that was related to the legacy employee share ownership plan that was discontinued at the time of the IPO.
When we normalize for the share based payments for the depreciation of fixed assets and the amortization of intangibles restructuring costs. The total year to date expenses were $78 3 million.
That was an increase of $23 million from the prior year or an increase of 41% that was slightly faster growth in that 36% increase in revenue that we derive during the same period.
We have touched on this before but for those of you new to the to these earnings calls our cost structure is largely made up of people costs.
In fact more than 70% of our total expenses consists of compensation related benefits.
Thus these increases that we've seen is largely related to high vision Mcs transaction in August of 'twenty, one and the <unk> transaction in April of 'twenty two.
Again to give you a sense of the impact of these two acquisitions hydrogen Mcf added 64 people.
While Abbvie was added another 81 people.
Our total head count at the beginning of the quarter.
With 418 people.
That compared to only 262 people in the month prior to these acquisitions.
Said another way.
The two acquisitions represented about 35% increase in total head counts.
When compared to the period prior to the prior to the acquisitions.
And that's prior to our recent restructuring exercise.
We have since reduced our head count.
And we have terminated consulting contracts with independent contractors.
Again, the annualized savings from the restructuring is more than $8 million.
Now note that our fourth quarter Opex will still include costs for those individuals prior to their formal termination.
Now beyond those head count increases we are also seeing increases in the cost of other cost.
Cost of our labor and the amount of travel and the cost of that travel increases in marketing spend and I guess the cost of just about anything else.
Our vendors are increasingly passing their increasing cost to us as well.
Okay.
The result of these cost increases were in adjusted EBITDA for the quarter of $4.9 million.
That's an improvement of $4.7 million compared to the same period in the prior year.
This quarter's adjusted EBITDA represents yet another company record.
And that company record.
<unk> has held since.
Second quarter of fiscal year 2016.
The adjusted EBITDA margin for this quarter was 13%.
We believe that this fourth quarter is demonstrating what our cost structure will look like in the near term, but more importantly, the adjusted EBITDA performance is demonstrating the earning potential of the company on a go forward basis.
Adjusted EBITDA for fiscal year, 2022 was $8 1 million.
Unfortunately, a decrease of about $4 2 million when compared to the same period in the prior year.
Just to sum it up and increase of year over year revenue of 33 million contributed to an incremental $17 million and gross profit but.
Total expenses increased by about $23 million.
Taking down the net loss level net loss for the quarter was $1 1 million compared to a net income of <unk> 1 million a $100000 for the same period in the prior year.
As was the case with EBITDA the quarterly net income was impacted by increasing head counts additional depreciation and additional travel and marketing.
Net loss for fiscal year, 2022 was $6 2 million.
And that's a $2 6 million dollar improvement from the same period last year.
Focusing on the balance sheets.
We ended the quarter with cash balances of $5 8 million and ended the year with $11 2 million outstanding on the credit facility.
When compared to the last fiscal year.
The big balance sheet movements are largely related to the Abbvie west transaction in early April .
The transaction consumed about $21 9 million in cash.
And we assumed $5 5 million in favorably priced term debts.
Assuming that there are no indemnity claims to be paid hi, Victor will pay an additional $2 million in future payments.
Total assets for the year were $148 6 million.
That's an increase of $26 1 million from the end of fiscal year 2021.
Again, the increase in assets is largely the result of the <unk> transaction, we assumed assets of $14 4 million, including inventories receivables property and equipment and right of use assets.
We also acquired intangibles of $10 2 million in goodwill of $11 7 million.
We have realized increases in working capital amounting to about $9 2 million.
Largely related to revenue growth and investments necessary to derisk our supply chain.
These increases were offset by the $21 million decrease in cash from the prior year end.
Total liabilities at fiscal year 'twenty, two year end were $58 3 million.
That's an increase of $24.8 million from the prior fiscal year end.
Similarly, the increase is largely the result of the Abbvie West transaction.
We assumed $4 7 million in liabilities related to payables and deferred revenue, we assume $4 8 million in term debt of which $4 million is currently outstanding.
And we also realized $6 6 million in working capital liabilities related to revenue growth and investments to derisk the supply chain.
Let's talk about where we are on the integration plans.
For Abbvie West the integration continues to be Swift.
Sales teams have been fully integrated and Abbvie West is operating under a common sales management system.
Product teams are fully integrated as other products.
<unk> solutions already support SRT, allowing interoperability and and high visions products are being integrated into <unk> management solutions.
Notable improvements have already been made.
Within the European production facilities.
And we've increased the production capacity and the availability of finished goods.
Our areas of focus continued to be the same as conveyed last quarter.
Increasing the flexibility of Abbvie west supply chain.
Adding abbvie west to a common accounting system, and bringing Abbvie west products to North America.
For high vision Mcs the integration has been more complicated and progress has been slower than we had hoped.
However, the sales teams have been integrated and we are beginning to see synergies in selling <unk> solutions to international customers.
Hi vision MTS is on a common payroll system and a common accounting system and we have made inventory investments to reduce the order to cash cycle time.
And we will be implementing more procurement bass best practices to improve inventory levels.
Our current focus is to more fully integrate development teams.
And we know that there are additional opportunities and the pace of integration should be increasing over the next two or three quarters.
As we've discussed on our last call we've been facing significant headwinds so an update on those.
Our supply chain specialists have largely address component issues for the foreseeable future and we continue to serve our customers with their mission critical needs.
We are beginning to see a degree of stabilization and component availability and their respective costs and we continue to serve our customers timely.
However.
It has been with some incremental costs in the organization, both financial costs and costs in terms of resources.
The good news is that this recent quarter's expenditures for components outside of the normal process with significantly lower than in the previous quarters.
For fiscal year 2022, as mentioned before we incurred approximately $1 8 million of such expenses.
And we're approximately two thirds through the incremental investments made to secure our supply chain.
Beyond the hard costs, which are relatively easy to quantify there have been soft costs that have also taken a toll on the overall organization.
The secure our six month needs for parts and components, we have increased the level of our deposits with our contract manufacturers.
We have made commitments for high value Logmein.
Long lead time componentry.
Boards have been redesigned to accommodate available componentry.
Alternative component manufacture manufacturers have been approved and we in source certain assemblies and qualified additional low cost sources to mitigate the increase in cost of goods and lastly, we've invested in third party systems to provide real time assessments of our supply chain.
Resiliency.
Again.
What we have to address what we believe to be the permanent change in certain component cost. We haven't closed a price increase effective October one and we should see the impact in fiscal 2023 and beyond.
We are also continuing to invest in our supply chain expertise with the addition of additional senior supply chain resources that will streamline our global forecasting procurement and fulfillment system.
And will minimize working capital needs for fiscal year 2023.
Yes.
The headwind discussed last earnings call related to finding qualified people also seems to be easing a bit but continues to have its challenges.
We have seen our level of voluntary turnover slowed to a trickle I suppose with the markets in a bit of a downturn people aren't so quick to leave or at least not leaving high vision.
Although hopeful we are aware that people really leave during the holidays. So we could see an uptick we just haven't seen that yet.
Further having just completed a restructuring of sorts, we have frozen hiring at this time, except for essential positions.
These essential positions that were difficult to hire in the Paas will likely continue to be a challenge going forward.
So to sum it up labor costs continue to increase.
And retention is still a challenge.
But as in years past, our budgeting process included wage increases and in some cases. These wage increases were above adjustments to salaries made throughout the year for those getting mid year promotions or for those that were below market.
Beyond supply chain and employment travel appears to be back in a big way and other operating expenses are increasing.
Despite the extended use of video conference tools that face to face interactions with customers is proving to be very important.
Further integrating our teams through face to face meeting has also proven to be very important.
M C S hydrogen M. C. F has a significant install team and as most of US know the general cost of travel has had a big impact.
Yes.
We have seen a significant increase in travel expenses in fiscal year 2022 when compared to fiscal 2021 about $4 million.
And much of that has to do with our install business related to high vision Mcs.
Marketing also appears to be back, including a very big returns of Tradeshows and we're actively participating in those trade shows.
And as I kind of alluded to before our vendors are increasingly passing their higher cost structures onto to companies like us.
In terms of expectations for the remainder of the year.
Our business is buoyant and we expect to see growth in fiscal year 2023.
The recently announced increases in price of our products should assist in that matter. However, we are facing potential revenue had headwinds.
Our enterprise and government customers are feeling economic pain.
And we decided to transition out of the house of worship.
Our house of worship managed services business again, our lowest margin surface offering.
And although we may see $3 million in such revenues. This year, we will likely be removing four or $5 million in revenue once the transition is complete.
Thus our revenue guidance for the full year is still expected to be between 130 and 135 million this year.
We expect to see expansion of our adjusted EBITDA margin as we continue to exploit synergistic opportunities we have uncovered.
We will be in a much better position to provide guidance on EBITDA at our next earnings call.
So with that said, we are now ready to take questions.
Thank you.
As a reminder, if you would like to ask a question press star followed by the number one on your telephone keypad.
Your first question comes from the line of Robert Young with Canaccord.
Your line is now open.
Hi, good evening.
The first question I think last quarter, you had said that there was a programmatic deal that slipped into Q4, just curious if you're able to.
Close that in the Q4, maybe if you could quantify what the impact might have been and any color you can give there would be helpful.
Yeah, Hi, Robert Yeah, definitely did actually we did close in Q4.
And.
The I mean, the impact was basically about a million bucks extra from what we expected. So it wasn't it wasn't a significant impact to Q4 as of Q4 was supposed to be significant in the first place.
So yeah, so it actually.
Went right in Q3, and we closed it in Q4.
Okay great.
And then I'm glad to hear the focus on EBITDA in 2023 just.
Trying to take all the pieces that you'd highlight.
Highlighted in and.
Try to get a sense of where you think it might go.
Numerically.
In margin terms.
13% in this quarter.
Do you think it can be from that.
I think you said the 2023 would be similar to Q4.
Is that.
Or you think 30% to 40% is that kind of.
What I really was trying to suggest is that our opex is getting into line as to where we think it should be.
Our fourth quarter was a huge quarter in terms of revenue and so that resulted in an outsized EBITDA margin in that specific quarter.
I think we still believe that.
You know over the year, we did about 6%, we're probably going to be doing 50% more than the 6%. We showed for the full fiscal year I don't know, if we're going to get into double digits on an entire year basis.
Okay, Okay great.
Very helpful.
And then you also touched on this in your prepared remarks, which are very detailed thanks for that.
The inventory increase.
Pretty significant quarter over quarter, and I was trying to maybe you could help parse between the impact from M&A.
Recent acquisitions I think you said that was a big factor and then also.
The impact of supply chain is that.
Most of it maybe.
Maybe if you could just give a sense of which was the bigger impact.
Well I think that I think we can look at you can say that part of the impact is due to abbvie West obviously abbvie west wasn't part of the equation in the prior year or in some of the prior quarters here, but I think really we are trying to bring both hydrogen mcs and abbvie west into a different.
Mind set as it relates to inventory.
We as a company have had very good forecasting methodology we.
We use those sports forecasting methodologies to assist our production teams in putting together product buying procuring product and what have you in the case of high vision M. C. S. They tended to two <unk>.
Wait until appeal was in and then we go look for the product or start procuring the product that would.
And the time between P O N and the delivery of the product sometimes it would be over 90 days and what we wanted to do was increase the velocity.
Cash receipt after Po and so we've asked them to start procuring inventory per forecast using our forecast methodology, rather than waiting for the P O to be in before starting the procurement process now when we have large supply chain issues as we've had before we've also had to buy a little extra.
To make sure that we had the product on the shelves to be able to serve our customers with these mission critical needs. So I would say those two things are evolving the procurement process and supply chain constraints, requiring us to make commitments in advance have elevated.
Okay. That's great. So I guess, it's a bit of a onetime normalization for Mcs and I guess, that's the biggest factor there.
I would say, it's a beyond the onetime normalization that we wanted to bring back down to a normalization.
Okay.
Okay, I think Thats all Ive got.
I'll leave it there and pass the line. Thanks.
As a reminder, if you would like to ask a question press star followed by the number one on your telephone keypad.
Your next question comes from the line of Nick Corcoran with acumen capital Youre.
Your line is now open.
Hey, guys congrats on the record quarter.
Thanks, Nick.
Yes.
I didn't catch the last part of that like you said, what the magnitude of the price increase was and what was the second part, yes, the magnitude of the price increase and whether or not or.
Oh, Okay sure Noah, but we did it.
But approximately 10% across the board price increase in all of our.
Encoder pricing, what I would call the the old high vision legacy stuff because we've already.
The M C F commensurate 60.
Wait three years for we priced that new next generation, we've already built into that the new pricing. So we didn't have to increase it.
And from the Abbvie West stuff, we also did add a bit of a mixture of changing some of our.
<unk> structures on bundling and a foreign exchange differences that were there before so we remove some of those handful of pricing and we actually decreased.
Appear to be decreased the pricing of Abbvie west.
Our street price.
But the bulk of it was approximately a 10% increase the reaction that she has been very very.
I would say non eventful I was expecting a lot more pushback, but we've done a lot of research we've prepared the field customers and honestly every vendor on the planet today, just like Dan mentioned earlier is passing on their cost to their clients.
Every day, we see it.
So there without saying zero kick back everybody accepted it.
Customers said.
No problem with finished because we know the costs are skyrocketing, we know their supply chain problems.
Most of the pump at all very well received.
That's good to hear and then you mentioned in your prepared remarks that revenue about 20% comes in the first quarter, 30% comes in.
Fourth quarter should we expect the adjusted EBITDA for the year. If this kind of high single digits to follow a similar trend or is there anything we should keep in mind.
Okay.
Well.
I guess, the one thing I like I would keep in mind is that we do go through a budgeting exercise that includes a review of our employee base and we give raises what have you. So we tend to see a little bit more of a compressed margin in the first.
Second and third quarter for that matter as well digesting using incremental costs and then of course, a fourth quarter tends to be more buoyant and so.
A lot of our profitability happens in that fourth quarter, just because we've got top line revenue.
That would be the only sort of direction I would give you in terms of.
EBITDA and the impact the impact of it on.
EBITDA with the seasonal revenue.
Great. Thanks for taking my questions.
There are no further questions at this time I turn the call back over to Marco for closing remarks.
But basically I just want to thank everybody all of our investors and analysts and.
And employees on the line today, the continued support of <unk>.
A vision of course, we'll look forward to speaking with many of you in March for our Q1 results. So thank you very much.
This concludes today's conference call. Thank you for attending you may now disconnect.
Please wait the conference will begin shortly.
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