Q2 2023 Intellicheck Inc Earnings Call
Good afternoon, welcome to the Intel a check Q2, 2023 earnings call.
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It is now my pleasure to introduce your host Paul Jackson Investor Relations. Thank you. Please go ahead so.
Thank you operator, good afternoon, and thank you for joining us today for the Intel a check in second quarter 2023 earnings call before we get started I will take a few minutes to read the forward looking statement certain statements on this conference call constitute forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 as amended when you use them.
This conference call words, such as well believe expect anticipate encourage and similar expressions as they relate to the kind of new York's management. It's all of the assumptions made by and information currently available to the company's management identify forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These forward looking statements are based on management's current expectations and beliefs about future events as with any projection or forecast. They are inherently susceptible to uncertainty and changes in circumstances and the company undertakes no obligation to and expressly disclaims any obligation to update or alter its forward looking statements, whether resulting from such changes.
As new information subsequent events or otherwise additional information concerning forward looking statements is contained under the headings of Safe Harbor statement and risk factors listed from time to time in the company's filings with Securities and Exchange Commission.
Statements made on today's call are outside today August 10, 2023, mashup will use the financial term adjusted EBITDA in today's call. Please refer to the company's press release issued chapter nine for further definition reconciliation in context for the use of this term.
We'll begin today's call with Brian Lewis and Telecheck, Chief Executive Officer, and then Jeff a Schmeling Telecheck, Chief operating officer, and Chief Financial Officer, who will discuss the Q2 2023 financial results. Following their prepared remarks, we will take questions from our analysts and institutional investors today's call will be limited to one hour and I will now.
I'll turn the call over to Brian .
Thank you Dara and welcome everyone to the Q2 2023 earnings call before I speak about our results some highlights and some of the things we're doing to raise awareness of been touched yet.
And a brief overview of who you.
Our story.
Turning to check has taken its place as an industry leader and we continue to distinguish ourselves as an exceptional identity validation company because our technology solutions are.
Seemingly accurate and extremely fast.
Many of you on this call are familiar with us, but for our new cameras and those of you using update we are evolving we are growing and we continue to be focused on refining at every level to expand our penetration into key market verticals.
I believe that this growing reputation for excellence has led to our used by some of the largest banks and credit card issuers in the United States and Canada that their teller workstations call centers online and in their stores to validate their customers' identities.
Currently in approximately 30000 retail locations and over 4800 bank and lender branches not counting the pilots and adoption continues to grow.
Feel equally confident that I've demonstrated superior speed and accuracy is key to the fact that 28 state level law enforcement agencies use intelligence to validate these and keep in mind that while law enforcement are the only people that can directly connect with E. M. D M B in North America to validate it.
They chose intelligence against speed accuracy and ease of use are they distinguishing factors.
Not to stop there. We're also much more than just I E validation for bars restaurants retailers banks and law enforcement for example, one of our verticals as our candidates vending machine clients to buy cannabis products the customer scans, a QR code on the vending machine screens with their mobile phone that prompts.
Our system the ideas validated to prove it is real and you are of the age and the southeast taken for facial recognition to show that you are the owner of the idea that you're holding.
Person has been geo located to prove that their standing at the machine pretty.
Pretty sophisticated where used by our clients, because we simplify and speed the process, allowing them to onboard more clients faster without making it doesn't feel like it's very little and almost as a byproduct we virtually eliminate fraud.
And although I know there are many of you may know our story very well, but given the number of locations, where he and I'm willing to bet that the law.
Gerard the people on this call who can run through our validation services and didn't know it was us whether the opening of credit card doing in bank or online banking transaction, making a change to an existing accounts buying a car or making a retailer or age restricted purchase we are increasingly integral.
Part of the process trusted by our customers to protect their business reputation and yet.
So with all this in mind now onto some of the financial highlights and Jeff will further detail later.
I'll start by saying that our trailing 12 month SaaS revenue continues to increase and has every months for the last 42 months.
Momentum continued in Q2 of 2023 with SaaS revenue up 19% to $4 7 million from $3 9 million in Q2 of 2022.
Gross margin improved to 92, 5% and we were EBITDA positive for the quarter.
All of this positions us to continue to invest in the growth of the business.
Looking at some sales updates of note for the quarter financial services company number three ran through their scan allocations and renewed for another $2 5 million transactions.
Turning to the pilots into two regional banks with 1400, 'twenty 700 locations that will use Intel are checking their bank branches call centers and digital use cases.
Here's an update the 1400 location banking tends to roll out next month when they finish the software update on the remaining scanners and about a third of their branches.
'twenty 700 location Bank is live in their contact call center for high risk Italian openings with their much more expanded digital and online use case planning to go live later in Q3. The good news is that we are already in discussions on expanding to other partners.
Which is exciting and demonstrates their endorsement of our products.
Last quarter I spoke about a channel partner, who is incorporated in telecheck into their platform and is working with an auto manufacturer with 2700 locations.
Manufacturers saw the early success of the pilot and decided that the loss has to be a big Bang, but they had not adequately to pellets training materials were trained their trainers that is being done now they plan to launch in September .
You may have seen the press release about the success of the pilot program, we had with the city of Charleston, South Carolina Bar and restaurant owners, which now has become a permanent program.
During the pilot, we detected 3400 stake or invalid I E.
And I can tell you the barcode and security staff love the system.
My daughter lives in Charleston had a I D check that event you. She asked demand what they were using and he said it's Alex Yes. She said my dad to CEO and it turned out he was the CEO of a security company hired by Daniel.
He gave his card has asked her to have them call them.
I did and he couldn't stop raving about Intel a check.
We are now looking to replicate this program and other college towns, where places with Rowdy Entertainment districts.
Last quarter I spoke about the diversification of our client base. So to provide further color in that regard I thought a list of some of the types of clients we sold into in the quarter will help illustrate this progress it grows.
We on boarded 17 bars and restaurants, we on boarded and if that security company.
Online marketplace for premium is that leading.
Two more candidates vending machines out there.
Credit Union and a small online back.
And the Internet child safety topic.
Nine more title companies and additional auto dealers.
What I continue to see is there a lot of business to be had in the 5000 to $50000 annual revenue market.
But our challenge is that we still do not enjoy the brand recognition to think of a company with multi market verticals success, especially with the pedigree of our clients.
As you know we've engaged in a growing number of efforts to address this challenge we still aren't satisfied with where these athletes are standing. So we have brought on board in the agency to rebrand and further develop our messaging.
As part of this process, they're speaking with clients across all sectors.
The head of fraud, but one of our largest banks if you would be willing to speak with the agency base.
Basically told US you would love to there's so many of our competitors only do about 20% of what they say they can do well in telecheck, there's 100%.
He said that anything you can do to help us improve our message and awareness and grow our business will be great for the industry that is trying to stop fraud.
When a client of this stature and make such an endorsement and offers further support based on the value of our technology solutions at speed.
Volumes.
We expect this branding work to be done in Q4 and be ready to launch early next year, we believe that raising awareness about Intel a check will help drive interest and leads in markets, where we know accuracy is important because the stakes are so high.
As part of our evolutionary refinement made some personnel changes as well.
We promoted Jeff to Chief operating Officer. In addition to his CFO role.
That's a very strong growth focused SaaS operational background and his assuming this role allows me to spend more time on important initiatives in areas like sales marketing and branding.
In his new position and Jeff will lift to ensure our internal systems are all fully operational and properly integrated with each other.
In addition, given as channel partner experience with silence, which really accelerated their growth.
Tasked with building out their systems and programs needed to support this and I'll, let him speak more in detail about that shortly.
We've also brought in a new VP of engineering, Jonathan rabbits, we brought him on board for two reasons.
First is to upgrade our technology stack, which will reduce our dependents on Microsoft products in Azure.
We believe this will reduce our overall costs in 2024.
The other reason isn't data analytics experience.
In his most recent role he worked for the Chicago Cubs to develop the database and AI for them to attract players even young players and build models with that would help them predict future success, and therefore, who they should draft or a trade for.
That is important because we've been speaking about data and the power of the data in a community setting.
Each of our clients use their own data nothing more but we see it all.
Our clients are very enthusiastic about cooling the data and then using AI and machine learning to glean insights to be used in modeling some.
Some said that would provide significant value along with I E validation.
Jonathan It is in the process now of building out the data lake that can make that happen.
I am very enthusiastic about some exciting developments happening here at Intel It checks, we look forward to sharing more on our expanding efforts to protect and deliver our messaging on point and about products such as the new effort being developed to tap into our data to help our clients stop even more fraud, and therefore generate more revenue.
With that I'll turn it over to Jeff.
Okay. Thank you Brian I'm pleased with the continued progress that we've been making across all levels of the organization as we continue our efforts to redistribute our spend and investment into the areas that will fuel our growth and profitability.
Our second quarter SaaS revenue saw growth across our top accounts versus the prior year continued to report a higher average price per scan versus the prior year and we continued our progression towards adjusted EBITDA neutral results for the year.
As Brian mentioned earlier, we're pleased to see the continued trailing 12 month growth progression in SaaS revenues, each month, which has been achieved consecutively for the last 42 months.
Continuing to cast a critical eye to the metrics of our SaaS revenue, it's encouraging to see a 14, 7% increase in our average price per scan versus the prior year, while we continue to see sequential monthly growth in our transaction activity.
With one large customer whose activities are primarily predicated on parsing consumer data at the point of transaction. Our average price per scan is up 17% versus last year when adjusted for this customer.
I'm also pleased to see that our average price per scan has grown sequentially for the platinum last 18 months and we will continue to maintain a focus on the development of this metric.
Really encouraging as it continues to speak to the testament of value realized by our customers we.
We are maintaining a focus on ensuring that renewals across the entire customer landscape or including annualized CPI increases and then we continue right sizing legacy customers that are entering renewal periods.
As we previously shared to drive revenues, we've been shifting our expense focus to have a greater emphasis on SG&A, specifically, our investment in sales and marketing.
We're maintaining our focus on operating expenses to ensure that we achieve the expected return on our investments in this area.
Within the Q2 period, we initiated a complete overhaul of the customer success team as well as the platforms. They were operating on to better support our existing customers as well as ensure a smoother onboarding experience for new customers.
We also signed and commenced a full brand strategy initiative that will be realized during the Q3 and Q4 periods.
We are also beginning the recalibration of our digital advertising strategy to increase the quality of our lead generation efforts.
We are finalizing the release of a cobranded industry case study and we're now initiating the implementation of our channel program to be completed by the end of the year.
As Brian mentioned earlier, we're excited to be putting in place a more formalized program that will support an expanded group of reshape resellers, providing marketing development funds to support their respective channels of regions as well as develop a collaborative approach with our existing sales team on increased lead generation efforts.
We expect this program to have a noticeable impact on our 2024 pipeline growth and bookings we believe that the combination of efforts discussed above will provide the necessary support from our sales team to drive increases in customer engagement bookings and revenues in 2024.
Turning now to our second quarter results.
Revenue for the second quarter of 2023 increased 18% to 4.716 million compared to $4 million 8000 in the same period of 2022.
Our SaaS revenue for the first quarter of 2023 grew 19% to a record 4.663 million from 3.928 million during the same period of 2022.
Gross profit as a percentage of revenues increased to 92, 5% for the second quarter of 2023 compared to 99% for the same quarter of 2022.
The increase was driven by a higher concentration of SaaS revenues, a nominal decrease in hardware revenue as well as continued improvements in our cloud cost structure.
As we discussed during the first quarter earnings call. We continue to model gross margin performance at a range of 90% to 91% as we continue to improve our cloud cost infrastructure and may experience some cost overlap thus nominally impacting our current gross margin performance, while we continue to scrutinize our cost structure will continue to assess the spin.
Cyclic impact.
Operating expenses, which consist of selling general and administrative marketing and research and development expenses increased 392000, or 8% to $5 million 137000 for the second quarter of 2023 compared to $4 million 742000 for the same period of 2022.
The increase was primarily driven by higher general and administrative costs, specifically head count related expenses related to the full accrual of severance related expenses incurred.
Included within operating expenses for the second quarters of 2023, and 2022 were 323000 and 446000, respectively of noncash equity compensation expense.
While lower this quarter, we expect our total noncash expenses will continue to comprise approximately 13% to 15% of our operating expenses with stock based compensation comprising 90% of that figure.
We continue to implement aggressive expense reviews to ensure we are effectively allocated the proper areas to support our growth initiatives.
With respect to our Q2 operating expenses, we enacted changes to the team that resulted in the Q2 severance accrual of 417000, which were fully accrued to employment agreements previously in place from an annualized perspective. These personnel changes along with additional changes will yield approximately $2 1 million and operating expense save.
Things that we'll be able to reallocate towards our investment in sales and marketing initiatives, specifically the brand strategy initiative and the launch of the channel partner program that will lay the foundation for the incremental revenues in 2024.
The company reported a net loss of 777000 for the second quarter of 2023 compared to the net loss of 1.098 million for the same period of 2022.
Net loss per diluted share for the second quarter of 2023 was four cents compared to the net loss per diluted share of <unk> for the same period of 2022.
The weighted average diluted common shares were $19 1 million for the first quarter of 2023 compared to $18 8 million for the same period of 2022.
Adjusted EBITDA for the second quarter of 2023 improved by 619000 or 106%, resulting in a gain of 36000 compared to a loss of 583000 for the same period of 2022 as a result of the expense initiatives. We continue to put in place were able to realize improvement in our adjusted.
EBITDA results when compared to the same period last year as well as the prior quarter.
Turning to the company's liquidity and capital resources as of June 32023, The company had cash and short term investments in the form of U S. Treasuries. They totaled $9 1 million. That's currently on deposit at Citibank and capital one working capital defined as current assets minus current liabilities of $8 3 million total.
Assets of $21 6 million and stockholders equity of $17 3 million, it's worth noting that the U S. Treasuries subsequently matured in July and we have rolled these over into a new tranche that matures in December with a weighted average rate of five 1%.
Company has a $2 million.
The credit facility with Citibank that are secured by collateral accounts. There are no amounts outstanding under this facility and the facility was not utilized during the quarter.
Turning now to our internal initiatives.
Our second quarter continued to maintain a focus on improving our operational effectiveness and ensuring that we have the proper foundation in place to concentrate on revenue and the path forward towards being adjusted even in short while continuing to invest in the business.
We also continue to build out revenue outperformance reporting to closely monitor the transactional health of our key customers in the key industries that we are targeting and survey.
The focus will continue to be on driving revenue productivity across our key customers and ensuring that our sales team has the proper data and support they need.
As I mentioned in the operating expense from works, while we recognize the severance accrual within the quarter before ultimately lead to the reallocation of approximately $2 1 million towards our sales and marketing efforts specifically the brand strategy initiative and the formal launch of our channel partner program, which will help lay the proper foundation for incremental revenues in 2020.
Sure.
Employees also continued to be our largest internal asset and we were pleased to continue seeing an increase in our average revenue per employee, which is up 14% versus the same prior year period, as well as up 36% versus 2021 and reviewing other public companies in the zero to $100 million revenue range with in the.
Technology services space, which has 65 selected companies we were in the upper quartile regarding this metric. We believe that we are currently right size from a head count perspective, and we'll continue to watch this with the caveat that the sales team will always have the latitude for opportunistic hires.
In consideration of our continued expense management, we will continue to improve the ratio of our operating expenses to revenue as we continue our progression towards adjusted EBITDA neutral in 2023.
We'll continue to implement disciplines that we expect will improve our expense ratio by approximately 800 basis points versus 2020 to maintain our focus on gross margin performance of 90% to 91%, while seeing a fundamental shift in our expenses towards funding sales and marketing initiatives in closing we're committed to the continued improvement of our call.
Performance, we look forward to sharing our Q3 23 results in November I'll now turn the call over to the operator to take your questions.
Thank you, Sir ladies and gentlemen.
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The first question Natalie half comes from Rudy catching up from D. A Davidson. Please go ahead.
Okay, great. Thank you for taking my questions. The sequential growth was was very nice to see them I'm curious if you could kind of attribute that growth quarter over quarter to a couple of buckets. I guess, you know existing customer scan volumes coming in maybe stronger higher than expected, obviously you called out.
A few customers that came online, but could you just talk about more detail.
Quarter over quarter growth that you saw.
And Jeff you ran the numbers do you want to take that for Rudy.
Yeah, I can I can jump into that so so rudy on the you know as.
As we mentioned on the call.
Happy to see the incremental transaction count we've seen that grow every month and on a monthly basis as well as for the year on the variance for prior year period were up almost 11% so.
You know, we saw pricing productivity with existing customers, we saw renewals in excess Oh, but I just got that figure in front of me too but in excess of.
96% so all.
All the metrics, we're seeing right now on the revenue side are solid.
Yeah.
Okay.
And then is it could you talk about kind of the.
You mentioned, some severance and restructuring I noticed how care. It departed could could you talk about was there anybody else you let go.
Particularly I'm interested on the sales side, if it does any restructuring on that side as well.
We did I we.
We did a restructuring in the marketing department.
We swapped out some.
On the sales side, we swapped out some account managers.
But nothing nothing that I would call a major restructuring.
I would say that you know we did a big round of hiring and you hope that 80% of the people are you made the right decisions on them.
But you know I've said, all along that we were going to watch people. If you don't think we're getting what we need out of them, we're not going to spend a ton of time, we're going to make sure that they are productive pretty quick.
But the main the main part of that severance was really.
Garrett and marketing.
Got it Okay and then.
Just the last couple of years now you've had very strong sequential growth Q1 to Q2, and then Q3 has been effectively flat versus Q2, I know youre not giving guidance at this point, but just directionally how should we think about Q3 SaaS revenue versus Q2, given the visibility you have today into projects that are going to come online this quarter.
I think it'll be a matter of how fast we get some of the banks going.
<unk> is generally definitely acquire period.
But I think a lot of it's going to turn around to part of the part of the joy of working with large banks as they can be very big deals, but it also.
It's sort of a hurry up and wait.
Our mentality.
So you know, while we don't give guidance its not like it typically isn't a blow out quarter, but you know we still expect to see continued sequential growth.
Got it okay I'll hop back into queue. Thanks.
Okay.
Thank you.
Next question, we have comes from Jeff <unk> from Craig Hallum Capital Group. Please go ahead.
Yeah. Thanks.
Sort of along the line of Rudy's question I guess as it relates to guidance I know you don't give the formal outlook here, but you know to the extent that based on what you see in the pipeline and what's what's in front of you at this point does 24 from a SaaS standpoint feels sort of like steady as she goes I mean, we're sort of printing, 20% give or take each quarter I mean is.
Your mindset sort of in that ballpark or do you see things that that suggest deceleration acceleration I know you don't want to quantify specifically, but directionally maybe in those terms.
I I I don't see deceleration that's for sure.
We've always kind of said that given where.
The sales team that was coming on new wins and thankfully very strong that we were really expecting you know definitely you know kind of more end of the year gross and then more into 'twenty 'twenty four and I've got to say that the pipeline that the sales team is bringing in is high.
Me excited.
But you know again, you get a great pipeline with a a bank and Theres certainly developing a lot of large potential out there, but then it doesn't matter how much the business people want it you still have to go through all this stuff for the internal security controls.
And that's sort of at the whim of those people. So I think you know.
I I think we're kind of steady as she goes but.
Yes, with the caveat that.
When you're when you're hunting whales, sometimes the well comes in quicker and sometimes it comes in later, so we could see surprises.
Sooner I like too in my mind forecast these wells as they take a lot longer than normal, but then you get surprised when you landed much quicker.
Yeah. So so maybe maybe to follow that then you know as you look at your pipeline loved to hear more I mean, the the breadth and depth of the pipeline maybe some comparison to the the overall you don't.
I don't know how you want to do it 12 months or are in the pipe versus six months ago. Just how has it is there any way you can quantify how it's changed and then also within that question is just the composition is it more onesie Twosies you know how is it biased big small some color there Mike might help build build clarity on the guide.
Yeah.
The like I answered a couple of different ways here I guess, one is what I'm very happy about it Chris doesn't his pipelines real you know you can make.
Sure his team's pipeline Israel. So if I look at the pipeline you know a year ago compared to where the pipeline is today.
On what was realistic that and what's realistic now I'd say, it's much larger.
And the other thing is since Chris has really divided the team up I think in a really good format. So that we've got.
People with different skill sets going after sort of different deals and then also dealing in verticals that they they're comfortable in a.
We have a very good mix of very very large deals to you know we've got some folks that you can turn around and auto dealership or a bar in in two days. So it's very.
I like the fact that just in the same way that we signed a very diversified group of clients in the quarter.
We continue to do that so that we're not sitting here.
Sort of praying that the well comes in we've got that again that three to $50000 a year pipeline really building.
And they're doing a lot of that through brute force, which is one of the reasons that I wanted to make sure that we get the branding the marketing messaging out there right so more coming to us and these guys having to go to them.
Mhm yeah.
Got it got it and then just one clarification I think you referenced in the call that a T. T. M scan price up 15% is is there anything that complicates the math there taking a look at your TTM growth and backing that 15 out and the differences you're your scan volumes.
No I mean, so the scan volume is up Jack and then on a price per scan effectively on a fully blended basis.
<unk> was up 14% and then again backing out that one customer that primarily on.
I'm parsing that you know we were up 17%.
Mhm got it okay. Thank you.
Thanks, Jeff.
Yeah.
Thank you.
Ladies and gentlemen, just a reminder, if you would like to ask a question. Please press star and then one no.
Next question, we have comes from Mike Grondahl from Northland Securities. Please go ahead.
Hi, guys. This is Owen on for Mike Tonight.
It sounds like there's some momentum rolling in terms of alcohol sales and a growing number of college stadiums and you guys recently signed a big Midwest Stadium.
Wondering if you got it Steve.
Call out there and how are you targeting growth in this vertical.
Oh, I'd say that the stadiums are certainly we've got people, who are going out and targeting them.
Because I think you know its importance debt.
These people care about it because they make a lot of money off of it.
And you know they get it wrong.
Usually the towns look to pull the license so both the vendor and the University lose the money. So they care about doing the right thing. So we definitely have a targeted outreach to them. The good thing is we now have.
Basically a relationship with each one of the major concession companies that serve the universities. They all are sold on an individual basis. Each each stadium is sort of its own business.
Underneath the kind of the umbrella of the concessions company, but given that we now have like I said you.
You know the main four are already integrated to know who we are it's making that process. I think you should help speed it up and make it go quicker. So it is a target for us.
I I don't have people going out and knocking on bars and.
In restaurants, one at a time I think that's sort of a waste of time, but what we're looking to do is target.
Charles didn't like things and the councilmen.
Who was behind this initiative and the original bar owner, who are behind this initiative are willing to help us out in any way. They can to make this work. So I think doing larger kind of package deals like that is where we do outreach everything else is sort of inbound and I think our law enforcement clients are some of our best.
References are salespeople because you know as soon as the place gets busted and ask what are you using we have a new customer.
Got it thanks guys.
Okay. Thank you.
The final question, we have comes from Scott Buck from H C. Wainwright. Please go ahead.
Hey, guys I appreciate the time.
Ian can you remind me and apologies if some of these have already been asked can you remind me do you guys charge for your pilot programs or is that something you kind of give away. The carrot are good they get people.
And the door, though generally we charge them.
Got.
It can be a case by case basis, but generally be charged for pilots.
And it can be sort of a different type of pilot you get up to a number of transactions or things like that but you know, but it just say I'm not going to lose a deal because somebody huge says well we don't pay for pilot suddenly be like I don't care because I know once we're in we're in.
Right right. Okay. That's.
That's helpful and then.
I'm curious.
Have you guys explored or are there potential partnership opportunities that.
Could could get you in the door with a meaningful number of <unk>.
Potential customers.
Yeah, well, that's exactly the whole program.
That you know really Jeff is building the infrastructure for us to do it. So we get a proper deal registration and all that we have a lot of folks that.
Currently our are reselling, our product, but we need to formalize the program and there are absolutely. We've we've targeted and it had been in discussions with people that need.
Solid identity validation.
In different verticals and so like we've got folks that are reselling us in automotive we've got some folks that have embedded us in things to scan for age restricted products were talking to people.
To provide software and say in the title insurance space. So we're definitely that is where we think we could get a lot of growth next year I'm happy to be Intel inside you know like I said at the beginning of the call that a lot of people have.
You know we've seen you go through our system you just never knew it was us because where somebody just asked for your license you don't know that it says doing it I'm happy with that model and again, if he can get me in places and I think automotive is always a great example, there's something like 16000 rooftops up out there.
Don't want to knock on every one of them, but if I can get you know the software provider that is in.
Most of them to integrate our system, that's that's a quick and easy win.
Yeah, no that makes a ton of sense.
And then I guess last one for me is it fair to.
Suggest that you'll be managing the business at this kind of breakeven.
Adjusted EBITDA level as long as you see you know meaning.
A meaningful revenue opportunities.
Yeah just.
Take a little bit of additional investment.
Yeah, we're gonna look.
We're going to invest prudently right I'm not a big fan of spending cash.
Wild Goose chases and things if it makes sense, we're going to do it.
If we continue to grow the way that we are our margins suggest you know that there should be enough for investment and also building up the cash pool.
We know where we need to invest we know what that dollar amount is and it's not tons and tons of money.
So.
Our goal is to be EBITDA neutral until we know that where we're at and then after a certain point, we can't help but you know.
It would be EBITDA positive no matter, what we did.
Sure Scott It makes sense.
Yeah, what are the biggest questions. We got since I started was.
One point are you guys going to hit adjusted EBITDA neutral and so rather than throw highly aggressive aspirational goals out there. Two years ahead. It's like let's just go ahead, let's hit that that adjusted EBITDA neutral, which we are tracking for and we'll be hitting this year.
If you take a look at our trailing 12 month adjusted EBITDA was just under a negative 200000.
So we're tracking towards that and with Q3 and Q4 coming up you know that.
That would bridge that gap, but to Brian's point, you know, we're going to continue investing in the business, but expect to see that all ROI to and if we don't find that expected returns then it's going to fall straight to the bottom line. If we can see that meaningful driver at the top line.
No. That's helpful. I guess I'll try to squeeze in one more since then like the tail end here. How do you think about the current marketing effort in and how often do you revisit what kind of ROI you might be getting on on your marketing.
So that's one of the things that we're looking at and I think one of the reasons that we decided to make some changes.
In that.
And also why you know we've hired an agency to help us with that.
No I think we're we've got a lot of people who are really good and sales at the company, but marketing is definitely a different animal and you know.
Again, that's sort of where we're going to put some money out.
Out to get to make sure that we're doing it right and that they're measuring and telling us what we're doing and helping us.
Jeff said earlier in the call that we're you know really reanalyzing, our whole digital spend where are we getting what we wanted out of it and these folks are suggesting that we weren't so that's why we put it on pause while we figure out how to get it done better.
So everything that we do and it's one of the reasons that you know I'm sorry, Jeff is onboard he's crazy analytical.
And looks at all of this in detail so.
We we will be analyzing it we know that our messaging wasn't getting through.
You know, having the head of fraud at one of our biggest banks that you guys messaging you know.
I'm happy to talk to you you know any prospect you have but we've got to help you with the messaging so.
We're always looking at it and we're working on.
Yeah Scott.
Just take a step back yeah. When you take a step back Scott and you look at what we what we will have the ability.
To reallocate and the coming quarters coming years 2.1 million.
That's a lot of spend and you've also got a ramp that spend up appropriately you just don't drive that within the first few quarters and as Brian mentioned you know.
Driving in a you know a revised brand strategy and the rollout of that is a multi quarter you know as we're rolling out the channel partner program and a more formalized way you know we expect to launch that in Q4, you know with realizing topline increases your pipeline generation all of that.
Into 'twenty four.
But again at $2 1 million at least for the stage of this company is that is a large channel back into sales and marketing or right sized on the G&A side, we are right sizing on that on the product side, Jonathan is doing a tremendous job. There. So you know our spend can almost go entirely into that sales and marketing side.
Got it well I appreciate the additional color guys. Thanks, and congrats again on a corner.
Do you.
Yeah.
Yeah.
Thank you, ladies and gentlemen that was our final question for today's conference.
That's the burn unit closing remarks. Please go ahead.
Thank you thanks to everybody for joining us today for the intelligence Q2 earnings call just as a reminder, we'll be presenting at the Sidoti Conference. This Thursday this coming Thursday, if you're interested in participating we put out a press release earlier this week with the details.
And with that I'll say, thank you and have a great evening.
Thank you, so ladies and gentlemen that income puke today's countries. Thanks.
And for joining US you may now disconnect your lines.
Okay.
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[noise] mhm.