Q2 2023 Innodata Inc Earnings Call

Good afternoon, ladies and gentlemen, and thank you for your patience. Your conference will begin shortly once again. Thank you for your patience the conference will begin shortly.

[music].

Good day, everyone and welcome to the <unk> second quarter 2023 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. If you have any questions or comments. During the presentation. You May press star one on your phone to enter the question queue at any time.

It is now my pleasure to turn the floor over to your host Amy acres ma'am the floor is yours.

Thank you Matthew good afternoon, everyone. Thank you for joining us today, our speakers today are Jack Applecart, CERP and no data Amyris Nally interim CFO , we'll hear from Jack first who will provide perspective about the business and then the rest will follow with a review of our raised.

For the second quarter, well then take your questions first let me qualify the forward looking statements that are made during the call. These statements are being made pursuant to the safe Harbor provisions of section 21 E.

Of the Securities Exchange Act 1934, as amended and section 27, a of the Securities Act of 1933 as amended forward looking statements include without limitation any statement that may predict forecast indicate or imply future results or.

<unk> or achievements. These statements are based on management's current expectations assumptions and estimates and are subject to a number of risks and uncertainties, including without limitation, the expected or potential effects of the novel Coronavirus pandemic and the response to the government's agenda.

Global population, our customers and the company there are two impacts resulting from the rapidly evolving conflict between Russia, and Ukraine investments in March language model, our contracts may be terminated by customers projected or committed volumes of work may not materialize pipeline opportunities.

Customer discussions, which may not materialize into work our expected volumes of work except in some of our new capabilities continuing digital data solutions segment reliance on project based work and the primarily at will nature of such contracts and the ability of these customers to reduce delay.

Or cancel projects the likelihood of continued development of the market, particularly new and emerging markets that our services and solutions support continuing digital data solutions segment revenue concentration in a limited number of customers potential in the building to replace projects that are completed.

Canceled or reduced our dependency on content providers in our agility segment, a continued downturn in or depressed market conditions changes in external market factors, the ability and willingness of our customers and prospective customers to execute business plans that give rise to requirements for.

Our services and solutions difficulty in integrating and deriving synergies from acquisitions joint ventures, and strategic investments potential undiscovered liabilities of companies and businesses that we may acquire potential impairment of the carrying value of goodwill and other acquired intangible at.

That's of companies and businesses that we acquire changing changes in our business for growth strategy, the emergence of new or growth in existing competitors. Our use of in reliance on information technology systems, including potential security breaches and cyber attacks privacy breach.

As our data breaches that resulted in the unauthorized disclosure of consumer customers employee or company information, our service interruptions and various other competitive and technological factors and such other risks and uncertainties indicated from time to time in our filings with the six.

Curious and exchange Commission, including our most recent reports on forms 10-K, 10-Q, and 8-K and any amendments thereto.

It takes no obligation to update forward looking information or to announce revisions to any forward looking statements, except as required by the federal securities laws and actual results could differ materially from our current expectations. Thank you I will now turn the call over to Jack Amy. Thank you.

Good afternoon, and thank you for joining our call today.

I'm tremendously excited to have announced today that we landed yet another of the big five global Tech companies as a new customer to help it trade in scale generative AI and large language models.

These of course are the technologies behind Chad CPT and stable diffusion technology instead of course, the world by storm and set off what we believe will be the next triple Lucia and computer technology.

We expect our formal agreement with this new customer to be signed tomorrow.

With today's deal announcement, we are proud to say that we have one each and every one of the potentially transformative pipeline deals we spoke about last quarter.

And as a result of various wins.

We are poised to support large language model development for four out of five largest tech companies in the world.

These wins, including the deal we're announcing today.

It will come in just the last eight weeks. So they are not yet reflected in our financial results.

We believe that these wins are potentially transformative for our company.

Moreover, we believe that we are in the very early stages of exploiting a market opportunity, which itself is in its very early stages and for which is our last eight weeks of wins demonstrate we believe we are particularly well suited.

In today's call I'm going to provide some updates and additional perspective around today's announcement and the other deal announcements. We made in the last eight weeks I will then discuss the opportunity landscape, we see forming around general <unk> AI technology, and how we intend to exploit it and lastly, I'll review, our Q2 result.

<unk> and provide some forward guidance.

Yes.

Let's start with the dealer in the last eight weeks, we made four deal announcements, including the deal we announced today.

Two of the deals or with an existing customer and tour with two new customers all of whom are among the top five global technology companies in the world.

We review each of these starting with today's announcement and then working backwards reverse chronological order.

For the new customer we're announcing today, we expect to be providing an array of services required to build and scale large language models, we expect to begin ramping up the engagement early in the fourth quarter.

Importantly, the agreement we expect to sign Tomorrow with this new customer is a framework agreement that enables the customers business units to easily add additional programs and allocate additional scope and spend to us.

The customer has told us that it will be potentially requesting us to participate in additional programs, which may include supporting the customers' own customer base with model fine tuning and integration.

<unk>.

Under the agreement, we expect the customer to authorized $3 5 million in spend to get US started and the customer has stated that it intends to supplement this authorization as we move forward.

It has shared with us his vision for the initial program, which the fully realized we believe could potentially result in an approximately $12 million a new quarterly revenues at maturity.

That said at this point, we do not know when or if the initial program will reach this level of spend.

In addition, while the customer has told US we will be signing tomorrow. It is possible that this could slip as it is outside our control.

On July 18th we announced having won another new customer another of the top five global Tech it leads.

Similarly, we will be helping this new customer to develop and train large language models the.

Customer shared with us that it has been extremely impressed with our pilots and selected us from a field of 17 competitors.

The agreement, we signed with a second new customer provides for up to 8 million spend for the remainder of 2023 under an initial program. Although how much of this re recognizes it dependent upon a number of factors, including how quickly we ramp up.

Up aside based on discussions with this customer we believe we may potentially get to an annualized run rate of $15 million with this customer by the end of the year solely on this initial program.

The agreement we signed with this customer is also a framework agreement with GE.

Business units and product centers to easily aside new programs and scope to us we have already begun discussions with this customer regarding new programs.

On June 27, we announced that an existing big five customer has selected us to perform AI data annotation and ill and fine tuning as a white label service for its cloud and platform customers. We view this as a particularly strategic win as we believe that it gives us the potential.

<unk> just skill L O M services for enterprises in a way that would have likely been impossible working solely under our own brand and with our own sales and marketing.

Driving distribution under the customers brand as a uniquely attractive opportunity the strategic value of which I will talk about more in a few minutes.

Engagement builds on our 18 months relationship with this company under which we are told we have distinguished ourselves based on data quality responsiveness and agility.

Well, we stated in our June 22nd press release that we expected to kick off the program with three end customers in July I'm pleased to report that we already have nine customers signed on for pilots and we're not even halfway through August .

We believe three of these pilots are likely to turn into book business near term with one having an anticipated booking value of over $1 million.

Beyond these nine white labels enterprise pilots, we presently have a direct pipeline of enterprises with which we are now or soon to be engaged in discussions about L. A and fine tuning and integration.

Our direct pipeline includes a large legal information company one of the largest life insurance companies in the world, a leading investment bank and a leading commercial bank.

In the near term through this program with our customer we anticipated a cadence of one to two new pilots each week.

While it is difficult to forecast the revenue opportunity. This program represents because it is so new.

We can continue to onboard from the potential pool of tens of thousands of our customers and to customers at the pace. We're executing currently we believe this opportunity could dwarf any single initiative, we are now pursuing.

On June 14th we stayed in bed and existing big five customer head engage with us for its L. O N build program.

In that announcement, we stated that we anticipated potentially exceeding $8 million in revenue this year with this customer.

This is up from approximately $3 million last year.

We believe there could potentially be considerable opportunities to expand existing programs with this customer and to land new programs.

The June 27th announcement I just spoke about regarding the white labeled service is an example of such a new program.

[laughter].

I would like to now discuss our opportunity landscape and contextualize these wins within our strategic framework.

First we believe that a technology revolution is before us that it is in its very early as two days.

That it will drive profound changes in the way people work and engage with technology.

Looking back we initially became convinced that we can gain a toehold in the emerging generative AI market by pivoting off our experience, creating high quality domain specific data and our seven years of experience and training AI models.

We selected the big five as our initial target market, because we predicted that they would be early adopters and we'd be spending aggressively.

They all have products, including search ads surfing and productivity tools that we believe stand to benefit directly from generative AI and.

And several of our Hyperscale that would seek to provide the high performance infrastructure for training and surfing arrange a generative AI models.

Fortunately based on what we've seen to date, we believe our assessment was accurate.

In their Q2 analyst calls several of the Big five tech companies referred to generative AI and <unk> is at the core of their innovation plans backed by commitments for billions of dollars per year of capital expenditures.

At least one prominent firms stated that every one of us businesses had multiple generative AI initiatives.

I believe it is quite clear that these companies are now we're in a race to build cutting edge <unk> that can service a foundational layer shed her today to serve their products as well as their ecosystem customers.

It is early days one company described it today.

Or one company described it as today as being just a few steps into a marathon.

For the Big five tech companies, we expect it to be performing arrangement data engineering work required to build cutting edge share today.

We expect this to potentially include collecting data, creating datasets used to train the models and teach the models follow instructions and chain of thought reasoning.

Providing a reinforcement learning the process by which we aligned models with human values and complex use cases, and providing red teaming and what'll performance evaluation.

Over time, we anticipate working with these companies to address multiple languages.

Multiple data domains and multiple data modalities, including video.

Given that we have now successfully penetrated four of the five largest technology companies.

We believe we are poised to potentially drive significant growth in the market in the near medium and long term.

It is worth mentioning that beyond the big five there are another 50 to 100 technology companies that we estimate are now building, we're likely to be building their own LMS.

This includes some prominent well funded startups, we intend to build the relationships with these companies as well.

I mentioned, a few minutes ago, another compelling opportunity for us with the big five establishing white label programs under which they can provide our services to their customers under their brand.

We've now got such a deal in place with one of the largest hyperscale or some of the world and we are exploring similar opportunities with others.

We view the white label arrangement as it, particularly strategic opportunity for three reasons first.

Given that this customer is one of the largest global cloud providers, we expect many thousands of customers and partners to utilize their infrastructure for regenerative AI.

These customers will likely find a one stop shop for all things AI to be an attractive value proposition.

We'll be able to obtain compute storage foundation models machine learning database and data services.

Basically everything required to train and serve generative AI all under one roof and at an attractive price point.

Second.

In the mid market come in mid market companies, such as ours grosses typically constrained by the size and scale of the sales and marketing effort.

But these white label programs offer us it means a potentially scaling independent of our own sales and marketing leveraging both their brands and their customer reach.

Lastly, as a result of these programs. We believe that we are likely to gain early exposure to a wide range of early adopter generative AI use cases.

Under our initial White label program, we have recently piloted use cases, ranging from call Center summarization legal and medical question answering and ecommerce.

We believe this exposure will set us up well for what we believe will be our largest and most significant opportunity.

<unk> for the enterprise.

We believe that a decade from now virtually all successful businesses will be AI companies that between now and then the pace of adoption will be dramatically accelerating.

We believe there are essentially two reasons for this first hello them early adopters are likely to be significantly more productive and to create significantly more compelling customer experiences. Thus.

Thus there is likely to be strong competitive competitive pressure accelerating the adoption curve.

In a June study Mckinsey estimate in degenerative, a I could add trillions of dollars in value to the global economy with half of all of today's work activities automated sometime between 2030 and 2016 with the midpoint of 2045.

Secondly, the tech stack will be ready.

High performing commercially usable open source generally to the AI models will become increasingly available and the best performing close first models will likely support fine tuning on AR and proprietary data we.

We anticipate that this will make it possible for companies of all sizes to customize their own large language models and to build generative AI applications to secure an enterprise grade fashion.

As the enterprise market accelerates, we believe our capabilities will be increasingly in demand.

Our plan is to exploit the enterprise opportunity with what we believe are five distinct competitive advantages.

First the skills and reference ability, we will have acquired helping the big five build the very foundation levels with which enterprises will then be seeking to integrate.

Second experience, we will have gains across a wide range of use cases, working with early adopter enterprises through our white labeled arrangements with the Hyperscale.

Third the real World experience, we continue to gain and integrating both classical and generative AI into our own operations and our own products.

Fourth our technology platforms for transforming enterprise data into El Limn ready context for both model fine tuning and prompt injection.

And fifth our technology platforms, both existing and roadmap for development that will help enterprises generate reliable fact based responses and insights from foundation models using techniques, such as retrieval augmented generation or Reg for short that combine the reasoning and language engines are pretax.

<unk> for the businesses comprise salary context data.

Unstructured data like technical documents images videos and reports as well as structured content from enterprise systems and sensors.

In addition, our strategy is to harness AI and ill, let them technology in specific workflow applications. For example in late 2021, we announced a multiyear agreement with one of the world's largest banks to use AI to reengineer workflows related to scanning regulatory updates.

<unk> is now well underway and is being enthusiastic enthusiastically received by the bank.

It holds the promise of improving regulatory change management, resulting in reduced fines and penalties, while also reducing the heavy lifting done by people today.

Under the arrangement the bank pays us an annual subscription fee.

Now in discussions with three other companies about this product.

Let's now talk about what you expect financially as a result of our new wins.

We are expecting to begin work on the win we announced today or in early Q4.

On the win we announced on July 21, we kicked off work about two weeks ago.

Based on our experience engagements start slowly.

First we worked with the customer to create detailed specifications and run pilots to ensure that the specifications are yielding the intended results.

Oftentimes this requires several iterations once the specifications locked down we then put in place the required infrastructure.

This includes custom configuring technology systems, finalizing process designs and assembling human resources, David Engineers and subject matter experts.

This can take two to three months.

After this is completed we scale up.

Typically scale up slowly so that we can continue to test and refine as necessary with the customer.

We expect our programs to be dynamic with customer dependencies, and checkpoints throughout which makes it tough to do quarterly forecasting at this point, but based on our experience. The end result that gets us to a full ramp up is typically achieved in a roughly 12 month period.

Finally, let's talk about our Q2 results and guidance in Q2 revenue was $19 7 million a 4% increase from Q1 and adjusted EBITDA was $1 6 million a 100% increase from Q1, which we believe was made possible by the work we did late last year it into.

Q1, and sharpening our focus and finding opportunities to operate more cost effectively.

Please note that there was no revenue in the quarter from the wins, we discussed today. It is also worth noting that there was no revenue in the quarter from the large social media company, which contributed $2 5 million in revenue in Q2 of last year, but dramatically pulled back spending in the second half of last year.

As it underwent a significant management change.

If we back out revenue from this large social media company, our revenue growth in the quarter or for Q2 2022 would have been 13%.

We expect that revenue and adjusted EBITDA growth to accelerate from here in the ensuing quarters, both sequentially and year over year as the wins, we discussed today start ramping up.

We ended the quarter with.

With $13 7 million in cash and short term investments up from $10 8 million at the end of Q1, we.

We continue to have no appreciable debt.

In order to support our growth and working capital requirements in the quarter, we put in place a secured revolving line of credit with Wells Fargo that provides up to $10 million of borrowings subject to a borrowing base limitation.

I'll now turn the call over to <unk> to go over the numbers a bit more and then we'll open the line for questions.

Thank you Jack Good afternoon, everyone allow me to recap the Q2 2023 financial results revenue for the quarter ended June 32023 was $19 7 million compared to revenue of 20 million in the same period last year. The comparative period included $2 5 million.

Revenue from a large social media company that underwent a significant management tools in the second.

Here I am.

As a result of Blake it domestically pulled back spending across the board. There was no revenue from this company in the quarter ended June 30, 20 quantity.

Net loss for the quarter ended June 32028 eight.

8 million or three cents per basic and diluted share compared to a net loss of 3 million quite intense for basic and diluted share.

Period last year.

Revenue for the six months ended June 32023 respect to $8 5 million compared to $41 2 million in the same period last year again, the comparative period included $6 9 million in revenue from the right Social media company referenced above there was no revenue from this company.

<unk>.

This company in the six months ended June 32023, net loss for the six months ended June 32023 was $2 99, or 11 cents per basic and diluted share incorporate a net loss of $6 6 million or 24 cents per basic and diluted share in the same peer.

Last year.

Adjusted EBIT.

Adjusted EBITDA was one 6 million in the second quarter of 2023 compared to adjusted EBITDA loss of $1 2 million in the same period last year.

Adjusted EBITDA was $2 5 million in the six months ended June 32003, compared to adjusted EBITDA loss of $2 <unk> in the same period last year.

Our cash cash equivalents and short term investments were $13 7 million at June 30, <unk> as compared to 10 point team Maryanne at this sounds like a good place 20.

'twenty two.

Again, thanks, everyone I'll turn you all back to Matthew.

We need to pay.

Yes.

Certainly everyone at this time, we'll be conducting a question and answer session.

Any questions or comments. Please press star one on your phone at this time we.

We do asked about posing your question. Please pickup your handset if you're listening on speaker phone to provide optimum sound quality.

Once again, if you have any questions or comments. Please press star one on your phone please.

Please hold while we poll for questions.

Your first question is coming from Tim Clarkson from Van Clemens Your line is live.

Hey, Jack I'm, good quarter, you know everything I hope so.

Just a basic question it seems to me looking at the results that your breakeven would be somewhere around I don't know, 21% to $22 million is that.

Kind of a ballpark number.

Yes, Tim I think that's right.

As I mentioned in my remarks, we did a lot of work late last year in Q1 two.

Focus ourselves and focus our investments in <unk>.

Steve.

You had a higher level of operational excellence and productivity and that's benefiting US now so I think that that's right.

Okay. Now historically, you know and it adds strength has always been execution I mean.

You know when we've had problems has been you know contracts ending being project based so odd but in terms of execution I can't remember.

You know a screw up on that and then how hard of these contracts that you're these new contracts to execute are these.

Within the obviously the competency of the company are how risky or they.

Sure well let me.

I'll start by saying that there are squarely within our competency and Thats why were so excited.

We've.

Got the ability to two.

So where we're finding ourselves.

Squarely in the middle of the visit.

The biggest technology revolution of our lifetimes and we're finding that we've got the competencies that are highly applicable to driving that forward.

We're working with the companies who are going to be spending billions of dollars of capex to do just that.

Now.

That said I think the contracts are hard, but that's why it's good business for US. We are good at executing we have a track record of executing some of the hardest data products and projects that have.

Yes.

Some have been apparent over the last.

A couple of decades season.

And.

We're finding that we are.

Several weeks into executing some of these new deals, but we're already demonstrating.

The excellence that we bring to that the customers are very very happy. So we're excited we're excited about where we are we're excited about the opportunities we have.

We're excited that we're bringing the competencies that we've had historically to a new market that highly values.

And.

We expect things to go very very well.

Right right now.

How would you or if someone was looking at it from the outside but how would you articulate the competitive advantages that you guys have.

Well I think we've.

Got quite a few.

You know I think that the work that we've done in the past as I said, creating high quality data.

And building AI models, and building and integrating them in the wild meaning outside of research labs in academia.

Perfect.

We've been like training for today for the past.

Five years.

Now, it's the big game and I think we're completely prepared for it.

Some of the competitive advantages that we're bringing.

You go to the table now or breadth of domain expertise competencies in AI model building and David training.

<unk>.

Geographic spread ability too.

To create very high quality training data.

That's exactly what where does an order as we look forward. What we see is we're building. Additionally, competencies as I mentioned a few minutes ago. We're now helping build foundation models. We're now.

<unk>.

Developing experience in a wide variety of use cases or expecting to develop a wide variety of experience through the white label programs that we've talked about.

We're continuing to build still additional real world experience in terms of integrating classical and generative AI into operations and products.

And all of these are.

Our proving to create significant competitive advantage for us in the market.

Sure.

So, let's pretend that at some point these contracts start to come to reasonable fruition and youre hitting say around $30 million in revenue at that level, what kind of a pre tax margin would you guys be showing.

So I think the way we would guide people in terms of building up models is to think about.

And adjusted gross margin being either gross margin less.

Severance DNA and stock option costs think about an adjusted gross margin as we scale of between 40% and 45%.

In terms of SG&A, we've got a tremendous market opportunity in front of us to exploit that we're probably going to be adding.

A bit more in sales and a bit more in terms of program execution, but not a ton more.

Our business is not tremendously capital intensive so I think I think you can kind of.

Kind of drag that out.

Predict what kind of cash flow, we're going to be.

Able to drive.

It should be at least a 10% to 15% pretax once you get about 30 million, that's what I'm thinking.

Yeah, I think that's absolutely right I think that there is potential to improve on that.

Sure sure.

Okay, well I mean, you know everything is is going great. Obviously, oh, I'm, just thrilled and and you know it's so it's still so early I think that's the exciting part of it so I'll, let other people ask questions great quarter. Thanks.

<unk>.

Thank you. Your next question is coming from Dana Bouska from Filton Company. Your line is live.

Hi, Jack.

Hey, Dana.

How are you this evening.

We're doing great. Thank you.

Youre welcome.

Everything sounds like it's it's going pretty good ive a couple of questions.

Around your White label program could.

Could you explain a little bit about what exactly you mean by white label.

Sure, but I mean is that we're going to be performing data engineering services.

Standing behind the brand in one of our large customers.

Again, we see this potentially expanding to other customers, but right now it's one of them.

So.

It's a customer that bet.

Markets compute.

Storage Foundation models database, and we will be marketing now in addition to that data services. So.

A customer of theirs that is looking to create where build or fine tune generative AI models will find we believe we will find it attractive to be able to obtain all of that in one place when.

When they obtain data services, where we're going to be providing some of that.

Okay excellent.

Around that are you gonna be relied on their sales force to do that or is it.

You, you're having yourself GMP involved with those type of projects.

No primarily we're relying on their sales force.

Certainly in this first iteration.

And again, that's what's so attractive about it for us, but we have the opportunity to scale independent of.

The limitations that our sales and market reach close upon us.

Our brand recognition and poses upon us. This is a very highly regarded brand with tens of thousands of customers and I think potentially this program and perhaps others likely to roll it in.

Table us too.

Achieve an escape velocity that otherwise wouldn't be possible, just working through our own brand and our own sales and marketing.

Okay, that's that sounds that sounds pretty impressive.

And a lot of those lines that well like price negotiation that'll be all done through your clients and you guys won't have to deal with that or is or will you be.

More subject.

Well, let me ask how do you see the pricing going well.

We're able to provide pricing upfront to the customer who has been able to represent that pricing in discussions with its end customer.

Okay.

Okay.

And then you Didnt really talk much about her at all about Senate Daxor agility. So let's do it seem to have had nice quarters could you elaborate a little bit on those two businesses.

Yeah happy to.

There is just.

Really so much to talk about in terms of.

Whats going on in the business that.

We were already probably beyond some people's attention spend so we left a few things up but.

Whats going on in <unk> and agility is very very impressive and we're very happy with.

Performance there.

Agility, we had a year over year growth of 13%.

Yes.

We returned to adjusted EBITDA positive in the quarter. So we.

We look at it like.

We're now making money there again, we had solid bookings our gross retention levels were actually beyond.

What we had targeted in terms of our internal planning.

And we're seeing it.

Improvements on our average selling price and our sales cycle.

In part attributed to be.

Work we've done.

Integrating our new product PR co pilot into into that platform PR copilot. It is of course a AI.

Our regenerative AI powered.

Capability that allows people to.

Gain AI.

AI augmentation, AI assistance and generating.

Market pitches or PR fishes in press releases.

Very very happy with what's going on there.

<unk> over the past year, we've had some problems since index mostly related to.

Covid.

So some attrition issues that we attribute to two to COVID-19, but we.

We're nicely digging out of that.

We had an increased.

Gross margin for the second consecutive quarter positive gross margin for the second consecutive quarter.

We are working with two of our largest customers kind of charting out new products, including some automated products, which is very very exciting.

And.

We're happy with that business as well.

Yes.

Excellent.

Yeah. They do both look like Theyre going along well.

Well for you and just to go back Junior J D. D. S could you talk a little bit about capacity with all these new projects that you have will you need to be adding capacity or do you have the capacity already.

Available.

So combination we've got the engineering capabilities and the performance management capabilities in <unk>.

Things like that that are required.

We add human resources as is as and when needed, but we don't have any issues relative to <unk>.

Scaling around that and adding resources kind of just in time, when we need them.

Okay.

All right that does it for me.

Congratulations on having things go so well.

A very impressive to me.

Thank you Danny.

Okay.

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 Bruce Galloway from Galloway Capital. Your line is live.

Hey, Jack congratulations great quarter.

It looks like you're firing on all cylinders.

In the past you spoke about growth rates and net margins going forward like two or three years.

And then I guess you stopped when when the world stopped.

Are you going to be giving us some guidance going forward along those lines and also.

Now that you're doing so well on and you're sort of in the middle of the groundswell are you going to be getting any wall Street coverage.

Sure.

Good to hear from you. Thank you for joining the call. So the answer is.

As we we've given some guidance in terms of.

We're expecting year over year and sequential growth in terms of both revenue and adjusted EBITDA as we wrap up these in these programs.

We also talked a lot about how there is uncertainty in timing of ramp up over the next few months and for that reason, we're kind of.

We're staying with the guidance that we've given previously in terms of.

Adjusted EBITDA going forward and such we're giving some guidance on what.

What we expect gross margin uptick to be.

What's so interesting about the opportunities that we've got in front of US is all of the contracts virtually that we're entering into our framework agreements and Theres a lot of talk about expanding programs Theres a lot of talk about some of the programs that we're now initiating two themselves be expanded very significantly.

<unk>.

And all of that is fairly dynamic. So we're not really on solid footing, given the ramp up and given all of the talk of expansion to provide.

Significant detailed guidance going out.

But I think the important things are that.

And frankly I never thought we would be in a position to say, we're now working with four of the five big Tech companies, who are investing billions of dollars of Capex.

<unk> the technology that okay.

We're poised to help them with.

<unk>.

It's so clear to us that there is a gold rush happening and where are the ones with the picks and shovels.

So I think we're going to see.

<unk> lay out.

Sure.

Very compelling way, but being able to forecast them.

Precision is difficult at this point in time.

We're working very hard to stay on top of it the opportunities and land and expand I think that should be our focus rather than trying to become experts.

Forecasting with precision right now given the magnitude of what's going on.

And what of what about getting some wall Street coverage I mean, you got an exciting story to tell let let sallie.

Yes.

There are a couple of analysts that were in conversations with we'll see where that goes I think.

Could be you know.

Something that comes our way, it's not within my control of course.

As you know we haven't.

We haven't done.

Arrays were.

We've been able to accomplish what we've accomplished working with internally generated cash flows and making investments from that.

Times coverage.

You know come comes with investment banking activities. So, but again that said there are a couple of people that have been in conversations with us.

Okay also the comment you made about the generative AI focused.

Services <unk>.

<unk> from 87 million to 82 billion.

And 11 years 12 years.

Could you elaborate on that.

Like hyper hyper growth.

Where do you stand within those services.

I think we're a player and I think we're going to become.

It's our intention from a mission perspective to become a significant player I think we're already demonstrating that we are.

So.

Yeah.

I think I'm happy to send you your <unk> for that report.

Bloomberg report came out recently numbers are exciting and certainly.

What we've been able to do over just the last eight weeks, perhaps in its own way supports the.

The hypothesis that theyre driving toward.

Alright, it sounds exciting.

It very much is thank you Bruce.

Thank you. Your next question is coming from Tim Clarkson from Van Clemens Your line is live.

Yes, just one follow up question Jack I know that you have sold stock before and a data stock. So its not something that you're you've never done, but I've noticed you haven't sold any stock.

Let's say in the last couple of years, So I assume you know your.

You invested in this belief that things are going to be really good.

Yes, well Tim.

We've been working at this for a long time as I said I think we've made some very.

Very good decisions that.

Pat.

Got us to the point, where.

Where we are today I think that we are.

Square in the middle of something that is so big and so prominent in we're still perfectly suited for it it's extremely.

Exciting.

In terms of selling stock I don't.

No I mean, I wouldn't think that investors should look at insider stock sales as a means by in a data as a means by which to predict the future.

I think that there are people, who have their own needs and reasons for needing to raise a little bit of money here or there or two.

Diversify their exposure and I think that's perfectly fine when they do it.

That doesn't mean that they're not completely vested in the success that we're driving it is I think we're now demonstrating.

Right, but my point is you haven't sold any shares.

I haven't sold any shares Thats correct.

Thank you I'm done.

Thank you that concludes our Q&A session I will now hand, the conference back to Jack Apple Hough for closing remarks. Please go ahead.

Thank you operator, so yeah to quickly recap today, we announced yet another highly anticipated win which we expected signed tomorrow completing our eight week wind streak of lending all of the Big Tech pipeline deals that we presented last quarter is potentially transformative for our company and this of course includes two.

New Big Tech customers.

We believe that these are all companies that are widely expected to forged the path forward in general because AI development over the next several years and to spend billions of dollars of Capex in doing so.

We believe the fees new deals, perhaps individually, but certainly in the aggregate present, a potentially transformative opportunity for our company. As you know we have a solid track record is land and expand with large tech companies.

Now with the additional strong <unk> of generative AI, we think we're extremely well positioned for significant growth in the near to medium as well as the long term.

<unk>.

We believe we are aligned with an exciting growing and dynamic market that we have the right capabilities and truly blue chip client base at this point.

I had a question just a few minutes ago about the.

Bloomberg reports, so maybe I'll talk just a little bit about that.

And it certainly will give you an idea of the magnitude of the opportunity that we've got and the basis for our enthusiasm.

Bloomberg released a report stating in all on a quote from the report.

General market is poised to explode.

And the report Bloomberg estimated that the overall market for generative AI focused <unk> services, which is what we do is going to grow from the $83 million in 2022.

To 21 7 billion by 2027.

$285 9 billion by 2032, representing a 100% compounded annual growth rate for the 10 year period from 2022 to 23 two.

According to Bloomberg also.

AI focused <unk> surfaces are actually among the four hottest market opportunities in general today are all with 10 year CAGR from <unk> to 100% or more the other three being generative AI based drug discovery software generally is AI based cyber security spending and generative AI.

Driven ad spend them.

And at the same report Bloomberg estimates that journey to AI will become an increasingly essential part of it spending.

In fact, I attended a dinner just last week at which the head of technology innovation for one of the world's largest investment banks, who runs of masses $15 billion budget predicted that 20% of his budget.

And in the next few years be directed toward large language models.

Pretty incredible.

My team and I are energized by what we've accomplished by the magnitude of the opportunities. We now have to deliver on our mission and by the magnitude of the opportunity that's in front of us. So again. Thank you all for joining us on our call today, we will look forward to our next call with you.

Thank you everyone. This concludes today's event you may disconnect at this time and have a wonderful day. Thank you for your participation.