Q1 2023 Genasys Inc Earnings Call
Ladies and gentlemen, thank you for your patience. Please remain on the line. Your conference will begin momentarily again, we do appreciate your patience. Please remain on the line or conference will begin shortly thank you.
[music].
Good day, ladies and gentlemen, and welcome to the Genesis incorporated fiscal first quarter 2023 conference call. All lines have been placed on a listen only mode and the floor will be opened for questions and comments. Following the presentation. If you should require assistance throughout the conference. Please press star zero on your telephone.
The path to reach a live operator at this time and it's my pleasure to turn the floor over to your host Kimberly Rogers Ma'am the floor is yours.
Thank you Kat good afternoon, and welcome to Genesis incorporated fiscal 2023 first quarter financial results Conference call I'm, Kim Rogers with Hayden IR Investor Relations firm for Genesis with me on the call today are Richard Danforth, Chief Executive Officer, and Dennis Cline Chief.
NASA officer.
During today's call management will make forward looking statements regarding the company's plans expectations outlook and future financial performance that involve certain risks and uncertainties. The company's results may differ materially from the projections described in these forward looking statements factors that might cause such differences in the other.
Potential risks and uncertainties can be found in the risk factors section of the company's Form 10-K for the fiscal year ended September 32022.
Other than statements of historical facts are forward looking statements made on this call are based only on information and management's expectations as of today, we explicitly disclaim any intent or obligation to update those forward looking statements, except as otherwise specifically stated.
We'll also discuss non-GAAP financial measures and operational metrics, including adjusted EBITDA bookings and backlog, which we believe provide helpful information to investors with respect to evaluating the company's performance.
For a retrofit reconciliation of adjusted EBITDA to GAAP financial metrics. Please see the table in the press release issued by the company at the close of the market today.
We consider bookings and backlog, leading indicators of future revenues and use these metrics to support production planning.
<unk> is an internal operational metric that measures. The total dollar value of customer purchase orders executed in a given period, regardless of the timing of the related revenue recognition backlog is a measure of purchase orders received that are scheduled to ship in the next 12 months. Finally, a replay of this call will be.
[noise] available in approximately four hours through the Investor Relations page on the Companys website.
At this time, it's my pleasure to turn the call over to Genesis Chief Executive Officer, Richard Danforth. Please go ahead Richard.
Thank you, Kevin and welcome to everybody.
If you look on our website you'll see.
The earnings release as well as a press release that has been hung up on the wire service will likely come out during this call.
Announcing the win of a large enterprise SaaS Award.
A company called a ramped up which happens to be the largest company in the world from a market cap basis.
So with that we are off to a strong start in fiscal 'twenty, three with our largest SaaS bookings quarter to date.
Our software business continues to gain momentum.
As evidenced by the $6 1 million in SaaS bookings in the first fiscal quarter of this year.
The strong bookings included an enterprise award from as I mentioned, a moment ago Aramco, the largest market cap company in the world.
And the California counties of San Diego, where they bought Jim Riverside.
Where they bought zone Haven subsequently, they had but Jim and I am an S. San Mateo, which bought zone Haven, and Monterey County, which bought boat Zone Haven and Jeff.
These results along with our rapidly growing SaaS pipeline further reinforce our strategy of investing in software development sales marketing and customer support.
The addition of the worlds largest oil and gas company and large, California counties to a global automobile manufacturing and regional critical infrastructure customer base elevates, our SaaS profile and demonstrates our ability to successfully close cross sell and support large enterprise and public safety clients.
Our international results were also robust this quarter as a strategy to rationalize business development by establishing sales offices in APAC Europe , and the middle East have proven successful.
During the first fiscal quarter, 50% of our bookings were international and APAC revenue more than doubled year over year as the entire region emerges from Covid related lockdowns.
With the world economy picking up we're seeing pipeline gross growth across all of our international sales regions. We expect strong fiscal year bookings in APAC, Europe , and the middle East driven primarily by hardware orders as well as developing pipeline of SaaS opportunities.
Total bookings for the quarter were $8 6 million up 23% year over year harder.
Hardware bookings for the quarter were $2 5 million as pending orders moved into our fiscal second quarter.
Fiscal second quarter hardware hydro bookings through January we're already 40% higher than the total first quarter hardware bookings.
We expect fiscal 'twenty to 'twenty three bookings to follow our typical pattern.
A large step up in fiscal Q3.
Driven by international hardware bookings in fiscal 2023 are expected to substantially exceed fiscal 2022 hardware bookings.
And what is typically our slowest quarter fiscal first quarter revenue was $10 5 million slightly lower than the prior year quarter and in line with our expectations.
Following the usual pattern, we expect sequentially quarterly revenue to increase in the fiscal second quarter and then strengthen in fiscal Q3 and four what is putting us on a solid footing for the seventh consecutive year of revenue growth.
Inflation resulted in increased hardware component cost and product mix was a factor in the decrease in first quarter gross margin to 43, 3%.
We expect our gross margin to return to more normal levels in the second half of fiscal 'twenty three.
As we discussed on our fiscal fourth quarter conference call continue investment in our SaaS business drove a 10, 5% sequential quarterly increase in operating expenses.
In line with our expectations given the confidence in these investments to accelerate our SaaS business grows we anticipate operating expenses in fiscal 'twenty three to increase by approximately $5 million year over year.
While SaaS bookings and revenue are growing hardware continues it should be a majority of our business representing 90% of the total revenues in the fiscal first quarter.
Our commanding competitive position as the de facto global supplier of long range acoustic devices gives our hardware business a compelling economic profile, we continue to diligently manage and dedicate resources to growing our global hardware business.
Recent attacks and increasing threats to critical infrastructure, particularly electrical substations are generating large business opportunities for our remotely operated <unk> at 915 Nx T system.
The NXT uses our proprietary technology to identify in response to potential threats.
Since the NXT launch last April we have received orders from international navies and critical infrastructure orders for Dan's Datacenters ports and electrical Substations.
<unk> NXT critical infrastructure in international Defense sales are expected to be a major contributor to hardware revenue this fiscal year and beyond.
Our hardware bookings are typically lumpy, we currently have a.
Large number of hardware opportunities expected to close this fiscal year.
The U S Army program of record and it's an international orders are anticipated to drive bookings growth and substantially lift hardware backlog in the second half.
Hardware will continue to be the economic engine that powers, the self funding of our SaaS business development.
In the future.
Our priority focus is fully integrating our SaaS solution and increasing the capabilities of our data driven protective communication platform.
SaaS system suite is evolving with the integration of Jim Zone Haven, and I am an S into a seamless platform expanding our capabilities and empowering Genesis to address a much larger scope of enterprise and public safety crises.
New platform features including flood and traffic modeling continue to expand our platforms multi hazard capabilities. So used during hurricanes storm surges tsunamis avalanches flooding debris flow wildfires chemical clones active shooter and other natural and man made disasters.
Some of our new capabilities with developed during the Ah were deployed excuse me during the recent atmospheric river condition that inundated northern California.
Protective communication platform was used in many counties to communicate the location and extent of flooding avalanches debris flows road closures hazard condition and recovery resources.
The severe weather events hundreds of thousands of residents access to Genesis a website to check the evacuation status of their neighborhoods and for others say lifesaving information.
Our land and expand strategy continues to grow our footprint with government public safety customers, increasing demand for our protected communication platform has 16, California jurisdictions now using multiple Genesis platform elements with three counties using the entire platform.
Riverside one of California's largest and most populous counties recently purchased zone Haven to integrate with their previously purchased Jam services and I M N S installations.
As we announced earlier this month the city of Laguna Beach is a notable example of how to perform the performance of our <unk> network create created another upselling opportunity. The successful use of I M and asked during two wildfire last year led to Laguna Beach City Council to prioritize the further expansion of its Genesis <unk>.
Work.
In Marin County, California, We've provided emergency warning services for the city of Mill Valley since 2019.
2021 I M N S installation equipment with solar power and battery backup are positioned and other areas within the county.
The follow on order announced last week further expands the counties <unk> network.
We have also expanded our footprint in Alameda County.
With UC Berkeley's purchase of I M N S, which will be integrated with the city of Berkeley's Genesis network.
As we announced last week, the extended network and the counties use of our zone Haven evacuation platform will expand emergency warning coverage and notification channels during public safety threats for more than 45000 students staff and facility.
We expect additional California jurisdiction to join Alamito, Moran and Riverside counties and adopting the full Genesis platform this fiscal year.
In the enterprise market. The addition of Aramco, along with previously announced global auto manufacturers manufacturers and critical infrastructure elevates, our SaaS profile and demonstrates our ability to successfully close large enterprise customers.
Extending the capabilities of our software platform further differentiates us and opens doors for new and follow on business opportunities.
Our approach to the vast enterprise sector is to target key verticals, where we can reference our proven execution.
We have spoken before about our ongoing investment in our SaaS platform and SaaS sales growth since late 2021 we've expanded our software development sales marketing and customer support teams and added new personnel with the skill set needed to achieve our revenue goals.
To build brand awareness and accelerate platform growth, we have recently appointed at Nida Gulati as vice President of marketing.
Neither is a highly successful enterprise marketing executive with extensive experience leading revenue based marketing organizations.
She has implemented global go to market strategies and lead customer acquisition programs for leading companies in the software semiconductor medical and financial market.
If neither is a key addition to our leadership team, who will help us drive scale and growth.
The whole team here has energized insight by the increasing adoption of our software SaaS platform and the burgeoning opportunity is fueling growth in our pipeline.
Our pipeline of qualified SaaS opportunities is now 25% greater than it was just a few months ago.
The SaaS bookings, we delivered in the first quarter further validates the investments we are making in our protective communication platform and we believe are a strong indicator of its potential.
With Genesis Genesis software now in use in 23 states and seven countries soon to be eight with the addition of Aramco.
We are gaining traction in new markets and building our software footprint globally.
We are reiterating our expectations for continued revenue growth and 23 with strong international sales continuing <unk> deliveries to U S military and increased software services sales and significant SaaS revenue growth.
With that I'll turn it over to Dennis.
Thank you Richard <unk>.
Revenues for the fiscal 2023 first quarter were $10 5 million, 2% less than the prior year quarter as.
As compared to the same prior year period, I'll read revenue increased 19% to $9 3 million.
Software revenue increased 39% to 903000. However, this was offset by a $2 $3 million decrease in <unk> revenue, which was 300000 in this year's quarter.
I am an S revenue throughout fiscal 2022 benefited significantly from a single 10 million dollar order from the U S Army.
Recurring SaaS revenue from North America increased 87% compared to last year's quarter.
Gross profit margin was 43, 3% this quarter compared to 48, 2% in the prior year quarter.
The gross margin percentage was impacted by inflationary pressures on product costs. The mix of revenue this year and increased software costs to support software revenue growth.
We expect the Q2 gross profit margin to be similar before improving to closer to our historical margins in the second half of this year.
Operating expenses were $8 million up from $6 5 million in the same period a year ago.
The planned increase is largely due to greater sales marketing and related travel expense plus additional compensation expense this year, including a 14% increase in our engineering staff.
Net loss for the quarter was $3 $5 million or <unk> 10 per share compared to a net loss of $1.3 million.04 per share in the fiscal 'twenty to first quarter.
The increase increased loss was largely due to the lower gross profit this year and the planned increase in operating expenses to support the software growth initiatives.
Adjusted EBITDA for the fiscal 'twenty three first quarter was a loss of $2 4 million compared with an adjusted EBITDA loss of 412000 in the prior fiscal year first quarter.
We believe this information and comparisons of adjusted EBITDA enhances the overall understanding and visibility of our business performance.
To that effect a reconciliation of our GAAP results to non-GAAP figures has been included in our earnings release.
Cash cash equivalents and marketable securities totaled $15 $1 million as of December 31, 2022, compared with $19 9 million as of the prior year end.
Working capital totaled $17 4 million at December 31, 22, compared with $20 7 million at September 32022.
Cash used in operating activities for the first three months of fiscal year 2023 was $4 $9 million.
This compares to cash used in operating activities of $2 7 million in the same period last year.
The fluctuation primarily reflects the higher negative adjusted EBITDA in this year's quarter.
We will now open the call to Q&A operator.
Thank you the floor is now open for questions. If you do have a question you May press star one on your telephone keypad at this time.
My question has been answered you could remove yourself from the queue by pressing one again, ladies and gentlemen at star one and our <unk>.
First question comes from.
Ryan Collie from.
Stephens go ahead.
Hey, guys. Thanks for taking my question.
Congratulations first off on the Aramco.
On the Ram co deal I'm curious if there's any numbers you can provide around that contract or just any.
<unk>.
Qualitative information you can provide us and help us size that up.
It was the largest SaaS booking we've ever taken.
By a lot Brian I think our largest one prior to that dentist is rare decided a million 120 <unk>. Yes. So this was substantially higher that higher than that.
I can get a little color on it it was a competitive solicitation.
There were competitors from the United States, and the U K and from Europe .
And.
The selected Genesis, which is terrific as a testament to the team.
The team here in the United States and the team in Europe and it so there's just a.
A stunning win for us.
We've mentioned in the last call, Brian we were gonna.
Begin to focus more on enterprise.
As well as continuous sled.
And we were able to go out and win the Hyatt the largest enterprises in the world So that was terrific.
Yes, it really would be a lot of work between now and when we go live but.
We're all very very pleased.
Absolutely definitely impressive an impressive win I'm curious.
When do you expect to go live on that on that contract.
Yeah.
It wont go lives.
It looked within.
It was booked in Q1, we signed the contract in December 27th I think.
Okay.
It's been an extended period of approvals for.
Our releasing the press release, which.
Which we received earlier today the approvals finally, so they've had the prices gone going since early January that's taken over a month to get their approval. It surprised us that it showed up this morning.
So we are scrambling a little bit to make sure we could get it out there as quickly as possible.
Got it but you started to say go lives.
Internal.
Current plan.
Is that they go live internally at the end of March.
But won't.
Begin to use it in.
In a public forum for about 60 days after that or just training and practice.
Got it and this is just for the this is for the gym software.
Yes.
And is it all SaaS all set.
Seth it's all SaaS.
It had an incumbent system, Brian that was on Prem.
So this is a big deal for Aramco.
Holding this stuff up on the on the <unk>.
On the network.
Was it was the incumbent provider was it one of the other large competitors they can ever bridger own solve or.
Any color you can provide there.
Yes, it was one of those.
Okay.
Hum.
Im curious what youre seeing from your competitors more recently I mean.
I mean by the looks of this deal it seems like your win rates.
Or improving.
Obviously ever both Enbridge and on solve kind of have.
And some other stuff going on.
The companies.
Yeah.
Everybody just going through some restructuring so I'm curious just if you're if you're benefiting at all from from call. It may be some some distractions.
And your competitors.
I can't speak to that Brian I know it ticked up.
Handful of salespeople that have been laid off by those companies, particularly ever bridge.
You know, we booked $6 $1 million in SaaS.
And our first quarter.
Which was the biggest we've ever done and obviously, it's being driven by a ramp co.
But we also picked up several counties again here in California.
I mentioned in my remarks, we're currently selling our software in 23 states in the Union and now seven countries soon to be eight.
And I also mentioned our pipeline has grown by 25% over the last handful of months. So it's.
It's it's behaving the way we expected it to and I know it all.
Due respect to the competitors here in the United States.
They might struggle, some but there's still there's still.
Formidable competitors.
Great.
Makes sense.
One last one and I'll cede the floor here, but I'm curious Dennis if you could provide any color on kind of why the outsized move in gross margins this quarter.
And.
I guess in the back half you're expecting them to get closer to.
The 50% range is that correct.
Yes, we are.
Yes.
Yeah.
Quarter over quarter.
The decrease as we saw over the last half of last year's.
Fiscal year, the margins decrease last year as well they picked up in the fourth quarter of last year, but that was because of the volume. If you take a look at $16 million of revenue in the fourth quarter of last year versus $10 5 billion in this quarter.
As you pick up several points of.
Just from additional absorption based upon that volume of revenue. So once we get probably through.
And mostly through the second quarter, we should see that we'll have.
The orders that will be shipping will be based upon our in our chances that the orders that we have booked from the higher.
List prices of our products, we have repriced that it just takes time to get get into the system and then it would be part of the backlog.
Understood.
Okay.
Thank you for the time today gentlemen.
Thank you.
Yeah.
And our next question comes from Mike Latimore from Northland Capital Go ahead, Mike.
Great, Yes, thanks very much.
That's on the strong SaaS bookings there thats exciting news for sure.
Just to be clear is the $6 1 million as a annual contract value or total contract value.
It's the contract value total.
Okay got it multiple awards.
Yeah, Yeah got it and then.
Okay.
It doesn't seem like you guys have seen really any.
Sort of macro effects on sales cycles or anything like that I mean, it sounds like things are going very strongly but.
Any any have you seen any kind of elongation of sales cycles in the enterprise market or public sector for that matter I guess, it doesn't really seem like it but just wanted to check because so many other SaaS companies have seen that.
I would say no from a SaaS perspective from our hardware.
And I'd, probably put a little color on that given where we came from.
With a very low number.
We've been able to grow it very nicely from a hardware perspective.
International was was most affected.
And bookings from a from a COVID-19.
Thanks, So sure APAC middle East and even Europe .
Well were terrible over the last three years.
Frankly, it was coming down began coming down prior to that.
So I'd say on a positive note, we see pipeline growth and.
And all of our international markets.
And we expect as I mentioned in my remarks significant uptick in international bookings this fiscal year.
Okay, that's great.
In terms of the Ram co win which is competitive Andrew replacement.
Are there one or two things that stand out here is to you now.
Why you won the deal from a technical perspective.
Yeah.
I can't answer that I have my own opinion, but I don't have the information from the Aramco folks.
We're just getting started with them.
Yes.
Part of it Mike is from a technical perspective, our team in Madrid has been working and putting working with network providers around the world since the early 2012 timeframe.
So they're very comfortable with the large network providers.
So we put a compelling technical case together.
And they selected us I'm sure, we'll get more color from them as we continue to work with him over the coming months.
Yes.
And just last it sounds like the pipeline growth has been great.
If you look at that pipeline.
Is there a way to rank order the.
Applications in terms of their representation in that pipeline.
One clearly got a bigger chunk of the pipeline and then another here among the three main ones yet.
Yeah.
Yeah.
Well, if you look at the three being the Jim Zorn Haven in IMS.
I have been asked by its nature will drive higher revenue.
But low SaaS.
And gentlemen zone Haven as I mentioned in my remarks, they are being combined.
And we've seen many counties now by Bulks.
Have wanted to buy both and as I mentioned Monterrey, but both to begin with.
Hum.
That significant from us from a.
A revenue perspective.
So if you look at SaaS.
Combined.
Uh huh.
Both sled and enterprise it's.
It's great it's a great opportunity for us.
Okay, great. Thanks, a lot.
Okay.
Thank you.
And our next question comes from Ed Woo from <unk> Capital go ahead Ed.
Yes, congratulations on the quarter. My question was on the increase in operating expenses of $5 million, how much of that is in sales and marketing versus development and why can't you really begin to leverage the revenue growth on your margins.
Yeah.
I don't have it sitting here in front of me what was more R&D or sales.
Sales and marketing Dennis to you.
I don't I can't give you a break out of my sense would be that it's more more sales and marketing oriented then.
Then with strictly R&D development.
We've added since a year ago, we now have our first chief revenue officer, and as Richard announced we have vice president of marketing, so, they're leading and building out their teams.
So, it's probably going to be.
We've added a substantial number of sales and marketing folks already this fiscal year.
So it's more likely sales and marketing.
And in terms of when the lever starts to hit.
Our revenue.
Dennis.
<unk> revenue for Q1 was 900 K up how much is up.
Yes couple hundred thousand care is a significant percentage.
But as we booked more orders at it.
So the curve that's sort of asked methodically so.
It will begin to improve.
Certainly by the end of this year I would expect.
Great well, thanks for answering my question and I wish you guys. Good luck. Thank you.
Thank you.
And our next question comes from Kris Tuttle from IPO go ahead.
Hey, Thanks for taking my question.
I had a couple of them just out of curiosity what was the time.
Since when you first started.
Selling and marketing on the Aramco deal to close.
Biological time on that.
It was shockingly quick for the Middle East, particularly.
Just a rough order of magnitude Chris.
Chris but.
Dubai office became aware of the opportunity in the fall.
There were.
Multiple demonstrations and responses to RFID.
Our proposal was submitted.
In December I think.
The award was made on December 27th So that's shockingly fast for an enterprise of any size.
Oh.
Notwithstanding this was the largest enterprises in the world. So.
They were determined to get it under contract I think they have some issues with their existing system that was the impetus to.
Sort of fast track this.
But it was it was a.
Again, a great team win.
Yes, that's helpful and that is for an enterprise sale.
The BD light.
Yeah.
One other question just in terms of the overall business.
You know you talked a lot about the strength in APAC Europe Middle East.
It kind of begs the question.
Yes.
Did you see some weakness or a slow ramp or any kind of delay pattern in the U S where deal.
May be needed longer approvals or.
You cited all the other geos, except for the U S. In terms of strength. So I'm just curious if we should be.
Thinking about that what your observations are.
International I mentioned, a moment ago has been.
Poor for the last handful of years and most recently driven by.
Covid shutdowns.
So our bookings from international have been down.
Substantially so I see them returning to normal levels.
Beginning this year.
Domestic orders have historically been somewhat lumpy.
And they remain somewhat lumpy.
Where second half is typically substantially stronger than first half and that's what we're seeing.
So I think the U S is <unk>.
Following the patent it usually.
Follows and international is improving a lot.
Okay.
And then.
I had two questions on that on the technology side one of them is.
I know, we talked a little bit in the past about kind of a unified.
Product.
Category.
Name.
Can you provide any kind of insight in.
Where that is on the priority spectrum, and what kind of timing there might be in terms of.
You don't want upgraded unified product and branding around the software business.
Sure.
Our endeavoring to do that I've mentioned in some of my remarks the unified.
Protected communication platform that is what we're calling it that will include all the functionality of Gem Zone Haven, and I M N S.
We will be rolling out.
Campaign on this late spring early early summer.
Okay.
And then one other question on the technology side and I'll hop off.
One of your.
One of the bigger names in the space ever rates, it's been around for a while.
Yeah.
My question is about interoperability.
Like them love them, they are failing or succeeding whatever they signed a lot of large sort of contract with.
Governments and state to provide towards the emergency notification and I'm wondering is there an opportunity for Genesis.
Interoperability side to come in and say well.
They won this award you can't walk away from it because it would be embarrassing but we.
We can provide some of the function that you need now in terms of <unk>.
Evacuation and other sorts of deeper deeper software and data services.
What level of interoperability you have with them and is that all legit opportunity or is that does it not really hit your radar screen.
We have.
A handful of states and our.
And our.
Won't call it and I'm certainly not in our backlog yet, but we are pursuing multiple states across the unit.
Yeah.
And so you'd be able to be interoperable with them or they would have to replace them.
But we'd certainly want to replace them, but our system can operate.
The <unk> channel the average mass notification channel.
Okay Alright.
In many cases, we have installed our I haven't asked systems here.
Here in California, and other states and counties and cities.
May in fact have ever bridge or odd solved so it becomes a.
Channel that's on the on the Gem platform.
I see alright, I got it thanks very much.
Alright, Thanks, guys Scott talk to you soon.
Ladies and gentlemen, the reminder to get in the phone queue. It is star one and our.
Next question comes from Brian Colley from Stephens go ahead, Brian .
Thanks for taking the follow up.
I am curious if you could just talk about your visibility to returning to revenue growth.
From a hardware perspective in the second quarter through the fourth quarter.
It seems like you have enough backlog to do that but I'm just kind of curious how we should think about the growth.
Second half artwork second half higher than first half for sure.
Our first quarter revenue.
By the way was the second largest in company history.
And in my remarks, I told you I think Q2, Brian will be higher than Q1.
And then the.
Recovering very nicely in the second half.
Got it and when you mentioned in the press release like do you expect continued growth does that.
Does that include year over year.
Year over year for <unk>, including <unk> correct.
It's the comment as full year to full year.
Hey.
Yeah.
Got it.
I wanted to ask about just the go to market strategy for software.
And maybe some of the initiatives that Dennis Walsh is working on.
Or are you looking more at kind of partnering with you now.
<unk>.
Any type of resellers or channel partners to kind of help you extend your sales reach without needing to hire a bunch of additional sales sales reps or is there just kind of curious yes. What are you doing from a channel perspective, and also what just any initiatives that Dennis is kind of.
To put in place that might be working so far.
Yeah.
International channels for sure.
Yeah.
And domestically, we I think we have one so it's not a big piece of anything we do right now, but it's something we certainly are looking to go to.
In terms of strategy from an enterprise perspective, it's a narrowing it down we've been frankly, taking a shotgun approach Brian on going after everything.
But necking that down to a very specific verticals.
I mentioned, we've hired a VP of marketing so our marketing effort will be then more pinpointed at large manufacturing for example.
With the automobile wins, we've had and now aramco.
We'll be focusing on a handful of verticals as opposed to everything.
Got it.
That's super helpful.
And I wanted to ask lastly, just about zone Haven, and the progress you are making just on expanding.
First of all just beyond California, but also <unk>.
Internationally and then also the integration with Jim I wanted to get an update on how that's going.
The integration with <unk> is ongoing it says I mentioned to the prior caller.
It's an initiative that we've called.
Protective communication that says all the functionality of mass notification.
And evacuation.
We've recently released a software feature sets that include blood modeling.
And traffic modeling.
Which further enhances the platform it enables the first responders to.
Determining how what zones they want on a vacuum.
Running the fire model when the fire will hit that.
And then how long is it going to take for all the cars in that.
Community to get out.
If the the answer comes back that it'll fire will be there in three hours and it takes four hours to evacuate well that doesn't work.
So.
We've continued to put a software feature sets that we think are very very helpful to first responders in both the German the zone Haven platform and we expect that platform to be combined and come out into the market as a protective communications.
Okay.
Got it.
And then just one last thing I mean for the Aramco deal are there any like startup costs or anything.
<unk> expenses, we should expect to hit the model.
Over the next quarter or so as that deal goes live or is it just kind of turning turning on turning it on with SaaS.
We're not hiring anybody else to prosecute the aramco deal, but it will be a significant focus of our software development team for the next handful of months for sure.
As part of the contract there was a relatively small upfront fee that they pay us.
But <unk>.
Most of it will be also the upfront stuff will be done.
As we typically do SaaS stuff.
Okay got it perfect well I appreciate all the time today and congratulations on the big win.
Thanks, very much Frank.
Okay.
And our next question comes from Martin Yang from Oppenheimer Go ahead Martin.
Okay.
Hi, Good afternoon. Thank you for taking my question.
Okay. Another question on Zelle Haven can you maybe.
Our longer term vision for Zillow Haven, and sales process do you think that it will be.
In futures sold more through as a feature of the gym.
As opposed to a standalone software at all.
The combined the combined platform.
<unk> will be our go to market.
Martin.
You know, it's a it's a process to redefine what mass notification is it's not just getting notifications, but it's also getting relevant information of where and when the threat is coming from whether it's from a hurricane.
The river flooding or.
The disastrous things, we've seen in California with the atmospheric rivers.
In that period of time recently at the atmospheric rivers the communities, we're using it for.
Warning people in evacuating people for avalanche for debris flow, although location of sandbags to location of freshwater.
<unk>.
The utility of the Gem and Southern Haven platform was.
On stage here in California during that horrific weather it took about two weeks.
So the application of the combined platform.
<unk> is not just forest fires.
It's it's any emergent situation, where lots of people lives may be at risk.
Got it that's very.
Fair enough.
Another question on current sales process, where they all come.
So in different ways and supported by the same team or to the habit like slightly different sales process.
Between them the same.
The SaaS team SaaS sales team goes out.
<unk>.
The combined platform.
And in the case of Monterrey They bought.
The combined platform with both functions of Gem <unk> <unk>.
And reverse side as I mentioned.
They bought everything but at three different time, so they have jamnagar zona, even I have iron Manhattan.
As I said in my remarks, I think we will see more and more of that out of the installed base.
As an upsell cross sell opportunity.
And if I showed you the picture of the state of California.
You'll see that.
We're in 34 of the.
58 counties.
And four more in the contracting phase.
So.
Those counties that have Jamon zone Haven, and not I am an asset it's all an opportunity.
Got it.
That's all for me.
Okay.
At this time there are no further questions I would now like to turn it back to management for any closing remarks.
Thank you.
We regularly discuss our business at investor conferences throughout the year.
Later this month, we will be participating in the winter Wonderland best ideas virtual Investor Conference <unk>.
Additional Investor Conference presentations are planned throughout this fiscal year.
Thank you for participating in today's call. We look forward to speaking with you again next quarter. When we report fiscal second quarter 2023 results.
Yeah.
Thank you. This does conclude today's conference. We thank you for your participation you may disconnect. Your lines at this time and have a wonderful day.
[music].