Q4 2022 Spok Holdings Inc Earnings Call
<unk> welcome to the spell of clothing zinc fourth quarter 2022 any results.
At this time.
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A brief question and answer session follows the formal presentation.
If anyone should require operator assistance during the conference.
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As a reminder, this conference is being recorded.
It is now my pleasure to introduce you to your house.
Thank you Sir he's got hit.
Hello, everyone and welcome to smoke Holdings fourth quarter 2022 earnings call I enjoyed today by Vince Kelly, Chief Executive Officer, Mike Wallace President's I've spoke ink and Chief operating officer, and Calvin Rice Financial Officer.
I want to remind everyone that today's conference call <unk> food forward looking statements that are subject to risks and uncertainties relating to spokes future financial and business performance such.
Such statements May include estimates of revenue expenses and income as well as other predictive statements or plans, which are dependent upon future events or congestion.
These statements represent the company's estimates only on the date of this conference call and are not intended to give any assurance as to actual future results.
Actual results could differ materially from those anticipated in these forward looking statements.
Although these statements are based upon assumptions that the company believes to be reasonable they are subject to risks and uncertainties. Please review the risk factor section relating to our operations in the business environment, which are contained in our 2022 Form 10-K and related documents filed with.
The Securities and Exchange Commission. Please note fetched focus is no obligation to update any forward looking statements from past or present filings and conference calls with that I'll turn the call over to Vince.
Thank you and good morning, everyone and thank you for joining US this morning for our fourth quarter and full year 2022 earnings call.
Today, we will share with you an update on how our strategic business plan is progressing as well as our financial results for the quarter I'll start by reviewing the agenda for today's call the.
The order will be as follows.
We will begin by providing a review of our operational performance for the quarter and full year.
Vince turn the call over to Mike to review, our fourth quarter and full year 2022 financial highlights as well as our pro forma results.
We will then conclude our prepared remarks, with our business outlook and financial guidance for 2023.
And finally will wrap up with some Q&A.
In general I want to reiterate how proud I am of what the spoke team has been able to accomplish in 2022.
And believe that we have established a solid foundation for the future as we continue to execute.
We now have a singular focus generating cash flow and returning capital to shareholders. We did it last year and we'll do it again this year.
In terms of operating results over the last year, we've made progress in key performance areas, including wireless trends software bookings in backlog levels as well as expense management.
So we successfully your lines our cost structure with our updated business plan.
Going forward, we believe our extensive experience operating are established communications solutions will create significant value for stockholders by maximising revenue cash flow generation and return of capital.
Certainly 2020th two was a year of change in an effort to quickly respond to market place dynamics as well as demand for our products and solutions last February we announced a new strategic business plan that setup priority on maximizing cash flow with the goal of returning capital to our shareholders.
As part of that strategic pivot, we made the tough decision to discontinue the development and sales spokeo and eliminate all associated costs.
Additionally, we expanded upon are already disciplined expense management track record to right size of company to focus on cash flow generation.
This was accomplished by streamlining spokes management and board structure by approximately 50% <unk>.
Reducing our employee head count by about 30%.
Rationalizing external cost reducing capital expenditures consolidating offices.
These difficult steps were taken.
Due to the challenging financial and resource environment or hospital customer base is experienced and continues to experience due to the pandemic.
This was and is not a good environment for new projects as hospital resources and budgets remain tight and they're focused on getting more out of their existing solutions.
Folks wireless and care connect Sweet service lines are ideally situated for this environment.
Okay has an excellent track record of driving revenue and cash flow from these business lines and enjoys significant market leadership position narrow band personal communication services and hospital call Center software.
Some sort of strategic pivot last February morale has been high and spoke as seen a significant improvement in virtually all areas, including sales product development and overall execution.
In 2022 spoke generated nearly $25 million a pro forma adjusted EBITDA and has returned $25 million cumulative capital to shareholders. Since the implementation of the strategic business plan and as you've seen from our guidance. We're on track to do it again this year.
Despite the difficult changes that spoke implemented in 2022, we've remained true to our mission of being a global leader and healthcare communications, we deliver clinical information to care teams when it where it matters most to improve patient outcomes spoken able smarter faster clinical communications for our customers spokesman.
<unk> for critical communications provide a vital service for our trusted customers. These customers include 18 of the top 20th adult hospitals, and all 10 children's hospitals named to the U S News and World Report 2022, 2023 best hospitals Anorak.
In fact over the past decade, nearly every hospital named to that honor roll has been spoke customer.
We have over 2200 healthcare facilities as customers, representing the who's who of hospitals in the United States. We built our solutions over many years and have long standing valuable customer relationships, we honor and respect our customer service and providing world class healthcare and we value our place in their communications ecosystem.
This is coupled with a financial strength that over 83% of our revenue is reoccurring in nature, where a company with no debt, which provides a significant flexibility.
We continue to focus on investing in and enhancing our integrated spoke care connect software solutions and wireless products in order to continue our long standing relationships with the nation's leading healthcare providers and.
2022 that we sharply reduced our research and development spend from the previous year, we still spent approximately $8.7 million to support development of our spoke care connect platform as well as wireless products such as our new Gen. A pager.
We expect to expand that investment to approximately $11.3 million. This year in line with spending levels prior to the introduction spoke up.
This investment is important relative to our plans for stabilization and eventual growth of future software revenue in these incremental costs are embedded in our guidance that Michael covered later in this call.
We believe these attributes combined with our experienced dedicated and committed employee base are what will allow us to generate significant cash flow into the future and returned capital to our shareholders.
So with that said, let me take you through a few highlights for the fourth quarter of 2022.
We were successful in stabilizing our business and positioning spoke for future growth. In addition to the highlights listed on the slide other noteworthy fourthquarter performance included.
Nearly 17% annual increase in year over year software operations bookings.
Next we ended the year with 44 million dollar software backlog up from the prior to here and built by our success and software operations bookings.
Third quarterly unit erosion of our wireless pagers average less than 1%, resulting in a full year unit erosion of 3.5% down 80 basis points from the prior year.
Next we were able to implement at 28% reduction in year over year adjusted operating expenses, primarily through faced Inactions I outlined previously with respect to our strategic pivot and as a result, we generated 5.6 million of adjusted EBITDA.
Our team was able to accomplish all this during the quarter, while returning six and a quarter million dollars of cash to our shareholders in the form of a regular quarterly dividend and we ended the year with approximately 36 million of cash and cash equivalents with over $52 million of deferred tax assets.
At the same time, we generated 17, new six figure customer contracts during the quarter, Let me take a few moments and highlight a couple of these.
First I'd like to highlight a multiyear agreements signed with a large health system in Oregon.
This locally owned nonprofit six hospital health system includes a full service children's hospital.
24 hour mental and behavioral Health services Center.
More than 70 primary care specialty and urgent care clinics with 14000 employees nearly 3000 healthcare providers. The organization provides comprehensive healthcare services across the region has the most five star ratings for hospitals in the area.
Customer for more than 20 years, the cell system signed a five year agreement. There's an example of our new multiyear contracts strategy.
Multiyear contracts customers have predictable annual spending shirts portability quicker access to new functionality and a streamlined procurement process among the many other benefits.
The other customer contract I'd like to highlight for you is with a large health system in Minnesota, that's received nationwide recognition across multiple.
People areas of care.
Founded in academics and with extensive deep roots in community medicine. The self system has 15 hospitals nearly 100 primary urgent care specialty and skilled nursing facilities and clinics. They have 12000 employees and 4500 healthcare providers.
Customer for over a decade health system signed a multi year agreement for premium support and professional services for their spoke solutions.
Even though the healthcare industry is under considerable financial pressure.
Customers leadership understood the value enroll spoke solutions plan, delivering critical communication and seconds matter.
Are multi year agreement was ideal for the customer because they wanted a predictable annual spend deeper partnership with support current software feature releases and value added services to maximize our investment spoke solutions.
When we implemented our strategic pivot last year I had said that I believe that this strategic shift will create significant value for our shareholders, while allowing spoke to continue to provide critical communications services to healthcare customers.
Two examples I just shared provide a good sense of the value, we're creating certainly our performance in the fourth quarter and for the full year demonstrates a company that has stabilized this operation and is poised to take advantage of growth opportunities in our chosen markets.
Now before I turn the call over to Mike for a more detailed discussion of our financial highlights and forward looking guidance I want to outline some of the assumptions that drive our financial expectations for 2023.
First we anticipate moderate growth and our software operations bookings as our customers operate within their resource constraints, while we continue to focus on multiyear contracts and value added service engagements.
Next we anticipate that we will be able to continue to minimize unit chern and maximize average revenue per unit or <unk> and our wireless products. So we continue to benefit from the pricing actions that we took in 2022 and the deployment of our Gen. A pager.
And lastly, we take great pride in our ability to control costs and although we have taken out the majority of course related to the strategic pivot, we expect to continue driving incremental savings in 2023.
Finally, Michael provide more detailed guidance information in a few moments, but we believe that these assumptions can drive our business to generate adjusted EBITDA in the range of $24 million to $26 million in 2023 with that said I would like to turn the call over to Mike Wallace.
View, our financial performance Mike.
Thanks, Vince and good morning, everyone.
I would now like to take a few minutes and provide a recap of our fourth quarter and full year 2022 financial performance, which was reported yesterday.
I encourage you to review our 10-K when filed as it includes significantly more information about our business operations and financial performance.
Cover on this call.
But before I do I would like to briefly outline for you are updated definition of adjusted EBITDA.
Is contained in our financial statements and the associated adjusted EBITDA reconciliation table included in our earnings release.
We believe that this treatment will give you greater clarity into the performance of the ongoing operations of our company.
As well as be more reflective of best practices of our software peers.
The old method adjusted EBITDA started with net income and then subtracted capital expenses and added back stock based compensation and any non-cash charges for asset impairments.
Under the new method the calculation again starts with net income and then adds back the stock based compensation.
Any non-cash asset impairment.
Had any severance or restructuring charges.
The difference between the two methods being previously subtracting capital expenses, which were $3.8 million for 2022, and now adding back severance and restructuring charges.
Again, we believe this will give you greater visibility into our operational performance is it takes out much of the noise that was created from the strategic pivot in 2022 and.
And of course impacts from seven and restructuring costs will be significantly less impactful in 2023.
As such the results being reported today in this deck and in our earnings press release reflect this new definition for all periods presented unless otherwise noted.
Turning to our income statement in the fourth quarter of 2022, GAAP net income totaled $24 $2 million or one dollar and 21 cents per diluted share compare.
Compared to a net loss of $16.7 million or 86 cents per diluted share in 2021.
Fourth quarter net income included a 21.9 million dollar non-cash gain related to the release of the previously established evaluation allowance for unused research and development tax credits.
During the fourth quarter, we assessed our valuation allowance and determined that it would be more likely than not that certain of our deferred tax assets related to federal and state net operating losses and other tax credits would be realizable based on several factors.
The uncertainty surrounding COVID-19, and spokeo or both significant detractors and our ability to reasonably rely on projections of future taxable income over the last several years.
But these uncertainties largely removed projections of future taxable income where primary consideration in our conclusion.
Largely resulting from our restructuring efforts and elimination of costs related to the development of Spokeo in 2022 <unk>.
Additionally, our historical experience of profit generation.
Prior to the introduction spokeo in conjunction with our deep knowledge of the existing wireless and software service lines provides us with greater confidence in these projections.
As a result, we have reduced the valuation allowance by $21.9 million, which was previously established in the fourth quarter of 2020.
The remaining 2.3 million dollar valuation allowance relates to certain state net operating losses state tax credits and foreign tax credits that we do not currently expect to realize based on these projections.
For a more detailed explanation please see our discussion in the 10-K.
For the fourth quarter of 2022 total gap revenue was $33.3 million compared to revenue of $34.5 million in 2021 <unk>.
Revenue for the quarter consisted of wireless revenue of $19 million, which was down point $2 million or less than 1% from the prior year and software revenue of $14.3 million down 7.2% from last year largely in line with our expectations.
With respect to wireless revenue fourth quarter of 2022 performance was driven by a continued decline in Patriot unit churn on a year over year basis as the net pager decline during full year 2022 was 3.5% with units in service declining by only 30000.
The fourth quarter monthly paging revenue component of wireless, which represents 97% of overall wireless revenue declined by only 3% on a year over year basis.
And while we're up wireless revenue did decline in the fourth quarter and full year that decline was less than we expected and the rate of erosion continues to slow.
The remainder of wireless revenue relates to product sales, primarily through last page or fees, which are one time in nature and are far less impactful to the ongoing value of this business.
For the full year wireless revenue declined by 4.1% compared to the prior year and again in the range of our expectations.
With the monthly paging revenue component of wireless declining only $3, 3% on a year over year basis.
Turning to the fourth quarter software revenue beginning with maintenance revenue, which is the largest component of our software revenue was essentially flat to the prior year quarter totaling $9.3 million.
As we have discussed in previous quarterly calls and as we continue through this period.
But the focus being brought back to our spoke her connect software products or expectation is for maintenance revenue to be flat to down slightly on a year over year basis, given gross chern and uplift levels remaining consistent with prior quarters.
However, as we continue to make progress on our product roadmap was spoke her connect we expect bookings will continue to grow in the coming years and maintenance revenue along with it.
Given the nature of maintenance revenue higher license sales will work through revenue lagging basis. So.
So we look first stabilizing that revenue decline and then beginning to grow it.
Professional services revenue was 3.1 million versus $3.8 million in the fourth quarter of 2021.
As we have stated in earnings calls over the past several quarters related to our financial guidance, we had expected a lower level of services revenue, resulting from the planned reduction in personnel of approximately 35%.
To better align with our current backlog and to drive a higher rate of net cash flow in alignment with the strategic shift in our business plan.
We believe the actions required for this alignment are complete at this time.
And as we have stated in several earnings calls it is important to remember that services has not historically driven meaningful cash flow on a standalone basis, but it has been viewed as an opportunity to expand our license footprint through customer engagement well is to fulfill upgrade obligations under maintenance contracts, which is critical to maintaining our existing customers.
Lastly, license and hardware revenue was $1.9 million compared with $2.2 million in the same period of the prior year.
For the full year total gap revenue was $134.5 million compared to revenue of $142.2 million in 2021.
Wireless revenue on a year to date basis was $75.6 million compared to $78 $8 million, reflecting net paging revenue churn in line with the trend seen in the fourth quarter.
And in 2022 software revenue of $58 $9 million compared to $63.4 million and the prior period.
This was driven by maintenance revenue being down 2.8% on an annual basis professional services down 27% due to the intentional reduction in professional services resources to better align with backlog just discussed.
And which was offset by higher license revenue of 22% driven by strong software operations bookings during the year.
Turning to fourth quarter, adjusted operating expenses, which excludes depreciation amortization, an accretion of point $9 million in severance and restructuring costs a point $9 million.
Totaled $28.5 million in the fourth quarter compared to $39.5 million in 2021 or 28% lower.
For the full year adjusted operating expenses were approximately $123.4 million compared to $154.3 million in 2021 or 20% lower as we carried most of the costs and personnel related to spoke go through April of 2022.
As Vince mentioned earlier, the streamlining of employee and management headcount reduction is now complete list of it was substantially all of the remaining liability expect it to be paid in the first quarter of 2023.
And lastly, adjusted EBITDA, the definition of which I discussed earlier and as defined in our earnings release tables and represents EBITDA before stock based compensation expense impairment of intangible assets effects is capitalized software development costs and severance and restructuring costs for the fourth quarter was a positive 5.6 million.
Compared with a negative $3.8 million in the same quarter of 2021 and reflects the progress made to date with our strategic pivot.
For the full year, our adjusted EBITDA was a positive $15 million compared to a negative for $9 million in 2021.
Now turning to our pro forma adjusted EBITDA.
Pro forma adjusted EBITDA results exclude one time costs related to the strategic pivot as well as costs related to operations under our prior strategy that will not be incurred going forward.
Those strategic change has been in effect as of January 1st 2022 are adjusted EBITDA would have been $9.5 million higher for the year. This.
This includes costs related to terminated employees of approximately $7.5 million and Nonpayroll spokeo and other costs of approximately $2 million.
Inclusive of these adjustments are 2022, adjusted EBITDA would have been $24.5 million.
Finally, I'd like to take a few minutes to outline our financial guidance for 2023.
In General <unk> was constructed with a base assumption of cautious optimism based on our performance in 2022 with our strategic pivot and the precepts that Vince reviewed earlier.
As a reminder of the figures I am going to discuss today are included in our guidance table and the earnings release.
In 2023, we expect total revenue to be in the range of $129 million to $136.5 million.
Of which we expect wireless revenue to range between $71.5 million to $74.5 million as we continue to expect.
A slower year over year revenue erosion rate based on certain price enact pricing actions, we have taken and continued adoption of our journey pager.
Software revenue is expected to range from $57.5 million to $62 million with the midpoint, implying total software referee total software revenue representing a small increase from 2022 software revenue as.
As we have discussed previously hour refocus on her spoke her connect software business after discontinuing spokeo.
Will involve the progress we have made in 2022, coupled with our research and development effort in 2023, which costs are included in our guidance to stabilize software revenue and positioned for growth in future years.
The efforts Vince summarized previously along with continuing to tightly manage expenses results in our adjusted EBITDA guidance of $24 million to $26 million for 2023.
On a final note, though we are not providing specific guidance for capex due to timing and other issues. We would expect that capex levels would be in line with prior years total.
Total capital expenditures for the full year, 2022, or $3 $8 million down from $4 $4 million in the prior year.
But that said I will now turn the call back over to Vince. Thank.
Thank you Mike finally, before we open the line up to questions I'd like to dive a little deeper and answer some analysts questions. We received prior to today's call. The first one was about sales full time equivalent level that being down relative to prior years do you feel you have necessarily level to achieve your sales golf I think yes, our pipelines growing every month <unk>.
Any of the deals were looking at a multiyear deals with additional licensing value added service engagements and further future upgrades. Our sales team coverage is good they're more efficient now than they've been in the past most of the head count we took out of our salespeople was from spoke go and much less from our care connect Sweet solutions and we're in the process.
Adding inside sales roles now a new channel director just came on board and two new regional sales directors as well. So we're going to continue to add talent when needed to support ourselves targets and we feel good about those resource levels second question has to do with customer sales engagement.
During COVID-19 it was hard to get face to face meetings. How is this going in today's environment great question.
So we're still seeing a hybrid mix of meetings summer in person somewhere outside the hospitals and summer are still remote it's getting better but it still challenge again, we're always pushing to get on site and when we can we're traveling much more strategically we're maximizing every meeting opportunity and it's important to understand that you know the way our business works on the software and why.
A side and the associated sales we drive there almost exclusively the result of our sales teams direct interaction with our customers versus respond into rfps and the like so it's critical that we're seeing more and more you know quote unquote in person meetings, although like everyone. You know we've adapted to virtual meetings as best as <unk>.
Possible given the pandemic.
Third question ourselves cycled the lawn, gaining just given rising interest rates and other macro pressures.
So now that we're not seeing any delays on our existing customer upgrade sales cycles, and we are seeing it shorten a bit with our multiyear deals. However, new project initiatives are still pretty slow in hospitals due to the resource constraints, both financial constraints and personnel resource constraints.
They're trying to get more out of what they already have and leverage existing systems and.
And that works for our strengths because we are an industry leader in contact center solutions or an industry leader in narrow band wireless messaging. So we can really meet with them and help them see how they can leverage our solutions. So so far so good there.
Fourth question what percentage of your software base do you think.
Went through communications upgrades IEPS in 2002, and what are you expecting for twenty-three.
So I mean.
That's not something we track in terms of P. B X upgrade that are at our customers. Our our sales are not dependent on that for customers with CPI integration the need to upgrade their spoke solutions can arrive from a PBX upgrade.
Integration I've said this before it's one of our strengths and we believe or an industry leader. There. However, that's only one of many drivers that can lead to additional sales opportunities you over the last couple of years with increasing prevalence of cyber security breaches you know they need to maintain updated operating systems and update your database and other critical functions that's been a really big.
Big factor in the upgrade frequency an average upgrade cycles for our solutions in the past have generally range between two and four years, depending on the size and the complexity and the number of solutions a customer might have an a number of other factors. So so far so good there.
Number five you talked about the upsell opportunity within your base I E customers only use one or two products, whereas the low hanging fruit and what we do differently today to capture that opportunity relative to how you pitched a few years ago.
So we really have a good handle on what our customers do and don't have today with respect to our solutions in our strategy with a multiyear deals allows us to build into their quotes additional licensing opportunities for additional solutions and services.
We're also focused on value added services that our customers purchase called a solution assessment and that really shows the solutions that will be most helpful to their organization in terms of the way they are structured with their workflows. So our technology approach with full integration with our platform is one of our major advantages <unk>.
Question number six was update on selling software into smaller hospitals. So.
We're in the process of hiring two inside salespeople right now to get started on selling our subscription offering into small hospital. That's our hosted solution. We should we have one customer up on it right now and running and we're gonna bring that online around the first of April we should be fully staffed by March 15th will start selling immediately none of that's in our forecast no upside in the <unk>.
<unk> for it or in our guidance, we've already had one customer like I set it up and running and we plan to wrap it up slowly and the.
Second half of this year, so we'll see how that goes and we'll keep you posted.
Number seven houses next Gen Pedro release tracking so we delivered 8300 <unk> in 2022, and we're expecting to deliver more than 20000 units in 2023, we're getting a big <unk> advantage from these units and we want to maintain that balance discipline. While we were all of these things.
Devices out they have been very well received.
Number eight retention levels in 2022, given the drop in full time equivalents and a new strategic plan. How does this compare to prior year. So I would say right now morale inside the companies as high as it's been in years and I think that's where a lot of reasons. They appreciate the business plan on running right now we're hitting our numbers a lot of competitors are struggling.
We are a company with no that we're making a lotta money and so it's really helping morale and you can see that in the numbers and 2019 2020, what we call regrettable turnover and regrettable turnover defined as people who voluntarily voluntarily leave for other jobs. So it's not going to include people, who we terminate performance or or <unk>.
Tyrants people, we don't want to lose basically 2019 2020 that was running about 11.5% in 2021. It was about 95% about 9% last year and 22 right now we're we're at a less than 1% run right. So we'll see how the year progresses, but we're really good.
Right there.
Number nine any synergies between the two businesses that are on tap can you grow the 20 per cent of hospitals that use those services. So we've got a strong sales incentive plan in place right now utilizes both wireless software teams to maximize our success there.
And 22, we sold about two and a half million dollars in software sales collaboration deals in 2023 were expected to do more. We've also added numerous wireless accounts that weren't was spoke prior our plans to continue to grow the percentage of the hospitals that use both servicing our teams motivated compensated to do so.
Question number 10 is there a threshold bookings, where you would have to consider reducing the dividend down the road if you fell below it.
So we are committed to pay an annual dividend $1.25 and 2023 in a state of previously we believe will generate sufficient cash to continue paying that level of dividend for the foreseeable future. Obviously this is a board decision before it looks at this every quarter, we declare the dividend like we did in the press release last night and so far so good.
Sure last pre submit a question number 11, you had mentioned at one point in trying to more purposely exploit opportunities for the communications console outside of healthcare. So that's something that's a priority for twenty-three or is it longer term.
Shortly after that longer term.
We think there's opportunity there and other market segments, but we're not focused on that this year.
We've got about 10% of our total revenues today coming from hospitality and from government. We would have to have additional development spend in those areas to really grow that a lot and so that's a longer term opportunity. So I just want to leave you with with the fact that our priority is generating adjusted EBITDA within the guidance range that week.
Gave you in return of capital to our shareholders. So at this point I'll I'll ask the operator to open the lineup for any additional questions operator.
Thank you Sir.
And gentlemen, we will not be conducting a question and answer session.
If you would like to ask a question. Please <unk> I'm new to this on keypad <unk>.
Confirmation Tonight will indicate your line is in the Christian Q you.
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Congratulations on the throne finished 220 22 that's.
Really a lot was accomplished in a relatively short period of time. My question has to do just starting off with the 2023 financial outlook No wireless revenue side, we had kind of Ah Ah Ah balance if you will in 2022 and the unit churn versus the <unk> just wondering what the.
The expectation is for 2023, given the revenue guy for wireless.
Yeah, Eric it's Mike good to talk to you yeah. Our thought processes is that you know.
We will continue to see unit.
Unit churn.
Pretty much consistently with what we've seen in 22, we have as you've probably noticed.
Actually seen an uptick from an <unk> perspective, and that's a function of some of the pricing actions that we took.
The journey Patriots that Vince talked about in his remarks, all of that is having a.
Solid impact if you will.
From an <unk> perspective, so those are kind of the underlying drivers. If you will that that's driving that range that we have there for twenty-three and wireless revenue.
Okay and then just Q4 question the license revenue of 1.27 million I only call. It out just because it was down 15 per cent. That's the first negative cap we've seen in that that revenue category since Q3 of 2021 what.
Going on there and what's your expectation.
Yeah. Good question.
Nothing going on there really it's just a function of mix at the end of the day.
From any given quarter.
You can have some some ups and downs as it relates to what the mixes from a license perspective.
And it's just it's tough as we.
Go through the different quarters for that to be.
Sort of static and grow in a linear fashion. The reality is is that as we <unk>.
Expect to grow bookings in total.
We would expect that over let's say an annual periods you will certainly see.
License bookings and thus license revenue be up.
So it should track with with overall bookings.
Okay, and I realized it wasn't a good time for the year 2022 full year.
The 17, Congrats again also on the the 17 six figure deal that you had in queue for the 66 for the full year you talked about your pipeline growing as you exited the year here what do you have a number for US is there a certain percentage you can give us either by customer category.
Or just raw numbers of large deals versus a year ago.
Yeah look we don't provide guidance in terms of what our total pipeline growth as we did start from a pretty low base last year, because our focus prior to the pivot in February of 22 was on spoke go. So we really started growing that pipeline with our care connect sweet solutions and.
<unk> say mid 2022, but it's been growing pretty nicely. Since then and we did a lot of big deals within the last year and we expect to do a lot more of them this year.
Okay and then my last question has to do with the cash. Obviously you you returned 25 million to shareholders in 2022, and that's the plan again in 2023, how much of that is coming from operations or maybe another way to ask it.
Given this mid point adjusted EBITDA of 25 million and what's called a $4 million of Capex is the assumption here that.
Will will generate about $21 million will be returned to shareholders from operations and dip into the balance sheet for the remaining $4 million you are spot on.
Okay answered my own question. Thanks, guys.
It doesn't look like we have any other questions in the in the queue operator are there.
No we have to have to relinquish Texas it's.
It's <unk>, yeah, we're gonna wrap up I want to thank everyone for joining us today. We appreciate your support and interest and spoke we look forward to updating you again next quarter and I want it on a final note kind of under the one more thing category. We think it's important to give our customers are investors opportunity to see are busy.
And talk with our our broader management team, we have customer meetings on a regular basis and with respect to our investors. We're going to have an investor day on Thursday may 4th of 2023, we're going to host this one in Dallas, We may do another one in the fall and do that up north.
Programs Gonna have management presentation, so I'll be there, Mike and Calvin will be there so over our head of sales John Lax in our CIO, Tim Tyndall will all be presenting there'll be Q&A opportunity and the event will also be webcast for those that can't join us in person will get more details on that out to you over the course of the next quarter, but.
Any questions about it just reach out to our galgano are investor relations contact and he'll he'll coordinate things with you anyway. Thanks, all for joining US this morning and have a great day, we really look forward to talking to your next quarter. When we report our first quarter earnings take care.
Thank you very much sir.
Gentlemen that concludes today's conference he's making a disconnect your lines at this time and thank you for your post dissipation.
Mmm.
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