Q3 2023 CSP Inc Earnings Call
Good morning, and welcome to C. S. P ice third quarter fiscal year 2023 conference call.
At this time, all participants are on a listen only mode.
And a question and answer session will follow the formal presentation.
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Please note this conference is being recorded.
I would turn the conference over to your host Michael Bolivia, Sir the floor is yours.
Thank you Ali Hello, everyone and thank you for joining us to review Cspi's fiscal 2023 third quarter results, which ended June 32023.
With me on the call today is the Lobo Cspi's, Chief Executive Officer, and Gary Levine.
He is chief financial Officer, after Victor and Gary conclude their opening remarks, we'll then open the call for questions.
Statements made by its E. S. P is management on today's call regarding the company's business that are not historical facts may be forward looking statements as a churn was identified in federal securities laws.
The words May will expect believe space project plan intend estimate and continue as well similar expressions are intended to identify forward looking statements.
These statements should not be read as a guarantee of future performance or results.
Company cautions you that these statements reflect current expectations about the company's future performance or events and are subject to certain uncertainties risks and other important features many of which are beyond the company's control that may influence.
What's the accuracy of the statements and projections upon which the segments and statements are based.
Factors that may affect the company's results include but are not limited to the risks and uncertainties discussed in the risk factors section of the annual report on Form 10-K, and quarterly reports on Form 10-Q filed with Securities and Exchange Commission.
Forward looking statements are based on information available at those statements you made and management's good faith belief as of the time with respect to future events.
We're looking statements are qualified in their entirety by this cautionary statement. It's USPI undertakes no obligation to revise or update any forward looking statements whether as a result of your information future events or otherwise.
After the date hereof.
With that I'll turn it over to Victor Lebel, Chief Executive Officer, Sir. Please go ahead.
Thanks, Michael and good morning, everyone. Today, we reported continued momentum for our business as revenue grew 33%.
Performance was driven by the continued outperformance of our technology solution business and I believe the results reaffirm our strategy to dedicate significant resources to this segment over the past couple of years.
Our other product lines and business segments performed as expected during the quarter and the business mix and tax team and led to an increase in earnings Garry is going to provide more details on the tax topic during his remarks.
A major contributor to the momentum in the quarter was the continued conversion of the backlog to revenue a good portion of which had been on the books for greater than 12 months of supply chain issues for the key components kept us from shipping completed orders to the customer.
Our customers continue to remain loyal because of our products and solutions are the most effective car sufficient answers to their critical needs and we are extremely pleased to finally move this backlog to revenue.
Our focus over the next few quarters to convert the remainder.
Oh this older backlog to revenue and our team is constantly engaged with our customers to keep them abreast of the supply of timelines and options. It is worth noting that throughout this prolonged supply chain issue. We have not lost a single order, which I believe reflects the importance of our products and our services to the business.
Turning to some of the segments results are T. S business revenues totaled $16 4 million compared to $12 6 million in a year ago fiscal third quarter.
As evidenced by the dramatic year over year increase this segment continues to be driven by our customers increased use of our implementation and installation and training capabilities.
H B P revenue was approximately $1 3 million in line with our expectations and compared to 700000, a year ago fiscal third quarter.
While the area customer base continues to grow and the pipeline remains high recent developments.
Positively impact RF solution H P segment overall NIM.
Coming quarters and years.
Perhaps our biggest achievement during the fiscal third quarter was our newest product launch Oreo Zero Trust protect which we are internally calling AZT.
It has generated a lot of enthusiasm within the organization and the early industry feedback gives us reason to be excited.
It is something that we have been developing internally as we often do and we believe it will be a major growth driver for our high performance product H P. P business as we move into the fiscal 'twenty 'twenty four and beyond.
The advanced and patent AI, driven technology is garnering interest from leading customers and reaffirms our belief that gives us greater confidence that there will be a game changer for C. S. P. I you have quite a few Carson Kosmos prior to the launch of AZT and we envision is going to accelerate adoption of the area of product.
And generate a reliable stream of monthly revenue for our company as.
As we move through the fiscal fourth quarter and expectations for fiscal 'twenty 'twenty four we believe the success reliability and consistency of our T. S business will be complemented by the H B P business, primarily as it as the bus being generated for my AZ. He protect converts to orders positioning us to significantly.
Expand revenue and gross margins from this product line in fiscal 'twenty, 'twenty, four and well beyond.
We believe our ability.
To develop this product is unique and separates CSPI from other companies in the space, especially amongst the larger players where we can identify a need to move on it quickly with limited development dollars other companies would need to evaluate analyze the opportunity even with unlimited funds. They may still lack the technical school.
Just to develop something like S E T.
So I'd like to spend a few moments describing why we are so excited about AZ T first AZ Ts.
I asked them it allows us to offer our customers a giant leap forward in the evolution of cyber security solutions Azt's performance surpasses anything available on the market today is a new generation of endpoint cyber security protection designed for critical operational technology and Brian They.
Our unique patents solution protects all of an organization endpoints from the full spectrum of cyber security attacks and infusion.
Techniques, including the most advanced zero day attacks malware ransomware supply chain vulnerabilities, even those threats that completely unknown to security teams by deploying artificial intelligence capabilities AZT also tax before any damage occurs.
It's sharing seamless operations without disruptions or downtime.
It lowers the risk of cybersecurity vulnerabilities exploits on endpoint devices applications to near zero without the need for constant patching update.
Our team believes AZ T as an excellent solution for a wide range of industries, including utilities logistics manufacturing Pharmaceuticals banking finance health care and energy. We are currently ramping up our sales and marketing investments to address these and other markets as we actively negotiate transactions with borrowers.
In key international markets and in order to maximize the global opportunity during the fiscal third quarter, we entered into one of these such agreements in Australia.
Rapid digital transformation is blurring to bound it varies between I T. In operational technology Ot networks have been traditionally yeah gap and kept isolated from the outside world. This is no longer the case the cyber attacks on Ot networks are most vulnerable and best prevented by AZ T.
Product represents the Spi latest offering a differentiated value enhanced solutions for the childhood challenges faced by customers.
As I mentioned before we think it's going to be a significant growth driver for our company.
To summarize we have generated substantial growth during the first nine months of our fiscal year. The watches they of AZT has underway where.
Excited about the opportunities ahead with that I will now ask Gary to provide a brief overview of the fiscal third quarter financial performance.
Thanks Victor.
As Victor mentioned in his opening remarks, we achieved.
Significant growth in the fiscal third quarter compared to last years fiscal third quarter.
We reported revenue of $17 $7 million.
A 33% increase compared to $13 $3 million in the year ago fiscal third quarter.
We have successfully converted some older backlog and delivered finished products to our customers.
We reported gross profit of $5 $9 million or 33, 4%.
Sales compared to.
$4 $9 million or 37, 4% of sales in the year ago fiscal third quarter.
As a reminder.
A function in the.
Quarterly gross revenue was anticipated due to business mix. However, we continue to believe our annual gross margin will expand as the business transaction.
Transact to higher margin products transitions excuse me.
Our engineering and development expenses for the fiscal third quarter were $741000 compared to approximately 884000 in the year ago period.
A year ago cost were higher primarily due to higher personnel costs, which included outside consultants and the development of the a C T product, which has mentioned earlier.
Only recently unveiled.
Our SG&A expenses in Q3 were $4 $6 million compared to $4 $1 million in the year ago fiscal third quarter due to increased in variable compensation or bonuses.
Sales commissions from higher sales as well as payroll and initial costs associated with the unveiling and the launching of the a C T.
Our tax benefit was $1.7 million for the third quarter.
Primarily.
Or are they from the release of the valuation allowance against the deferred tax asset.
We performed an analysis and determined that it is more likely than not that.
Substantially all of the deferred tax asset in the U S jurisdiction will be utilized.
We reported net income of $2 $5 million in the fiscal third quarter.
Or a dilutive earnings per share up 52 cents compared with net income of $684000 or diluted earnings per share of 15 cents for the physical 2022 third quarter.
The company had cash and cash equivalents of $13 $8 million as of June 32023, as compared to cash and equivalents of $23 9 million as of September 30th 2022.
The lower amount is primarily due to the strategy, we implemented last year to leverage our strong balance sheet.
And finance certain large customer orders.
Preferable interest rates as well as the increased level of receivables created byproduct sales.
However in early Q4.
A significant cash flow has been generated through the payment of receivables and the full repayment of financing provided to us to have a customer during fiscal 2022.
We believe the successful implementation of this approach also has yielded positive results and we will entertain similar opportunities.
Meets our strict criteria.
I also want to highlight that the board of directors approved a quarterly dividend.
<unk> per share payable on September 12, 2023 to shareholders of record on the close of business on August 23 2023.
With that I will turn it over to the operator to take your questions.
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One moment, please while we poll for questions.
Okay.
Thank you.
Our first question is coming from Mike price, who is an investor Your line is life.
Thank you good morning, congratulations on a great quarter.
Previously you had said that C. S. P has a problem with name recognition and it seems like if you have a revolutionary product as you call. It the a Z T has there been any discussions with anybody larger they can get this to the market faster and in a bigger way than C. S. P on its own.
Okay.
Not currently right now, we just announced it you know less than 30 days ago. So you know we're looking you know to build our customer base and then as always everything is on the table. If we were able to be approached it would always be something we would look at.
Okay, and you said that the repayment the payment of the receivables taken place in the fourth quarter does that bring the cash back over $20 million.
Pretty close to that yeah, yeah pretty close.
Oh, it's only changing based on payables and you know, it's it's constantly moving but it is right right I understand it's closer to that $20 million.
You've categorized $2.4 million as held to maturity with interest rates short term rates, where they are I assume that cash is earnings a fair return.
Even on a short term basis.
Yes.
Okay, because I'm looking at the cash that you have and invested in short term rates that probably covers with the current dividend is on an annual basis and it goes back to the question of having a company with a $60 million market cap with $20 million in cash and cash equivalents.
The dividend is quite a bit lower than pre COVID-19 and also a question about the share repurchase I think you authorized a 194000 I don't think you did anything in the previous quarter, what about the quarter just completed have any shares been repurchased.
It was a very small number.
Okay, well with the runway that you have isn't this a good use.
Both funds.
I mean, it seems like the Z Z T. Protect us is the future of this company.
And as shareholders, we can certainly get out in front of that by using some of the cash to repurchase shares I appreciate the illiquidity in the stock but whenever possible.
I noticed Victor in the last window, you bought a few hundred chairs, which shows your confidence by opening up your wallet. It seems like the shareholders should be able to do the same.
Okay, well, we'll take that under advisement and we're constantly reviewing that with the board.
Right now, we're just investing in the S E T and so.
But we'll take your.
Yeah, and then in a cash fluctuation to having that $20 million at times as you see it goes down is because some of our larger customers.
These finance deals.
We're doing at a you know an interest rate, which is definitely you know in our favor to make their life a little easier just based on budgets that they may you know get preferable pricing model, but you know they don't want it budgets are yearly instead of like multi year and those are the reasons why we're doing self financing.
With these larger institutions. So that cash is important for us and then having the resell of business two to get the lines of credit to buy the equipment, having that cash allows us to have watch credit lines with the big distributors and manufacturers.
That allow us to you know placed these multimillion dollar orders without having to go out and get financing you know yeah, you know, especially at the race out there. So that's why that cash sometimes is important to have there because it kind of if you know in some cases like I said it helps finance the deals that we may or may not get and then.
Second of all it allows us to purchase the products that that we need to with these big lines of credit that we have with these distributors.
Okay, and then I'll ask one question on what the cash.
The last question or comment is I understand at the end of a fiscal year you have 90 days to report, but it's a little frustrating that you take usually till mid December you know, it's a full what 75 days to see results is there a reason that it takes so long.
I mean, I don't I don't see anybody what it depends on the order it in 90 days time.
Okay.
Mike a lot of it is dependent on the time and one of the things that we have is we've got a lot of moving parts and our closing related to.
Many of the products are shipped by the manufacturer and then we have to go and spend a large amount of time just determining what the cutoff between isn't good as again in a quarter or not in the quarter and that takes us.
A significant amount of time as well as the time, we have to spend a having the audit done.
Okay, Alright, I appreciate your time and move it up we're trying to move it up.
Yeah.
I appreciate your time and great quarter, and looking forward to the end of the year. Thanks, a lot. Thanks, Brian . Thank you.
Thank you. Our next question is coming from Joseph Nurtures with segregate investments your line is nice.
Yeah, Good morning, guys.
Congratulations on a great quarter, and and a great product introduction with this AZ team protect software.
While U two two words were used in the press release initially use the term revolutionary and in today's press release.
Named user point of a potential game changer for our product.
I agree wholeheartedly.
Let me recommend one thing I did review on the website.
You have an extensive right up on this product on the website I mean really extensive and for any client investor or potential investor I really advise them to go to the website and review it there because theres. So much detail that you know its hard to convey.
Just in a conference call I don't know if you agree with me but.
Are you really put a lot of color.
Color on this new product so that's something that people should look into.
Appreciate it Joe.
You talked in Alaska.
The last press release are less slack.
Conference call about potentially expanding the.
Many service providers and you were you were talking about overseas.
We have.
Have we made any headway on that I know you talked about the Australian MSP, which aside but Uh huh.
Similar.
I'm assuming are there.
There's good potential for a lots of parts of the.
Especially the European area are either U K, where we are now.
Uh huh.
Any candidates there that we're currently talking to.
We're talking to them, but we wanted to make sure. They have commitment right not just starting on the product on their catalog that they're going to put time and resources you know not just signed a reseller application and our agreement. So the conversations are going on but we're not going to just sign up people just to be another line on the catalog we wanted to make sure that they commit.
Did that to sell it well I've got that that's that that.
That's that's great and I agree with you, but with this.
If they don't recognize if if the potential of this easy T protection product. We just introduced I mean, you should.
There should be a lot more serious discussions when when this is now available for them and in the future.
Oh gosh.
I mean, yeah, yeah, there's a lot there's quite a few in the U S that we're talking to and they're going they're going well I'll just leave it as that we have how well how many channel partners do we have do you have a.
After.
Approximately how many channel partners do have we signed over the years.
I would probably say five or six okay.
Ah you know specialized and in.
And selling security.
And then your talking tomorrow like I'm just yeah.
Yeah, Alright, yeah.
Have we are we are we still looking for any royalties on EQT either this year or.
Currently and possibly.
It's liquid, but I'm thinking it's going to be Q1.
Okay.
Okay. You can want yeah Q1 of next shake it could grow into Q4, but I'm more comfortable saying you know Q1, okay.
You mentioned in the press release about the considerable attention from industry leaders and I and I think you added.
Added to this a little bit.
Your current presentation, but are we talking about interesting specific leaders in the industry like electric Pharmaceuticals transportation energy, yes. So we are cutting the base with some.
And I assume in this case some of them are pretty large I mean, when you start going to utilities.
Most of them are pretty big so.
Yeah, they're all big [laughter] the ones that we've been talking to alright, well, that's great. So that that's out there.
Market there is huge yeah D O T space, where they have you know a lot of manufacturing you know oil gas you know a lot of you know O T that the operational technology area. Those other companies that that where we're talking to right now so okay, great and.
A follow up too.
The previous.
Question here I'm talking about the stock buyback and I understand you know you utilizing the money for marketing purposes, what we're doing and getting new deals, but when you think about our stock well.
So when you when you have a potential game changing revolutionary product and your stock is selling for less than one times.
And that is less than one time sales it certainly.
Would suggest that buying or buying.
And opportunistic protect.
Potential to buy some stock when you get the chance and I realized we don't have it in the open market and it's hard to buy some days, we have very little volume. So you you you really are limited in what you could do but again only if we just look at that.
Combination of what we have available to us now and in the fact that it was less than one time sales I mean, that's almost unheard of for a technology company to be.
At that level. So again, thanks, a lot great quarter and a.
I'm, hoping to hear from you guys again in early December on this great. Thanks again thanks.
One other point right.
I Wonder why league.
Give you a historical forgive me.
From my perspective, and a prediction here many years ago, there was a small company and it was named halite cooperate.
And they released a new product and it was the Xerox copier well well, yes. It was a product myself successful that not long afterwards, they changed the name of our company from Haloid too.
Iraq.
I predict that we have that same potential.
Gone down there we may change the company name someday two areas cyber security, if if or if there's a Z T protect product.
Is it successful and I think it could be.
So I'm I'm I'm changing the name of the company for even [laughter] again, thanks a lot.
Thanks, Joe.
Thank you.
Our next question is coming from Brett Davidson, who is an investor Your line is life.
Good morning, maybe you guys can ask Joe for what the new ticker is gonna be.
Yeah.
[laughter] ARIA.
Yeah.
I got a oh, all kinds of different items I wanted to touch on.
Was there any revenue this quarter from the cruise ship business.
Limited.
Limited so there was some though.
That's still winding up.
Yeah, yeah, they're slow to make decisions right now theyre doing well, but they're prioritizing you know different projects at this point, but we're in talks with that we're ready.
But we're keeping the you know the engineers busy with other projects. While this other stuff there's still it's moving just out of a turtle space.
So probably not Q4, maybe sometime in no there'll be some age there is revenue there. It's just not at the same peak they use it was once but we are.
Still getting you know revenue and projects for the various cruise lines.
So it's kind of like the beginning of just accelerating back to more normal levels.
We're hoping you know this week, we have a roadmap we just have to have them execute on their roadmap.
Got it.
Hum.
The supply chain.
I'm not you know I know before it was like nine months to get stuff for that area hardware.
What does that look like now or are we looking at half that time period or you can pretty much get what you need when you need it.
For the ARIA piece of it you know, where we're probably six weeks now for the area of hardware that goes along with it and then B you know the AZ T. Protect is all software right. So you know it's instantaneous for that piece of it it's on the T. S side of the house in <unk>.
Some product lines and manufacturers is it's pretty quick you know I would say anywhere from four to eight weeks and then Im sorry, I know the product lines. All at the same manufacturers in some cases, it's nine months still so it's just it varies you know a lot of switching products across the board whether.
I I don't want to name who they are but some of the big players. It's still a lengthy process you know that you know.
Some of the data we're getting is believe it or not 2025 and in some cases, yeah and some of the larger switches that backlog is is pretty bad but in some other cases, you know different models, we can get in four weeks. So its just you know it varies based on product.
Wine and manufacturers in some cases, but it's definitely getting better it's not getting worse you know, so which is which is good for us, but some of the backlog that we flushed out what you know it was close to a year old that finally came in and we're hoping that you know we continue flushing the backlog and.
Putting that revenue to the books.
And the the Australia and.
A distributor is that strictly is that strictly services or are they also hardware.
They're strictly a security company.
So they are both interested yeah, we we have opportunities both on the on the a D. R. M. D. R. And are we are talking to a few customers on the new release of the a Z T product.
So are they are they directing customers to you or are they just reselling. The oh are you.
So they would be reselling, it, but where help supporting it on the on the technical side.
Got it.
Hum.
The significant cash flow so I'm, assuming that's all coming back from one customer is.
Is that accurate.
The majority from one customer in but there are it's probably three different customers the cash flows coming in.
So the the one big customer I mean is there a potential to run this through again with them or is it kind of like well enjoying it for five years. So we've been doing it for five years. So you know and then we just signed another deal with a different customer for a five year deal that took a multimillion dollar order in.
[noise] spread it over five years.
Got it.
And these are popping up on a regular basis. I mean are you guys using this as part of the sales pitch for these products or there you know requested in this because it's been done before or other they heard from other customers or how is it that these developed.
Well, we've probably been doing it for probably the last decade, but just on a smaller you know we we weren't really you know in the market to do it but some of the large customers that we do a lot of business with.
You know they they wanted that three or five year pricing, but they they could not you know give it more than you know they could cut a purchase order, but the budgets where a year by year by year. So when we ended up doing one of the deals with them then they kept requesting it and they're a phenomenal customer and they've got more money.
He then.
Then the risk is zero. So when we took it you know we're like well do it and then a couple of other customers that you know our last day of the customer requested as like Hey, we want you to do this for us and we're like Yeah. No problem you know.
A credit worthy of customer and the and it's all product.
And it's all for delivery of product now or is any you know any of this written so the product is delivered over the life of the financing.
Now the product is delivered upfront.
And that they're using it and then the support that goes along with it that gets you know mhm.
Uh-huh.
So I mean has anybody approached you to do this as an extended delivery. So you know we need 10. This year 10 next year.
Hum.
Well finance it through you guys and a sign a long term deal like that or nothing like that it's project by project. You know that's kind of how it looks like you know it could be a storage product or it could be a networking project or it could be a wireless project is based on the projects not just that you know they're usually good for three to five years.
One of the customers and we just.
One of the new orders, we just did for a couple of million dollars. On this was there you know we did a deal prior to that for three years and then the gear they need to upgrade all their equipment. So we did another deal with them for five this year. This time.
But do any of them involve equipment deliberate over a multiyear timeframe.
All they get it they get it all upfront.
Yes.
And I mean, do you see a scenario, where where you guys could possibly pitch that to.
Do you have a recurring sales stream over like three to five years or something.
Nobody wants to commit that far out.
Nobody wants to come in and we do have one it's one deal you know either three equal payments of five equal payments, depending on we try to do three year deals five is unusual.
But you know just depends and that's kind of how how we frame. It and then when the project gets renewed because maybe the maintenance or the gear is you know becoming obsolete then we'll try to roll them into a new a new opportunity.
Got it.
I just wanted to add.
One kind of directed at Mike There there is a huge CPA shortage juge coding graduate shortage.
I can't see.
Can't see the audit ramping up any sooner because all of those firms are.
Operating a shorthand it.
So I would be shocked if.
How old that process can be shortened.
And then one thing that year ran close is way different than our quarterly quote close right the amount of work that they do.
The audit firm does is is quite significant you know computer a quarterly.
Close so that's why it takes extra time and to Gary's point, you know we have to wait at least you know two weeks or so to make sure. The cut off is correct and in the orders and the product that are getting you know put in either Q4 or Q1, and you know that takes time, because we have to work with the manufacturers or the.
Our distribution looking at the cut off an invoice states. So there's a lot more tedious work that goes into a to a year end close to make sure that you know all the revenue goes into the current quarter.
Yeah.
Yeah, there's a revenue recognition mhm.
Mhm.
Yeah heavy.
Got it yeah, I know that the rules would become so obtuse that it's difficult to follow the revenue recognition and stuff.
Hum.
And the last the last thing Hum.
Have there been any sales booked yet on that easy product there, we're still looking out like Q4.
Q4.
Got it alright, well thanks, so much for taking the time to answer the questions, it's always pretty entertaining like Joanna.
Thanks again, guys you you take care as I sit here and I'm sure. Both 73 degrees Sony Buffalo, So [laughter] a good one.
Yeah take care.
Thank you once again, ladies and gentlemen, if you have any remaining questions. Please press star one on your phone at this time.
We have a question from Joseph emergence from sovereign investments your line is life.
Just just to fill this is just a fill at brick on Australia in question.
The name of the company is Logitech, that's that's the Australian company and there's a there's a nice article out there that this particular associated with area.
If he wants to.
The title of the article of cyber security for manufacturers legacy.
Oh T systems.
And so.
So if he puts light attack and area of cyber security.
In the end is Google search you'll find that article so just for anybody if they want to look it up with a nice article commentary by Gary South where like general manager on that.
Mike.
Thanks, guys.
Yep. Thanks.
Thank you we have a question from will lauber with vision wealth advisors. Your line is life.
Yes can you guys just kind of clarify a what the Hawkeye what.
I guess, you're getting just international sales now and.
If there is any international sales do you guys for sure get that revenue or how that works.
Yeah, well, it's coming it's really slowing down well there hasnt been a lot of transactions that have gone on.
There's we're getting pretty close to the end.
Of the program.
So we literally.
It was just a few hundred thousand dollars.
That we believe is gonna be a nail.
Okay.
Well see something about.
Some other country buying some but are they starting to get the.
Well the international people starting to get some of the more advanced planes now that you guys aren't giving up anymore.
That's what our.
We believe.
Because there's not that many.
Orders coming through.
Okay and with this new product can you kind of describe.
Yeah.
Looking back when you.
First started this product line I guess, a couple of years ago like what the level of interest is now with this new product compared to when you were starting out or.
Even like a year later or something like that.
Well the easy T piece of it you know we've talked to a lot of customers already we've hired a couple of new salespeople, but.
We just rolled it out but all the feedback has been positive you know, we're doing things a little different than some of the other potential companies are doing so they're very interested in hearing you know what we're doing how we're doing it you know the demos are going well you know we are.
We're talking to a couple of watch customers they've already asked for pricing. After the first meeting. So you know where we're enthusiastic we're asking them you know they know we just rolled it out we're asking for feedback and you know.
They're being brutally honest the good bad and the ugly and it's really hasn't been any ugly, which is which is good at this stage. So.
You know it's about it's about taking the resources that we have right and are just getting our name out there you know we're gonna put some.
Some energy with marketing more than we have in the past.
Like I said this product is just another it's a it's a segment.
That needs attention and I think you know the way we're doing it how we're approaching it is as is different and.
You know, we're going to put some time and money against their getting our name out there and Uh huh.
Like I said, we already hired two new salespeople over the last 30 days a couple inside people to focus on this and you know hopefully start generating some revenue and taking that.
Those profits and reinvest again to continue the growth. So that's kind of the the short term game plan right now.
So.
So you know these are all very large potential customers.
Usually that might imply a longer sales cycle or.
What is the standard sales cycle in the cyber security space and how would you expect that to compare to this product.
Hum.
Big companies don't move fast, but this product can be you know we can do a P O C and get it implemented inside their infrastructure within 10 minutes right.
So there's not going to be a long P. P. You know P O C timeline to do this.
You know if the budgets here correctly, we're hoping to you now.
You know to be able to close sales you know in a in a it's a quick banner right and the larger companies you know we're trying to focus on different divisions get some adoption of the product and then roll it out instead of trying to roll it out to all of you know.
Company wide because that would take you know I would say minimum a year to do that so we're trying to focus on you know getting.
So I I department or division to adopt the product and roll it out that way. So we you know.
Can evangelize it easier as you know its already being adopted inside your organization and then the next focus is to look at some medium sized companies, which decisions are made you know a lot quicker.
So I can't give you you know how long the average sales cycle is because on this particular product because it's been it's too new you know on the Sim product that we have the sales cycle I would say six months you know it could be quicker than it has been two months, but I would say the average sales cycle is probably four to six months on the on the E D.
We are an M D R.
So would it be safe to say I mean, one of the possible good points about going with them.
So your customers is that.
The price point.
It was probably somewhat of a drop in the bucket for them I mean is that would that be a.
Safe to say or I would love to say that you know, but everybody is looking at every dollar right now, but it compare their security budget.
I don't think we you know we would cause a lot of harm if they were to adopt it you know throughout the organization, it's a necessary evil and I got to believe you know security has got to be number one on their list. Yeah, you know to make sure that there's dollars put us to securing.
Their assembly lines, and you know, whether it's a pharmaceutical organization or manufacturing.
Okay.
Well, thank you very much.
Have a good one.
Thank you as we have no more questions in queue. At this time I will hand, it back to Mr de Novo for any closing comments he math.
Thank you as always I want to thank our shareholders for the continued interest and support.
We had success in the quarter converting some of the older backlog, which I believe demonstrates we are committed to fulfilling our customers' orders a reputation within the industry is stronger today and continues to rise and the introduction of AZ T product will only help our cause as we move forward.
And I look forward to sharing our progress in the fiscal 2023 fourth quarter and the full year ending September 30th operating results. Later this year until then.
Be well stay safe and enjoy the rest of the summer goodbye.
Right.
Thank you. This concludes today's conference call you may disconnect. Your lines at this time and have a wonderful day, we thank you for your participation.