Q4 2022 ICAD Inc Earnings Call
Good day and welcome to the Ikat, Inc, fourth quarter and full year 2022 earnings call.
At this time, all participants have been placed on a listen only mode and we will open the floor for your questions and comments after the presentation.
It is now my pleasure to turn the floor over to your host Lenoir fever.
The floor is yours.
Thank you operator, good afternoon, everyone. Thank you for joining us today for <unk> fourth quarter and full year 2022 earnings call.
On the call today, we have Dana Brown, our president and Chief Executive Officer.
Before turning the call over to Dana I would like to remind everyone that we will be making forward looking statements on the call today.
These forward looking statements are based upon I cats current expectations and are subject to uncertainty and changes in circumstances.
Actual results may different materially from these expectations for a list of factors that could cause actual results to differ please see today's press release and our filings with the U S Securities and Exchange Commission.
<unk> undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.
I would also note that management will refer to certain non-GAAP financial measures.
<unk> believes that these measures provide meaningful information for investors and reflect the way they view the operating performance of the company.
You can find a reconciliation of our GAAP to non-GAAP measures at the end of the earnings release with that I'll turn the call over to Dana.
Thank you Linda and good afternoon, everyone for those of you I haven't had the opportunity to meet I want to introduce myself. My name is Dana Brown Emperor on March 13th leadership transition announcement, and the new President and CEO for ICANN I've been a member of <unk> Board of directors for the past year and stepped into the chairman role.
January I want to take a few moments to tell you about my background and why I'm uniquely qualified to lead I can't at this point in time.
I spent the first 25 years of my career in the technology industry as a founding member of multiple successful ventures, including co founder and Chief marketing and business development Officer for Medisoft software.
Medisoft was essentially ERP for telecom media and Internet providers. During my tenure, we became a category killer consistently winning deals against many of the larger players at the time, including Lucent until Cordelia.
At the time, we had a unique business model choosing to focus our efforts on building disruptive innovative technology, while partnering with entities like E Y for implementation services, who at one point in time had a $50 million backlog for our projects I was responsible for our business development strategy with rigor we can.
Sleep evaluated buy build or partner options and ways to grow our footprint across technology markets and geography, we implemented an aggressive acquisition strategy, enabling us to accelerate getting to market faster than our competition.
We originally developed the platform for the mainframe environment, no I'm really dating myself and subsequently ported it to client server and later redesigned it to be fast my co founder and I took the company public and it was later acquired by Oracle as it was and still is one of the largest enterprise system ever built on the Oracle suite.
After Medisoft I became CEO of Ipsum networks, which was a network performance management software company credited with pioneering route analytics technology and it was acquired by Cisco in its early stages.
I went on to be on the turnaround team of other tech ventures, and the content delivery and mobile space until 12 years ago. When I made a shift from the tech sector to the nonprofit sector.
I joined United way worldwide as its first Chief Digital officer, and Architected, Our co development partnership between United Way 140 year old $5 billion global nonprofit and sales force a 24 year old eight youre running world's most innovative company and then likely partner.
Our ship to build a new cloud called philanthropy cloud, it's a platform that empowers corporations to put their values into action. It extends each company's reach by engaging its customers and employees and philanthropic endeavors enhancing brand reputation awareness, attracting and retaining top talent and delivering greater impact.
Most recently I served as the senior Vice President Chief strategy and operations Officer for Susan G. Komen, the world's leading breast cancer organization.
<unk> has invested more than $3 3 billion and groundbreaking breast cancer research community health outreach advocacy and programs and more than 60 countries at Coleman among leading other strategic initiatives in our turnaround and transformation I led our efforts to create Mike human health the fair.
Patient care team and researcher engagement platform designed to guide patients through the end to end breast cancer journey with access to experts resources and aid as well as share for cares a first step for patient powered breast cancer research registry storing information ranging from determinants of her.
Health risk profiles, how status, including documentation of care delivery, such as diagnoses and interventions all gathered from digital and non digital EMR EHR data as well as genomic data.
To summarize and not to be trite, but I've been there and done that I've built companies teams and products from the ground up I've leveraged partners to create scale become the category leader and I'm asking ecosystem, that's driving a sustainable I've led product strategy through seismic shifts and underlying platforms and licensing model.
And I've been responsible for changing business models and ways of doing business through challenging turnarounds implementing sizable cost reduction measures, while simultaneously diversifying revenue streams.
And now I'm honored to be leading this incredible company.
Working alongside our talented team our board our clients and partners I'm committed to upholding our vision to be the world's most pervasive and Personalised suite of I E. I cancer detection solutions changing lives for patients around the world and creating value for our shareholders and stakeholders I'm uniquely prepare.
Third to leverage my experience and expertise to position this company for future growth, So and that's about my background, let's dive into our business and financial update.
Well, both the therapy and detection lines of business have great market opportunity and potential we believe our core competencies and focus needs to be solely on detection and our strategy around AI.
Therefore, we recently announced the company is exploring strategic options for disaster business.
We remain confident that the Zap technology has the potential to positively impact the lives of cancer patients and the providers who care for them on a global scale.
As we move through this time of transition we want to explore strategic options that could accelerate the accessibility of this technology and provide more focus and synergies to its growth.
We've hired two banks to help us explore these options.
<unk>. These two banks was driven by inbound relationship based strategic increase.
As we explore these opportunities we've reduced operational costs and overhead for that line of business. We have streamlined operations to focus on what's essential to servicing and supporting new sales as well as our existing installed base, resulting in an annualized decreasing expenses of $1 3 million.
Moving to the detection side of our business in the battle against cancer. We believe early detection and diagnosis is a key part in transforming the patient journey and quality of care.
Breast cancer is the most common cancer in women worldwide and the second leading cause of cancer deaths among women in the U S. But I catch early detection technology, we have the ability to detect cancers early giving individuals the opportunity for more positive outcomes and more lives saved as mentioned on previous calls.
It's an important change for our company driven by customers on the leading edge of the adoption curve is the transition of our business from a perpetual license on premise technology model to a more sustainable subscription based license and SaaS or cloud based technology platform.
Its business model and technology platform change is important as over time. It ensures a steady reoccurring revenue stream that can grow more quickly and enable us to invest more in our products and services to meet our customers' needs now and in the future.
Combining the subscription method of payment with the SaaS method of deployment offers an accelerated way for customers to adopt deploy and scale our technologies with significantly lower upfront costs.
SaaS implementations enabled customers to leverage new functionality more easily and quickly without costly capital outlays associated with traditional model.
While demand continues to be promising for this model, we're still in the early stages of the adoption curve and the percentage of our overall revenue from subscription licenses has remained small.
You'll hear more from us on this metric as it becomes a more significant percentage of our overall revenue.
As noted in our earnings call announcement, we have implemented further cost reduction measures to continue to align and streamline our cost base, we're focused on creating a broad and long runway needed to change the business, while we run the business, it's a reset and recalibrate year for us and we're already made.
Important changes.
We recently made several changes to the operation, which have reduced annualized expenses by $4 three to $4 $6 million and annualized cash burn has been reduced four nine to $5 2 million.
As a result, together with exploring strategic options for the therapy business. We're now projecting to be cash flow positive and returned to profitability before the end of 'twenty 'twenty four.
We believe these changes give us the runway needed to successfully navigate our business model transition without needing to raise additional capital.
I also wanted to be clear that transitioning our business model isn't just about moving to a SaaS subscription platform, we're going through a rigorous and thoughtful process to evaluate a range of growth opportunities such as going direct to patient working with our industry clinical partners with offerings like a new.
G P T powered digital care platform.
Access to elective risk assessments and other personalized predictive scoring solutions.
We're looking at pursuing payer and reimbursement strategies to get risk assessments and they I read screenings cupboard.
It can be for women with dense breasts as early detection can save thousands of dollars and medical expenses incurred with the late stage diagnoses and their courses of treatment.
We're partnering with large employers with women's health initiatives to provide AI powered mobile screening services on campus. We're looking at supporting patient advocacy organizations on the front lines of tackling helps spur DS and utilizing aid programs to help all women get access to the breast health care they need.
And we're looking at expanding our cloud based AI platform to address other cancers and modalities.
We have strong existing partnerships that can help us mitigate the risk of expanding into these new initiative partnerships like our strategic development and commercialization agreement with Google health to integrate its artificial intelligence technology into our breast AI suite.
As previously discussed this is the first commercial partnership Google Health has entered into to introduce its breast imaging AI into clinical practice and it is positioned to improve our market, leading breast cancer AI solutions for mammography as well as expand access to our technology to millions of women can providers worldwide.
<unk>.
Like our partnership with the least mammography the law.
Largest independent provider of breast screening and diagnostic services in the U S. So this is the first in the country to offer profound AI risk with a new direct to patient program called Mammoth plus. Additionally.
Additionally, last quarter, we announced a new development and commercial collaboration agreement with solar focused on using mammography to define cardiovascular risk a new application that could identified millions of women at risk for heart disease using data obtained from their mammogram.
Heart disease being the number one killer among women in the U S. This collaboration not only offers the potential to address a significant unmet need and patient care, but also to penetrate a sizable new market given that approximately 40 million women are screened in the U S annually.
And lastly, I would be remiss, if I didn't mention the ability to further leverage our existing partnerships with top medical technology companies like GE and Siemens and of course, our developing relationship with Grad partners.
In summary from a business standpoint, I'm focused on creating runway preserving cash and building a defensible and competitive long term strategy that diversifies, our revenue stream and smooth out our customer concentration, we expect to be able to share the metrics and milestones of our strategy in the third quarter of this year.
I'll now summarize our financial results for the fourth quarter and the year ended December 31 2022.
Revenues for the year ended December 31, 2022 were $27 9 million, a decrease of $5 7 million or 17% over $33 6 million in fiscal 2021.
The detection segment revenue decreased $2 3 million to $19 7 million with a $3 2 million reduction in product revenue offset by a point 8 million increase in service revenue.
The therapy segment revenue decreased $3 5 million or 30% to $8 1 million for full year 2020 to.
The decrease in therapy revenues was primarily due to a $2 8 million decrease in product revenue.
Total revenue for fourth quarter of 2022 was $6 $5 million down 17% from $7 8 million in the fourth quarter of 2021 that.
The detection segment revenue decreased <unk> 9 million to approximately $4 $6 million with a 1.2 million reduction in product revenue offset by a <unk> 3 million increase in service revenue.
The therapy segment revenue decreased <unk> 4 million or 17% to $1 9 million from the fourth quarter of 2021.
The decrease in therapy revenues was primarily due to a point 4 million decrease in product revenue.
Moving on to gross profit on a percentage basis gross profit was 71% for the fourth quarter of 2022 compared to 73% for the fourth quarter 2021.
Gross profit for the fourth quarter of 2022, with $4 6 million as compared to $5 7 million in the fourth quarter of 2021 reflective of the reduction in revenue.
Total operating expenses for the fourth quarter of 2022 were 7.96 million, a $1 $9 million decrease or 19% from 985 million in the fourth quarter of 2021.
The decrease was related to cost cutting measures implemented in 2022.
The operating loss decreased <unk> 8 million to $3 3 million in the quarter ended December 31, 2022 from the same period in 2021.
This decrease in operating loss was predominantly due to the $1 9 million decrease in operating expenses is offset by decline in gross margin from reduced revenue.
Net loss for the fourth quarter of 2022, with $3 1 million or 0.12 per diluted share compared with a GAAP net loss of $4 1 million or <unk>, one seven per diluted share for the fourth quarter of 'twenty 'twenty. One this year over year decrease in the GAAP loss per share.
It's primarily due to the operating expense reductions.
Looking ahead following the 4.3 to $4 6 million of reduced annualized expenses as I. Just mentioned, we are now projecting to return to profitability for the end of 'twenty 'twenty four.
non-GAAP adjusted EBITDA for the fourth quarter of 2022.
Lots of $2 8 million.
non-GAAP adjusted net loss for the fourth quarter of 2022, with 3 million or <unk> went two cents per share.
Moving to the balance sheet as of December 31st 2022, the company had cash and cash equivalents of $21 3 million compared to cash and cash equivalents of $34 3 million at December 31, 2021.
Cash and cash equivalents from operating activities used during the fourth quarter of 2022 were $3 1 million.
This concludes the financial highlights of our presentation and I would now like to turn the call back over to the operator to lead us through the Q&A.
Certainly at this time, we'll be conducting a question and answer session.
Have any questions or comments. Please press star one on your phone at this time.
We do also about posing your question. Please pick up your handset if you're listening on speaker phone to provide optimum film quality.
Once again, if you have any questions or comments. Please press star one on your phone.
Your first question is coming from per Ostlund from Craig Hallum Capital Group.
<unk> is live.
Thanks, Good afternoon.
I wanted to start out with.
The restructuring announcement.
First week and I apologize in advance this might be a little bit of a long winded question.
A couple of pieces.
Okay and in your prepared remarks standards, it's very very clear that the company is.
Focusing its efforts around the cancer detection side of the business.
But the reduction in force was also said to.
You know come predominantly from the detection side of the business. So I'm curious.
To.
I guess, the identification of where within detection.
The most logical places to cut because it doesn't sound like you're pulling back on go to market. It doesn't sound like you're pulling back on.
Development, So I guess I'm.
Curious where you saw.
Oh for lack of a better word.
Or the opportunity to take cost out of that side of the business. Since it is the focus going forward.
Yeah, so for small pear nice to hear from you and things for the question. So as we looked across the organization on the detection side and as you mentioned I mean, it's already there's already a fairly lean organization, but we still had some silos. So one of the things that we've done is crew.
More cross functional teams I'm, a little bit of some hybrid rolls so, particularly when you think about the skill sets and expertise required for example, pre sales and post sales, where you're working with customers to envision how to incorporate the technology in their environment, how to maximize it right for best practice.
Those are examples of where we could get some economies of scale writer synergies by combining teams.
So that's an example, where you know we were able to take out you know do some of those reduction in that.
Other areas just looking across the organization you know at skill sets and expertise that's best poised for for where we want to go particularly when we look at things that are cloud based so that also enabled us to get some efficiencies by combining some roles and kind of just really streamlining what folks are focused on.
Okay.
That makes sense.
Maybe maybe.
Follow up to that point.
The press release.
Talked about the notion of a partner led model and this has been something.
Come up in recent quarters, how does that affect you.
How much of your sales and marketing effort becomes geared toward securing.
Securing partners more so than.
Actually in field type sales.
So.
We have introduced a new leader right. We got the news senior Vice President for commercial he joined the organization just in early January and as a part of that move right. We've also created some new roles focused exclusively on partnerships, so kind of creating an overlay for the whole sales organization with individuals whose primary.
<unk> responsibility each and every day is working with the partners motivating them, making sure that our direct sales force is appropriately leveraging the partner resources that we have in the field. So we're feeling good about that because now we've been able to create some focus and some dedicated bolt on partnership I mean, when we look at you know.
But the idea is right that that kind of enumerated as areas that we're exploring to diversify revenue each and every one of them will have a strong partnership component. So you know I think that youre going to be hearing more and more from us as we go forward.
Okay.
Makes sense look forward to that.
Maybe the other side of the restructuring.
It's not the focus of the company, but or going forward, it's a focus of the company but.
I think on the on the job.
That is more straightforward.
With that restructuring there.
As it pertains to dish.
The strategic alternatives.
Don't know how much you necessarily can't say, but.
Can you characterize any of your own.
Early discussions there.
Do you have a desired timeline to sort of come to a conclusion on that does the furlough actually help a potential sale by streamlining the organization.
And last but not least on that apologies for the four part question.
How do you think about valuation or how should we think about valuation of that business.
Potentially look to sell it.
So I think I Miss one of before I got you know how the furlough impacts potential.
Timeline valuation I think I may have missed it very first one.
So just a thought around characterizing early discussions I guess, okay. Okay great.
So I'll answer timeline, and furlough and kind of characterize that discussion and then Dan Shea our interim CFO lives on the line, so I'm going to pass the ball to him. So you'll get to hear a different voice for a little bit and you can talk about what we're thinking about valuation but.
The furlough staff, we focused on ensuring that we can you know service and support existing customers and any new customers. So you know anything we can do to continue to help the business actually be accretive right in our strategic option is what we were focused on them.
But the discussions are interesting because I would say, it's a full spectrum from you know potential.
Since that are really strategic global in scale to those that want a really just almost kind of restart the business around the technology and it's a piece. So it's a broad spectrum, which is very interesting I think it also stinks speaks to just you know the breath right the solutions.
Were created in this off business as far as timeline you know as soon as possible you know, we're targeting a quarter to get for far enough along through these conversations that one you know we know the right next steps with the staff who were furloughed.
As well as you know, we're able to ensure that services and support for customers continued to not Miss a beat so and then I'll pass it over to Dan If you want to talk about the valuation process and just our models for it.
Yeah. Thank you.
I think the evaluation.
Depend of course on.
On who we were.
We're talking to who is the buyer.
Or a financial buyer I think the the feeling.
Feeling is that what we have with zoster is a pretty strong brand.
It is worth something different too.
Cause some bars and others.
It's.
Strong product is good.
Great name within the Derm circle and other modalities, so I think.
The valuation is just going to depend on who the buyer is and how they're going to use it.
Dana.
So that's something that we're looking at.
Pretty actively.
The timeline is as you know.
The furlough could be 90 days 90 days and sort of.
The feeling of it it's sort of the pump the brakes a little bit.
Save some money and.
And run a process that sufficient and.
Can it commands a value that's commensurate.
Commensurate with the brand.
Okay.
Sounds good.
Thanks.
Thanks.
Thank you I'd like to lose our audience know that we also have denture interim CFO on the line for questions. Your next question is coming from re tripled from B T. O G. Your line is live.
Hi, Dana Hi, Dan. Thank you for taking the questions asked afternoon.
I wanted to pick up on where per left off on the soft business in and just see if I can drill a little bit more in on your outlook near term for that business I certainly understand that the service revenue ought to hold off given you know installed base and that being a recurring revenue model, but I'm curious if we should expect product revenues.
Sort of be flat from where it was in 2022 how to think about that I'm, certainly a little bit concerned that with some of the furloughs and certainly the announced a possibility of a sale that.
You know the work force may not be quite as motivated. So how would you have us thinking about that near term therapy revenue from the product side.
So hi, Marie the stainless so I'll I'll answer a few comments and I'm going to turn it over to Dan. The first thing I wanted to say and I've only been on board a short while but that soft team is amazingly committed I'm extremely passionate about the product the research.
To work that they're doing you know we just got some additional data studies right that again, you know prove just the distinctiveness and competitiveness of it so I wouldn't underestimate the power of a small but mighty team alright, that's continuing to manage that business.
You know as you mentioned that business has a high percentage of reoccurring revenue you know somewhere 60, 65%. So yeah, we were able to take that into account with our reductions to make sure.
You know the we're able to service and support the customers that we have Dan I'm going to turn it over to you. If there's some additional comments you wanted to make for Maurice question.
Yeah.
I think you're right to point out the persistency.
So the service revenue.
That's a that's a known and you know I think that when we thought of the furlough decisions I think that was a big factor in determining.
Who would get furloughed into who wouldn't get furloughed I think.
Right now.
Does it work forces there that that's covering manufacturing field service sort of you know.
Assembling source X rays, and feeling filling orders for.
All kinds of.
The disposables and.
The.
On the product side, I think you know back to.
The discussion just earlier I think the you know the go to market approach with zoster is at least partially done through our partners and so there there is.
We said there is a bit of a sort.
Sort of a lull now and because of the furlough, but I think the the controllers were still getting controllers.
We are in order.
To that's delivering.
You have to have them available to be purchased and.
In particular.
Outside the U S market.
Some some strong partners who are in a position to.
To you know to make orders that are I think.
Yeah, I think it's a good question on the product side I think you're also right to highlight.
I liked the persistency of the service revenue.
Sure. Okay. That's helpful. Thank you for that I guess I'm, you know to sort of highlight one other thing that you mentioned today, that's new to US as is the profit profitability timelines very encouraging to hear what are you assuming in that or are you assuming that you know there is a strategic option fond resolved.
You know are you, assuming some sort of growth on the top line.
As part of that question I guess, if you could refresh us on what margins look like for the detection business that would help us as we as we plot out you know getting to profitability and in in late 'twenty four thank you for the questions.
So hey, Dan I'll I'll flip it on you if you want to go first and maybe tackle some of the metrics oriented and then I can talk to some of the underlying just assumptions on the business model side Okay.
Yes.
Thank you.
You're right to highlight.
The sale and what that might mean to.
If a sale or if it's a sale and to generate cash in a sale that's going to obviously help our <unk>.
Our process for determining how much runway, we have to you know get get the detection business up and running or keep running them.
Follow through on everything that Dana started with.
So are.
I think from a from a margin standpoint I.
I think the detection margins are.
I guess I'll start Matt.
It's like around <unk>.
80%.
And you know I.
I think deserved margins or more.
30 or 40%.
You know for.
For.
Right.
So it's probably more like 85, and 40 would be the way to think of it.
And yes, so I think we're.
I think the hard the hard products, if you will that are.
Our.
Sure.
Lower margin than the service.
The software we are selling it to the detection side.
Okay. Okay, and then just did it in the assumptions.
Yeah, I was just going to say so the model. We have right now is very conservative. So it is actually not dependent on it.
Receiving an influx of cash for example from the <unk> sale that would be good news right and we would actually treat it a bit as you know an investment reserve and assuming we create some really compelling.
Oh I models from some of these areas as I mentioned that we could diversify into from a revenue standpoint than we'd want to be able to deploy right that cash to bring those additional revenue streams online. So so this is you know right now like I said we've made.
The cuts.
The cost reductions deep enough that we could be self sustaining right to get to this point rate of being cash flow positive and being profitable as we exit next year in the most conservative scenarios and then we've got work ahead of US over the course of the next few months to build out these business case options alter.
<unk> and see which ones we want to we want to dive into right and take on so and then we would be in a position at that point in time dig had been talking about you know the market opportunity you know what it could mean to actually grow the business hopefully even faster.
Okay understood. Thank you for taking the question Hey, welcome.
Thank you once again, everyone. If you have any questions or comments. Please press star then one on your phone.
Your next question is coming from Yale Jen from Laidlaw and company. Your line is live.
Uh huh.
Good afternoon, and thanks for taking the questions and congrats.
Okay.
<unk>.
Company right now.
Sure.
My first question is.
Based on our rough asked.
The detection of the therapy business take about 30% of the total revenue and I understand this.
In transportation for the detection, so the revenues a little bit lower.
But nevertheless, this seems to be a reason.
Reasonable large home eventually need to be filled and add more.
From detection to presumably to reach the profitability go but at the end of 2012 before so it was good.
A potential.
Aspect or particular area, you'll feel that.
Good.
The gross revenue much quicker.
Well.
Maybe comment.
Yes.
Yeah.
So I'll chime in with one area in particular that I think we're just beginning to I'll say maximize right or explore and then Dan I can pass it over to you I think the greatest near term opportunity, we have and it's based upon the great work that got accomplished in 2022 is really leveraging some of our new channel.
Partnerships. So I believe on the last earnings call right. The partnership that's in development was introduced with Rad partners. So that's an exciting partnership.
At the beginning to pick up speed in fact, I personally probably spend an hour or so each day with the team working through them details in terms of the architecture. The scaling are helping Rad partners think through how they're going to ramp up their business around it. So that's an exciting area of growth that we'll see come online here in 2023.
And then really began to take hold in 2024, so Dan I'm going to pass it over you. If there's any other comments you want to add.
No not not a ton.
Right.
Yes.
Yes.
The therapy business is about 29% of our 2022 revenue.
And.
And you know I guess the thinking.
At least on the path that is to explore strategic options is.
<unk>.
The two businesses arent as integrated as we might have originally envisioned in the past.
You're not going to lose a lot of <unk>.
Synergies by separating the two and then candidly it's just it's just.
You know, what Dana said, it's giving us more runway to two.
To sort of grow into this.
SaaS subscription model, a hopefully generating big.
Big Big Jacory check for for for.
For this business and.
And then that'd be really it's they were very focused on preserving cash and minimize minimum minimizing our losses and in cash and cash burn.
Okay great.
Helpful and maybe just one more.
More question here, which is the Google health.
If you have.
Yes.
Bill.
Or would that be more of the increased awareness.
A much greater a general public or are there sort of other aspects that could also involved.
You're generating.
<unk>.
Yeah. So I think you know just to also just to make sure. We're all clear right. So this is a it's a technology partnership right. So we're leveraging them and co developing technology with Google Google would not be like a channel partner from a sales perspective for us but to your point.
Obviously, Google has great brand awareness.
Oh, great processing power you know, we're actually seeing already the ways in which knowing the processing power. The lift it's gonna give them two operations at term turnaround time right for reading. These images is just is just fantastic shown as part of the work we're doing in exploring them.
The best way to deploy the technology with partners. For example, so I do think that the Google health relationship will be seen as you know risk mitigation for companies that are moving to cloud for the first time for this kind of technology and services I do think because of their brand awareness because of the work they already have.
And place around data security and privacy, that's gonna help again.
Hopefully shorten right to sell cycles. So I think like indirectly you're going to see that it's going to accelerate and help revenue, even though theyre not per se a sales channel for us.
Okay great.
Very helpful as well and thanks for taking the questions and congrats.
Thank you.
Yeah.
Thank you. Your next question is coming from Dave, particularly from JMP Securities. Your line is live.
Hi, good evening.
I Wonder if you might.
To be able to offer some color potentially on.
Specifically on detection.
Trends that you've seen.
Obviously, we're.
Pretty close to the end of the first quarter I know you don't want to probably give any guidance but.
Is there any color or any thoughts you could offer us in terms of.
You know what that trajectory would look like either in the first quarter or for the rest of the year.
Yeah.
So Dan I'm going to let you go first on this one as well.
Yeah well.
The I guess the elephant in the room is the subscription model.
And you know the.
When we first.
Rolled out this.
This path I think we.
We had sort of described it as sort of a somewhat it could be bumpy a bumpy ride it could.
It could be it could come in.
<unk>.
Big.
Waves over the over the rocks or it could just be little dribbles, and so far it's proven to be that way and so I think that's probably the way to think of the rest of the years, we have a big we have a really big push to them to sell subscription.
And our new head of sales has been pressing.
New incentive scheme.
Program with our sales force that encourages the sale of subscriptions is exploring certain.
Sort of term contracts with sort of guaranteed contracts for for longer term periods.
That would really provide a sort of a more protected revenue stream together with the subscription model, which we are very excited about.
So I think so you know look looking into the future I think we're definitely going to be pushing up against the you know the revenue the accounting revenue point, because it'll it'll take time to build the base of the subscription base before we can start to really see.
You know are really again persistent cash generating.
Element of the business.
Stan stand ready for the next wave of Oh.
Adventures.
Got it and then since you mentioned it I.
I Wonder if you could give us any comment on.
Specifically again, just the detection side because that would remain in good.
Any comment on sales force size turnover anything that's happened since you announced it.
Restructuring would be helpful. Thank you.
Yeah.
So I can chip in here. So we did not do reductions on the sales force side. So we still have the same team as we mentioned we just brought in a new leader for our commercial also same team from an O U S perspective. So that teams remained stable you know the one change I think we made that's actually going to help them.
Is creating this end to end customer success function for both pre and post sales says that again, they're getting actually getting access to a bigger talent pool that can be available to help them you know either putting together proposals for for customers or being at the ready to offer the post sale services and support.
Meaning.
So.
Thanks.
Mhm.
Yeah.
Thank you. Your next question is coming from Frank Bridgeville from Oppenheimer.
Your line is live.
Alright, Thanks for taking my questions just I guess my first one is big axis on this profitability.
Goal here I'm just wondering if you know obviously transitioning to a subscription model is good it's going to take a hit in terms of the on the short term for a influx just based on how software models work or SaaS models work, but so I was just wondering why such a focus on profitability in the short term.
Through this transition of business here.
Yeah.
Oh, so I'll chime in and then I'm going to pass it to Dan So.
Smiling right because you know I think the board would like to see it happen even faster. So I used to love that comment of that question I you know I think so.
With the changes we've made so far right. So with the cost restructuring with really looking at you know our revenue stream from I'll say selling what we have right, including the move to cloud by the end of the year that is the <unk>.
The fastest if you will they're we're able right two to reach profitability and we felt like actually that was being.
I'm pretty prudent so we didn't cut so far that we couldn't continue to maintain investment key initiatives. However, as we're exploring these new revenue opportunities right the way in which we could diversify we may very well come back and we would you know go to our board first and say here's a business plan proposal right.
If we can invest ask what do you think that this could be the return on that investment it might push out right the path to profitability.
But we don't know that yet until we complete that diligence and that's the work that we want a complete between now and third quarter. So again, yeah. We took a really conservative approach just building our base case model on our current set of detection solutions.
Taking into consideration moving to the cloud taking into consideration how the leverage some of these key partnerships like with so less mammography with Grad partners.
And we felt like we could get there you know next year, So which is you know part of what I think as well. So you know from your perspective, and having confidence in the business and our ability to execute them. We felt like that was you know I'd say responsible right in a sustainable approach to looking at our business plan going forward.
Dan is there anything that you want to.
Chime in on the profitability side.
You said a lot of what I would say I think.
The I guess the thing that comes to mind is just sort of this.
Notion of business business planning is what we're talking about and that's the core of what this is all about and so you know when you're when you're planning for our business. There is always a treasury person in the room, who.
It was probably a bit of a skunk of the lawn party because.
You know.
There's a there's a motivation on one side to run run to SaaS is as fast as possible.
But of course, if you're not if you're not bringing in and some of the revenues that were you know they.
There were you know were pretty persistent before you know and and we were getting upfront revenue on perpetual sales, we have certain customers that.
Probably you're never going to go to Sam maybe they will.
Overseas.
I think.
It just needs to be a balance between the pace to subscription and you know it keeps.
Keeping some of the perpetual for a while and then you know.
Do you have the right runway to two that is cash.
Do you have enough cash to kind of hold yourself out there and just take your time and you know we'll get to the cloud completed at some point here in the near term and.
It will start to change the whole dynamic of how the business planning evolved but in the near term, but it needs to be a balance between I guess the person we're in the treasury and the people who want to go to subscription as fast as possible hope that makes sense.
Yeah.
Yes, that's it for me thank you.
Thanks.
Thank you. Your next question is coming from Frank <unk> from Lake Street Capital market. Your line is live.
Hey, Thanks for taking my questions I wanted to start with one for you Dan on some of your past experiences just curious if you could elaborate on how you may elect to leverage some of that experience and some of those previous relationships into patient advocacy programs or anything of that nature that could help and better promoting profound.
Yeah. So.
I'll speak about cumin in particular, so I know a lot of the work we did it come in was focused on ensuring people were aware of the risk right. In fact, we ran campaigns that were know your history know your risk a lot of the ways in which we were able to help people determine their risk were very traditional mall.
Models right family Health history looking at other key indicators are markers.
I would say it was felt a little bit more like a survey right or kind of a Q&A kind of approach and then looking at just kind of correlating common factor. So the other important thing about Coleman is you know youre looking at an organization. That's mobilizing you know two and a half million women on an annual basis and so.
So they are also working with large corporate partners with women's Health initiative, so companies like Salesforce or Disney you know kind of that whole spectrum. So I think from I catch perspective, you know, we would be best served by leveraging and going direct to patient through organizations.
Like a common like a V Crs, which is breast cancer Research Foundation like a health at her Hugh.
American cancer Society, because those organizations are looking for additional programs and tools right that they can can create you know make sure that their their patient base is aware of and then provide ways for them to access it.
You know most of the I'll call. It cancer advocacy organizations also have a lot of financial aid program. So they help women get access to the care they need right to screenings, especially if.
For example.
There are you know they may not have the right health and health benefits right. So they may be that under insured or the non insured. So there are ways in which we could work with them to ensure they get access right to readings. The kind that you know our products right. The profound suite can offer so I'm excited about it because they think that.
Maybe this just kind of a bit of a gap in knowledge about each other and how we could help each other and I you know put those kinds of programs together in place at home and so I think you know, it's going to be a natural opportunity for ICANN to leverage.
Okay. That's good color and then just for my my second one I was just curious if you could give an update on the competitive landscape.
Anything out there, that's new or different I mean previous assumption was I cant had a pretty good lead on everybody and with it continuously ingesting more data should continue to predominantly but mhm ads growth has slowed a little bit and just curious if that dynamic has changed in some other players have had the opportunity to improve their position.
Yeah. So I think it is a very competitive landscape.
Some of the competition is.
I would say not necessarily better in terms of efficiency and accuracy, but may be better at you know pointing out some of the other benefits of the product right. So we've got to make sure. We're doing a good job of continuing to socialize in evangelize about the reasons why why this is important and why.
You know why you should be focusing on it why it should be a top component of your evaluation criteria. We havent you know and again you know keeping in mind you know onboard here for a few weeks more active when I stepped into the executive chair role in January but there arent necessarily new competitors.
It's on our radar screen, it's just everybody's learning about each other's you know approach to selling them, you know competitive strengths or weaknesses areas to spread you know fud fear uncertainty and doubt. So you know people get better competitors right as well as ourselves get better and better at that I will say, our new commercial cell.
Lead has a really great approach to keeping tabs on the competition and equipping the team to effectively sell against them. So he also is just kind of within his first 90 days, but in just a short period of time, he and I have overlap you know I've been a part of multiple conversations with the sales team equipping them.
Out in the field right to address you know concerns or point counterpoint. So I think we're going to get better better right and being competitive in the sales process and really helping to bring what we know is that technology superiority of our product right to light and making it easy to understand.
Okay. That's good color thanks for taking the questions mhm.
Thank you that concludes our Q&A session I will now hand, the conference back to Dana Brown, President and CEO of Ikat for closing remarks. Please go ahead.
Thank you operator.
In conclusion, we made significant strides in 2022 with our transition to a cloud based SaaS platform and we plan to complete that technology upgrade late this year.
Demand for our technology continues to be strong the evidence supporting it just continuing to grow and we are solidifying new and strategic partnerships that will ensure our continued success.
I'm optimistic about the company and its future and I'm confident we're taking the right steps to ensure continued growth and create additional shareholder value.
And just to reiterate I'm focused on creating runway preserving cash and building a defensible and competitive long term strategy that diversifies, our revenue stream and smooth out our customer concentration I am looking forward to updating you next quarter as we continued to get clarity on their strategy enhance our team and drive.
Towards increase shareholder value.
Do you and have a great evening.
Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day.
Thank you for your participation.