Q1 2024 ZeroFox Holdings Inc. Earnings Call

Thank you for standing by and welcome to the zero Fox fiscal first quarter 2024 results conference call at the time all participants are in a list and only mode after the speakers presentation. There will be a question and answer session.

Thanks, operator. Good morning and thank you for joining us today to review Zero Fosters fiscal first quarter 2024 financial results.

With me on the call today are Foster, our founder, Chief Executive Officer and Chairman, and Tim Bender, RCFO.

By now, everyone should have access to our earnings announcement. This announcement, as well as our supplemental financial information, may be found on our Investor Relations website.

Before we begin, let me remind you that we will make forward-looking statements during the course of this call, including statements related to our anticipated financial results, growth opportunities in external cybersecurity, our progress to achieving profitability, and expected benefits from our acquisitions of IDX and Looking Glass.

These statements are not guaranteed to future performance, but rather are subject to a variety of risks and uncertainties.

Our actual results could differ materially from expectations reflected in any forward-looking statements.

Forward-looking statements made today speak only to our expectations as of today, and we undertake no obligation to publicly update or revise them.

for discussion of the material risks and other important factors that could affect our actual results.

Please refer to the risk factor sections of our SEC filings available on the SEC's EDGAR system and our website, as well as the risks and other important factors discussed today during its release.

Additionally, non-GAAP financial measures will be discussed on this conference call. Please refer to the tables in our earnings release and the investor relations portion of our website for a reconciliation of these measures to their most directly comparable GAAP financial measure. With that, I'd like to turn the call over to our CEO Foster.

Thanks, Todd. Good morning, everyone. I am really excited to speak to you today. Zero Fox got off to a strong start to the fiscal year with Q1 revenue exceeding the high end of our guidance range.

I'm proud of what our team was able to accomplish, given the continued uncertain macro environment, and a very busy quarter for zero-box.

In Q1, we hosted our company and sales kickoffs, announced an exciting new partnership with Google Cloud, launched our large language model capabilities at the RSA Security Conference, and we completed our acquisition of LookingGlass. Today I'm going to provide you with summaries on a few key areas of our performance.

continuing vision.

To begin, we'll provide an overview of our Q1 results and the continued demand we see for our external cybersecurity platform.

Second, we'll walk through some key customer wins that demonstrate continued success adding large enterprise customers and cross-selling are multiple platform pillars.

And third, I'll talk about our partnership with Google Cloud and our recent acquisition of Looking Glass, both of which strengthen our platform capabilities. Through ?öylePhoto update?

What a very nice start to the year. We ended the quarter with ARR of $178 million, which represents 24% year-over-year growth.

We also saw another record quarter for total subscription customers, where we ended the quarter with 1,251 recurring customers. We also saw another record quarter for total subscription customers, where we ended the quarter with 1,251 recurring customers.

And lastly, we saw continued strength in our large deals with 31% year-over-year growth and subscription customers with ARR greater than $100,000 per year. And we saw continued strength in our large deals with 31% year-over-year growth and subscription customers with ARR greater than $100,000 per year.

Overall, we continue to see healthy demand for our external cyber security platform from both new and existing customers.

The Q1 demand environment was consistent with prior quarters and thus far is remaining more stable in the macro environment.

We attribute our experience to this resiliency to that of the industry, the emerging nature of the external cybersecurity category and our go-to-market execution.

The external cybersecurity challenge for organizations around the world continues to increase due to the attack specification and volume we are seeing. The external cybersecurity challenge for organizations around the world continues to increase due to the attack specification and volume we are seeing.

Specifically, we see that organizations are struggling with the sheer fact that the external attack service for every company continues to increase.

These organizations have limited visibility into its attack service, and it's not protected by traditional security controls.

And finally, threats to this external attack surface, including fishing attacks, impersonations, and account takeovers are increasing in automation, and thus, again, like I said, overall, it's act volume.

The result is that organizations are increasing investment and external cybersecurity solutions with a clear preference for a platform-based approach.

This aligns well with the vision driving our ZeroFox external cybers? platform, which fuses together AI-powered analysis, advanced analytics, intelligence, and automated protection to solve the external cyber challenges.

The dawn of artificial intelligence for cybersecurity and the masses is finally here.

AI has been a critical component of our platform at 0FoxFence Inception.

wherever we'll bust intellectual property and innovation program and over 54 patents already issued today.

For example, we have long-used capabilities like natural language processing and computer vision to detect sophisticated threats.

A couple of examples of using MLP to identify written languages and sentiment, or leveraging advanced AI and computer vision to identify hidden threats and high-rich media content within images and videos.

There is no doubt that recent advancements in generative AI and large language models will have significant impacts on the cybersecurity industry.

Extending upon our program and this trend, we launched Fox CPT in Q1, which is a material advancement for our program, like I said, where we have begun to deploy a new large language model into our platform.

FOXGPT optimizes security analysts workflows by accelerating the analysis and summarization of threat intelligence across large data sets.

For defenders, it means that leveraging zero-box AI to detect and disrupt threats becomes even more critical and it saves them time. Over theälly edit on-box AI every ???.

AI will be key to increasing the efficiency of security operations and reducing the time to respond to attacks and with automation the time to respond continues to shrink.

For adversaries, it makes life easier for them. They now can develop more sophisticated threats in areas like fishing, fraud, social engineering, and spam.

Quite honestly, Chat GPT makes it much easier to create a written attack.

Like we have always done, we will track our adversaries so that we can continue to fight back on behalf of our customers.

Now I'd like to highlight a couple key customer wins that we believe validate the strength of our platform and market leadership positions. here lighting positions.

One of these wins was a six-figure deal with a Fortune 500 media company.

This customer was looking to protect hundreds of brands, social media accounts, and executives from a personations fraud, scams, and piracy. They also invested in zero foxes, continuous dark web monitoring, and on-demand investigation products. This customer was looking to protect hundreds of brands, and on-demand investigation products.

The customers selected zero-fox because of our comprehensive platform capabilities across multiple pillars, including protection and intelligence, and our ability to quickly operationalize our platform.

This was competitive when we displaced a legacy, digital risk protection managed service provider.

Another key win was a six-figure deal with a Fortune 500 real estate company.

This customer wanted actionable threat intelligence to seamlessly integrate into their environment, given the relentless external attacks they were experiencing, and they invested in protection across all of our platform pillars. Two quarters ago, we launched our strategic zero-fox on-demand response platform capabilities.

which includes brief response, incident response, and on-demand intelligence capabilities. In Q1, we experienced strong demand across all of these areas, and we were actively engaged with approximately 1200 on-demand customers. We were actively engaged in a very strong demand across all of these areas, and we were actively engaged in a very strong demand across all of these areas.

Additionally, we had multiple large response fields that were more heavily weighted towards the end of the quarter.

While the timing of these deals slightly impacted our Q1 services revenue as Tim will discuss in more detail shortly, we believe we are set up for a strong response revenue performance in Q2.

Furthermore, the overall demand for these capabilities continues to give us confidence of our fiscal year guidance.

In Q1, we made further progress driving synergies between ZeroFox Response and our other platform pillars.

For example, while engaged with the Global Metal Code Technology Company on a platform opportunity, the customer had an urgent requirement for on-demand incident response and intelligence services.

We are able to demonstrate immediate value to the customer with your box response, which serves as a positive influencer and the customer signing a fixed figure platform deal to protect multiple brands and digital assets. We are able to demonstrate the positive influencer and the customer signing a fixed figure platform deal to protect multiple brands and digital assets.

While engaged with a large restaurant company for a data breach response, we were also able to cross-deliver zero-fox protection and disruption.

And last quarter, we talked about a Fortune 50 Media and Technology company that engaged with Zero Fox Response for the first time over their legacy incumbent provider. This was a happy?™ directional press conference and Singapore could come to China very soon.

In Q1, we signed a six figure on demand breach response deal with this customer, which represented a seven X increase and there's zero Fox response investment, quarter over quarter. Overall, I am pleased with the meaningful progress of our expanding platform and our ability to become a true cybersecurity ally for our customers.

Our customers are looking for opportunities to consolidate on our platform. Let's shift our attention to two recent announcements we made in Q1.

First, our partnership with Google Cloud, and second, the acquisition of Looking Glass.

Both of these expand our platform capabilities and increase our values to customers.

And April , we announced our partnership with Google Cloud with ZeroFox, was the first enterprise partner to integrate our external protection and intelligence capabilities with the Google Cloud Web Risk Service.

The service protects and users across five billion devices from malicious URLs and targeted facts. The service protects and users across five billion devices from malicious URLs and targeted facts.

This partnership further strengthens our market-leading disruption capabilities and improves our relationship with Google.

We also announced our acquisition of Looking Glass, a leader in external attack surface management and vulnerability intelligence.

This acquisition accelerates our platform, roadmap, and external attack service management, an area that we believe is strategic to external cybersecurity. And loud cheers.

But the last also provides us with powerful of pack surface technology, including its comprehensive internet, asset, and data lake.

Integrating these capabilities into our platform will accelerate our ability to provide complete visibility across all internet-facing assets, regardless of type or location. Integrating these capabilities into our platform will accelerate our ability to provide complete visibility across all internet-facing assets, regardless of type or location.

Looking glasses technology is battle tested and is being used by very large, sophisticated organizations, including strategic public sector customers. The technology is being used by very large, sophisticated organizations, including strategic public sector customers.

We believe that strengthening our tax service management capabilities will increase the strategic value of our platform and increase our growth opportunities with existing customers.

This acquisition also increases our tan.

IDC has estimated that quickly growing EASM market will hit nearly one billion in revenue by 2026.

Additionally, as acquisition provides us with other benefits, including, but not limited to, strengthening and expanding our public sector opportunity, increasing the scale of our revenue, and we believe it will positively impact our path of profitability and cash flow break even. We are making rapid progress with the integration I look forward to providing.

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We will also continue to optimize our infrastructure to support our long-term growth while laying the foundation to drive operational efficiencies and leverage.

And lastly, we'll deliver more meaningful synergies across our platform, including improving our overall cross-selling efforts.

I want to thank all of our Foxes around the world for their energy, passion, and commitment as we continue to execute on our initiatives and the opportunity in front of us.

In short, Q1 was a strong start to the year and we remain very optimistic about the next few quarters. With that, I'd like to turn the call over to our CFO and vendor.

Thanks, Foster. As Foster mentioned, Zerafox started fiscal year 24 on a positive note.

Our Q1 results include nine days of operations from looking glass as the acquisition closed on April 21st.

With the exceptional revenue and unless otherwise stated, all financial results we will discuss today are non- GAAP financial measures.

Reconciliation between our gap and non-gap results can be found in our earnings release. Reconciliation between our gap and non-gap results can be found in our earnings release.

For Q1, ZeraFox reported revenue of $45.5 million.

including approximately 500,000 of revenue from looking glass. Subscription revenue was 18.2 million and included the 500,000 of revenue from looking glass.

Services revenue was 27.3 million, consisting of 20.7 million of recurring revenue from our strategic government customer.

and 6.6 million from our on-demand response services. In the past calls, we have discussed the potential volatility of our on-demand response services. This ???iner got a three-?ce-myth. So what you going?

As Foster mentioned, we experienced this volatility in Q1 as we closed a multi-seven figure response deal at the end of the quarter.

While the timing of deals negatively impacted one-demand response revenue, 2-1,

Q2's services revenue is positioned to achieve significant growth.

As of April 30th, our annual recurring revenue was 178 million.

which included approximately 19 million of ARR from looking glass. Zerofox ARR consists of our platform subscriptions.

A small amount of recurring one-demand services.

and 83 million from our strategic government contract.

We ended the quarter with a record high, 1,251 subscription customers.

We continue to see significant opportunities of both land, new customers, and expand platform capabilities and response services within our existing customer base. We continue to see significant opportunities of both land, new customers, and expand platform capabilities.

As Foster mentioned, in Q1, we saw continued success winning larger deals.

Subscription customers with AR are greater than $100,000 increased 31% year over year.

Turning the gross margin. For the first quarter, subscription gross margin was 72%.

As expected, subscription gross margin decreased slightly from last quarter's 73% level due to the timing of our investments.

which tend to be more heavily weighted towards the first half of our fiscal year. Given continued investments we will making Q2, we would expect subscription gross margin to remain constant and then increase in the second half of fiscal year 24. While there is a potential for quarter to quarter volatility,

Our goal is to deliver consistent, moderate, subscription gross margin improvement on an annual basis, as we have done for several years.

Services gross margin was 24% compared to 23% in Q423. The services gross margin increase was driven by the higher mix of revenue attributable to the platform-based component of response services.

For Q2, we expect services gross margin to decline. Three to 400 basis points.

from Q1 levels due to a higher mix of notification and enrollment services, a trivial to our large response engagements. Thank you very much.

Total gross margin was 43% compared to 41% last quarter.

The improvement in total gross margin was driven by the higher mix of subscription revenue and the services gross margin increase.

As we look at Q2, we will expect total gross margin to decline as a result of the expected sequential decline in services gross margin.

We continue to see opportunities to improve our overall gross margins of scale our business, drive greater cost efficiencies.

and our higher margin subscription revenue becomes a greater portion of our overall revenue mix.

Turning to operating expenses.

Total operating expenses were 28.9 in the quarter, including approximately 400,000 of expenses from looking class.

The increase in expenses was primarily driven by continued investments in sales and marketing and research and development.

as well as expected increases in GNA due to the timing of fees for our annual audit, residual D-SPAC-related filing requirements, and transaction costs related to the looking glass acquisition. Our loss from operations was 8.4 million.

Looking at the balance sheet and cash flow, we ended the quarter with $28 million in cash.

46 million in accounts receivable, 66 million in total deferred revenue, and 188 million in total outstanding debt.

Cash flow use and operations was 18 million. Our Q1 cash flow was impacted by the timing of collections from our large government customer and transaction calls related to the acquisition of looking glass.

We expect hash flow to significantly rebound in Q2, and the key takeaway here is that our overall cash flow expectations for the first half of fiscal year 24 are in line with our plan.

Now that's where I'll look. Our guidance reflects our Q1 performance and incorporates the operations of looking glass. Our outlook also assumes no material changes in the immacro environment.

Demand for our external cybersecurity platform remains consistent and anticipates volatility within our services business. Our outlet also incorporates my prior commentary regarding the services gross margin for Q2. For Q2 official year 24, we currently expect revenue to be in the range of 51.5 million to 52.5 million.

and non-GAAP loss from operations to be in the range of 8.3 million to 7.7 million.

For the fiscal year 24, we currently expect revenue to be in the range of $198 million to $202 million.

and non-gap loss from operations to be in the range of 28 million to 26 million. We continue to focus on the path to profitability.

We expect free cash flow for the remainder of the fiscal year to be near break even. Additionally, we now expect that we will achieve free cash flow on the sustained basis in the second half of the fiscal year 25.

With that, we'd like to take your questions. Operator.

To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster.

The first question comes from Joseph Gallo with Jeffries. Your line is open.

Hey guys, thanks for the question. I might have missed it, but did Tim, did you give the inorganic impacts for revenue to guidance? I know you know it at the 500K of revenue in the quarter from looking last, but just anything you can help with there. And then you also noted some services linearity.

Was there any subscription linearity in the quarter and then just anything as it relates to Macro and maybe incremental Macro that you might have seen versus for two? I heard three questions. So I think the first one was if we carved out the looking glass piece.

We expect revenue in the 14 to 15 million range for the full year. And then as it relates to a subscription linearity, now that's a pretty costly we saw consistent growth as we've seen in previous scores, so it didn't have any of the walkiness that we saw in the services revenue. And then from a macro standpoint, I'll have foster jump in on this one.

Yeah, Joe, I think from an aqua standpoint, we saw maybe a little bit more study of an environment than we were expecting. We saw consistent and kind of healthy demand off of Q4 in Europe , for example. And I think we continue to take a very conservative outlook.

and some of the emerging markets of the world. And as of today continue to be surprised and the resiliency we're seeing from some of those emerging markets.

Could also just be lost more numbers, which we appreciate. Yep, and then maybe for you Foster, just as it relates to AI congrats on Fox GBT, you seem better positioned than most to kind of potentially monetize AI. I guess from your view, is AI table stakes for the cybersecurity industry or?

It maybe just talk through, is there a monetization path of Fox GBT and how we should think about those model implications?

We'll look, I appreciate the question. Maybe a couple thoughts. Zero boxes got a pretty robust intellectual property and innovation program. We have some day one. We've got 54 patents already issued in our name today with more than a dozen in the works. And so I think for some folks,

that have taken products to market and don't have a real intellectual property program. I think this is gonna be a tough lift for them. The large language models, generative AI, which everybody's talking about, they're not the easiest models today to apply to big data sets. I think folks that don't have backgrounds and data science.

and maybe even advanced algorithmic computing in their platforms, they're gonna struggle with this. And I don't know, we've had kind of a program in place for a long time. I mentioned it in our PR where we've used computer vision, NLP and other types of AI in our platform for several years now. So I think this is a national extension of what we've been doing. And to go back to maybe your prefix there, I do believe that AI as a, what I'd call just a,

core feature sets will be required in cybersecurity for years to come. It's just where we're going and the and the platforms that don't figure it out will be at a meaningful disadvantage and the platforms that have the ability to invest and are capitalized to invest in it. We'll see I think in a real acceleration and it'll probably take

One to two years to get real separation from those that have and those that can't. Makes the time to sound thanks guys and congrats on closing the deal. Hey, thanks a lot Joe.

Please stand by for the next question. The next question comes from Jonathan Rook Havver with Canter. Your line is open.

Yeah, hey guys, congrats on the drawing results overall. And, good morning, if you could just dig down a bit more into the, the, the straight with the plus 100k customers, just talk about that success in terms of, you know, the go to market, the initial land, what are the specific products driving that success in this?

as an organization in Q3 of last year. And so, you know, as with any kind of new strategy, one that launches additional products or capabilities, it just takes a little bit of time. And I think what we're seeing here is we are seeing really continued nice adoption of multiple capabilities within the Zero Fox platform. And I think that is increasing that our large customer spend.

I think the other part which I'd love to take a full credit for, but can't and earnest, is that the size of the problem that we're going after is predicating some real additional spend. If you think about the size of the problem and the external cyber escape and the fact that still most enterprise organizations don't have full visibility of what their external attacks are. It looks like.

and without visibility, they can't control or protect it. It's really requiring them to spend maybe a little bit ahead of what they thought, and that's why we're seeing some really nice growth in our large customers. I think the last thing I put in there is, we're seeing more and more consolidation opportunities with our customers.

Maybe it's a little bit given the macro environment. Maybe it's given the maturity of our platform and company. You know, we've hit size and scale where the only dedicated external cybersecurity company to be public right now. And so I think our customers are getting more confidence in our abilities and they've seen it firsthand over the last few years, where they feel more comfortable investing at a higher rate than maybe they did when we were start up in a still in high growth mode.

Yeah, yeah, I guess as a fall. Yeah, I've been to Tim just adding them to it. We saw those 100 day customers come from all industries and sectors too. So what's nice is, you know, we still have a strength in finance services, but we're saying, you know, large customer all across all industries and verticals. So that's further, you know, six that that we're saying in the large customer wins.

Okay, so that's great. And that just, you know, in terms of the consumption trend across the platform and the Fort Key pillars, are you seeing that success within, you know, a discrete pillar specifically because, you know, protection has always been the strongest one. Is that where you're seeing the...

of these kind of land and protection and expand into our intelligence, disruption, and response pillars. I think that's the motion we set up for this year and we're seeing some success there.

Yep, okay. And just that, the last question for me, just to follow up to the previous question on AI, it just seems to me that AI enabled fraud and the consumerization of the ability of the adversaries to get involved in the game, if you wanna call it that, but.

it just fundamentally changes the at the enterprise attack service even more than you know what we see today and it just seems to me that external security market is a category just becomes

even more strategic. I'm just kind of curious, are you seeing that yet in terms of adversarial tactics? And what do you thought on that broad issue?

We are. I mean, I think one of the terms that we continue to kind of advise our customers on is that it is beyond the human eye in terms of visibility of determining attack versus real for the most part now. And maybe I give you two concrete examples to try to drive this home. One, like...

Deepfake's at the point now where a deepfake will look as good as a real video. And so an automated created deepfake video of an executive or an individual will look, feel, and for all intent purpose, be as good as a real video. And so it's really hard to distinguish that. And then second, you know.

It's simple as it may sound, Chatchy BT will, will I think change the security landscape where there'll be less emphasis on training over time and more emphasis back on protection. And we've seen cycles, at least I've seen cycles in the last 20 years where training's been in vogue and then protections in vogue and then trainings in vogue. Well, Chatchy BT now can allow anybody in the world to create a perfect spiritual.

very acute and very targeted attacks. I think we are set up really well to execute upon this opportunity.

Please stand by for our next question.

Next question comes from Mark. Wagner with Steve. Your line is open.

Great, thank you. This is Mark on for Brad Rebek. I just wanted to ask about the IDX cross sales. I know you guys had your sales kick off in late March. So it's kind of early results into seeing how that's kicking off. And then also obviously looking glass and IDX.

both have a public sector component. So I wanted to see what kind of energy you're expecting there. And as Echros, a little bit of an outlook in terms of the public sector. Thank you. Yeah, good morning Mark. Thanks. A couple thoughts, and I'll address them in order.

So one was on kind of an IDX cross zone how we're doing. Thanks for reminding the crowd that we did have our sales kickoff here in Q1. And so part of our synergies that we communicated last time was that we were going to have our sales kickoff in Q1. We did that. We also had a company kickoff. And that was really setting the foundation and rhythm for us to drive those cross zones. And we started to see some really nice progress. I think we mentioned.

in our earnings call that there is some really nice deals that we saw come over. One in particular was a deal that we talked about last earnings call, where it was a starter deal, end-of-response pillar, primarily from the IDX side of the house, plus some of the new organic capabilities we're building into that pillar now. And quarter over quarter, this Fortune 500 customer.

increased their spend with us on the response out of the house, 7x. So we were very happy with that. And this customer has been a zero fox customer for over a half a decade. So I think that's the type of motion that we're starting to see, where the awareness that we're driving into our customer base is leading to revenue opportunities. I would also say that this awareness will be

Redneck over quarters to come. I don't expect huge spikes in

They certainly have in general longer contract terms and so that's the risk of war model without there We really like the customers that they brought to the table They've been long term healthy customers and they're using it at the platform at scale And that'll give us some really interesting opportunities. I don't expect any near term big wins in the

The public sector's energy side of the house. It takes time to go through those motions, but we do have a really nice, healthy pipeline there. Great, thank you. As a reminder to ask a question, please press store 11 on your telephone. Please stand by for the next question.

The next question comes from Epoly with Cantor. Your line is now open. Hello, good morning, foster and Tim. And I also want to extend my congratulations on the strong start with this good 24. So my question is more on the pipeline generation.

We know you have the sales kickoff, you know, the past quarter. What's wondering like, foster 10, can you comment on the pipeline outlook, you know, right now as compared to like, let's say six months ago or 12 months ago, you know, any any commentary positive, negative, the same.

I mean, I'll give you some kind of qualitative commentaries. Our pipeline today is bigger than it's ever been in a company history. Why don't we start there? You know, I think, as I mentioned, the very first question.

We continue to be very calculated and conservative and our growth planning this year, given an uncertain macro. But I think in general, in the last two quarters, we've been slightly surprised about some of the resiliency and those emerging markets in particular. I think we've done a nice job here in North America where we've seen the markets kind of remain.

optimistically steady for us and our sector and overseas. We've still seen some healthy demand. And I think there's just kind of mixed signals we continue to watch where there's economic uncertainty in particular industries and the sector, especially in countries within Eastern and Western Europe . But at the same time, I think there's a heightened threat environment over there.

And so people are looking at security differently than maybe some of the other areas in productivity or IT where there's maybe an option to push. We're finding opportunities where people aren't using that option to push. They're continuing with their plans.

Okay, and then for the as a follow, I know like looking glass is included in the guidance, like on the other guidance, I was wondering on the Google Cloud opportunity, when do you think monetization will take place in this? It looks next case, five billion devices, and people use the billion browser, right?

So, wanted to get you know how it was going back in.

We're seeing increased opportunities at some of our larger customers and partners, given those capabilities right now. When we announced our integration kind of being first the market with Google Cloud, we're pretty excited. We saw some nice traction here in Q1 about interest in demand. So I would expect us to.

have more announcements in the quarters to come. But I would say in general, with most enterprise quality deals, and certainly what we're doing with Google is an enterprise scale application, it would take a little bit of time to kind of get into the full pipe and turn into revenue.

I call it the zero-fox internal monitoring here is road map to revenue. So we've got it off the road map and we'll work on the revenue sector. Thanks for that, Foster. And one last one for Tim is on the financing refresher, I know $28,000 in cash, $4,6 million AR, $6,8, and defer revenue. What's wondering if you could raise the rates, give us a refresher on the financing fees. I know you mentioned.

the capital necessary to get to that sustained cash flow in the latter part of next year and feel confident in our ability to get there.

Okay, thank you gentlemen, and we look forward to hosting you next Wednesday at our CACO Software Conference. Have a good day. See you next week, Guy. I show no further questions at this time. I would now like to turn the call back to Foster for closing remarks.

Thank you operator. As you can tell, we are excited about the strong start for the fiscal year and the opportunity in front of us. We are looking forward to seeing some of you today at People's CSI Conference and next week at the Cancer Tech Conference in New York. So again, good morning and thank you everybody for joining us today.

Cheers. This concludes today's conference call. Thank you for participating. You may now disconnect.

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