Q2 2024 Ooma Inc Earnings Call
Good afternoon, My name is Emma and I will be your conference operator today.
At this time I would like to welcome everyone to who most of fiscal second quarter 'twenty 'twenty four earnings conference call.
All lines have been placed on mute to prevent any background noise.
After the Speakers' remarks, there will be a question and answer session.
If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad.
If you would like to withdraw your question again press the star one thank you.
Robinson you may begin your conference.
Thank you Emma good day, everyone and welcome to the fiscal.
Fiscal second quarter 2024 earnings call at the Bank. My name is Matt Robison Numis director of IR and corporate development on the call with me today are CEO , Eric Stang, and CFO Shay Hamamatsu.
After the market closed today issued its fiscal second quarter 'twenty 'twenty four earnings press release. This release is also available on the company's website and the Dot Com. This call is being webcast live and is accessible from a link on the events and presentations page of the Investor Relations section of our web site. This link will be active for replay of this call for at least one year a telephonic replay will also be avail.
For a week starting to see things about eight P. M. Eastern time dialing information for it is included in today's press release during today's presentation. Our executives will make forward looking statements within the meaning of the federal securities laws forward looking statements generally relate to future events or future financial or operating performance, our expectations and beliefs regarding these matters may not be.
To realize an actual results are subject to risks and uncertainties that could cause actual results to differ materially from those projected.
These risks include those set forth in the press release, we issued earlier today and those risks are more fully described in our filings with the Securities and Exchange Commission.
Forward looking statements in this presentation are based on information available to us as of the date hereof, and we disclaim any obligation to update any forward looking statements, except as required by law.
Please note that other than revenue or as otherwise stated the financial measures to be disclosed on this call will be on a non-GAAP basis. The non-GAAP financial measures are not intended to be considered in isolation or as a substitute for results prepared in accordance with GAAP a discussion of why we present non-GAAP financial measures and a reconciliation of the non-GAAP financial measures discussed in this call.
To the most directly comparable GAAP financial measures is included in our earnings press release, which is available on our website on this call. We will give guidance for third quarter and full year fiscal 2024 on a non-GAAP basis. Also in addition to our press release and 8-K filing the overview page and events and presentations page in the investors section.
Our website as well as our results page of the financial info section of everywhere.
Right.
Links to information about costs and expenses not included in our non-GAAP values and key metrics of our core subscription businesses. These are titled supplemental financial disclosure, one and supplemental financial disclosure. Two Additionally, our investor presentation slides include GAAP to non-GAAP reconciliation that also provides resolution of GAAP expenses that are excluded.
From non-GAAP metrics.
Now I will hand, the call over to M. A CEO Eric Stang.
Thank you, Matt Hi, everyone welcome to <unk> second quarter fiscal year 2024 earnings call. Thanks for joining us.
I'm pleased to report <unk> performed well in Q2 and looking forward to reviewing our accomplishments and the progress we've made on several growth initiatives, we have underway this year.
Financially.
Cheap $58 4 million in revenue <unk>.
8 million and non-GAAP net income.
$4 9 million of EBITDA, and $3 6 million in cash flow from operations in Q2.
They also managed opex spending well in the quarter and reduced our inventory.
Adding growth are important business subscription services revenue grew 27% year over year.
Overall, we ended the quarter with $215 million of annualized exit recurring revenue up 15% versus a year ago.
I believe we executed well in Q2 to drive these results and that <unk> is in a strong position today to pursue its strategy and growth initiatives.
During Q2, we continued to invest in Houma office, which of course is our award winning solutions, specifically designed for small to medium sized businesses, which seek a combination of advanced features ease of use and affordability.
We added to pro plus our top service tier several new features to facilitate collaboration and customer interaction including online bookings.
Too many messaging.
Teen chat and new CRM integrations, with Zohar and fresh desk.
We also improved our office desktop out introducing an updated user interface and faster performance or a more cohesive user experience it simplifies interactions.
These feature in hips enhancements continue our strategy to build out the capabilities available in our pro plus service tier, which along with our pro service tier allow us to target.
Slightly larger customers and drive higher revenue per user.
We feel our ummah office strategy is working by allowing us to serve increasingly larger customers, while maintaining our long standing focus on making communications approachable for businesses of any size.
As in past quarters more than half of our new office users in Q2 selected one of these two premium tiers.
As we continue our journey to democratize advanced technology and make it accessible to small and medium sized businesses.
Well My office is targeted at businesses, 1% to 20 users in size I.
I am pleased to report our largest office customer win in Q2, with a 286 user account, which valued the flexibility and affordability of our solution.
We're also seeing interest in office from potential partners to see office is a good fit with their products and services.
Last quarter, you May recall, we announced a partnership with next health, which focuses on the dental space and we have additional office partnerships and progress.
For the rest of this year, our plans for home office or to continue to build out the pro plus tier feature set and to enable more partners to integrate with and in some cases resell home office.
We also continue to invest in Houma enterprise, our solution targeted at larger sized businesses in select verticals or in need of customization.
One focus for US is hospitality customers, where we continued in Q2 to secure wins with major brand hotels.
We also began working recently with a new partner to enable our core telephony and SMS capabilities in their platform in support of an artificial intelligence use case.
EMEA enterprise will be incorporated into the partner solution via a C pass like business model.
Our partner already has several alpha customers deployed and is targeting launched this year.
While we don't specifically promote enterprises see past solution.
Believe this one off use case demonstrates the ultimate power of our platform to adapt to the spoke needs.
For the rest of this year our plans for <unk> enterprise are to continue our industry focused strategy, while also growing our network of telecom agents and resellers.
We're also making investments to expand internationally.
As planned we made a major step forward in Q2 with our largest customer by putting in place the capability to serve them in a new region of the world.
Over the coming weeks, we will begin rollout in earnest in this new region.
I'm also pleased to report that during Q2, we were able to add more users than we anticipated and we gained visibility for increasing to 100000 users or more with this customer.
For the balance of this year, we will focus on implementing our service for this customer and the new region.
At least one additional region.
As well as on continuing to onboard their users.
Our largest area of investment at this time is on the air dial our integrated solution to replace aging and expensive copper lines that serve critical infrastructure and other specialized applications.
As you know, we see a massive market opportunity for <unk>, both in the USA and in other countries.
Our feature enhancements to air Dial continued in Q2 as we brought out version 2.0 of our remote device manager.
Implemented network side auto dialed features to support older emergency phones.
And implemented implemented modem support to make remote programming of door access systems more reliable.
There is a long tail of specialized in older equipment relying on copper lines today, when we feel our ability to control. The total end to end solution is an advantage as we evolve airedale to meet all the needs of the market.
Owning all spot all aspects of our platform and to earn its allowed us to adapt to our platform to serve the needs of customers with challenging use cases, including in circumstances, where those customers have had another provider failed previously.
Commercially we announced earlier this month that U S. Cellular completed its launch planning and began offering are dial through its sales organization in.
In fact, I am pleased to report that U S. Cellular's first customer win.
With a customer requiring 136 lines occurred in Q2, even before the formal launch date.
In this case airedale displaced a competitor whose products were not working well and we helped U S. Cellular deliver a solution in a situation where the customer needed to maintain compliance and a very short timeframe.
As in past quarters, our Salesforce funnel for air Dial continued to build in Q2, and we had some notable wins in the quarter or.
Our largest Q2 win was a restaurant group, which will deploy deploy over 750 lines.
Just days after the end of Q2, we also won a large retailer opportunity representing approximately 800 lines.
Both of these opportunities came to partners of ours, who are reselling aired aisle.
Just this week, we made a further exciting announcement regarding air dial.
I am pleased to report that the largest REIT in the world Pro largest will offer both of whom are dial in Houma office through their essentials platform.
Platform provides building and other services to <unk> large base of customers.
We're thrilled to have chosen <unk> as their featured and only solution for parts replacement and business communications.
Bringing on partners is one of our key strategies to drive <unk> growth.
Most typically our partners resale air dial, but in some cases, they refer customers to us.
This last quarter. In addition to U S cellular and pro largest we also established new partnerships with to see Lex two aggregators and to other resellers.
Our plans for the rest of this year for air dial are to grow our sales and go to market resources significantly established more resale partnerships and further enhance the differentiation of our solution.
As I've outlined we have a lot of initiatives underway and it's an exciting time for us.
I will now turn the call over to Shang, our CFO to discuss our results and outlook in more detail and then return with some closing remarks.
Thank you Eric and good afternoon, everyone.
I'm going to review, our second quarter financial results and then provide our outlook for the third quarter and full year fiscal 2024.
We delivered another strong quarter with a total revenue of $58 4 million exceeding our guidance range of $57 4 million to $57 $9 million.
On a year over year basis total revenue grew 11% in the second quarter.
Driven by the strength of <unk> business as well as the addition of onset in.
In the second quarter business subscription and services revenue accounted for 57% with total subscription and services revenue as compared to 51% in the prior year quarter.
Due to product and other revenue came in at $3 6 million as compared to $4 7 million in the prior year quarter. The prior year Q2 product revenue included certain accessory sales that did not recur this year.
On the profitability front.
The second quarter non-GAAP net income was $3 $8 million at the high end of our guidance range of $3 5 million to $3 8 million and represented 26% increase over $3 million in the prior year quarter.
Now some details on our Q2 revenue.
We will now business subscription and services revenue grew 27% year over year in Q2.
Japan, driven by user growth and the addition of onset.
Excluding the effect of on Sip revenue contribution.
<unk> business subscription services revenue grew 15% year over year.
On the residential side subscription and services revenue were flat year over year.
As a reminder, we had a one time churn event during their first quarter with a particular customer with an unusual application.
Lost approximately 4000 total users and we saw a full quarter impact of it in Q2.
We expect residential subscription revenue growth to resume at a low single digit percentage on a year over year basis in the second half of this fiscal year.
For the second quarter total subscription and services revenue was $54 7 million or 94% of total revenue as compared to $48 million or 91% of total revenue in the prior year quarter.
Now some details on our key customer metrics.
We ended the second quarter with $1 million 237000 core users up from $1 million 225000 core users at the end of the first quarter.
At the end of the at the end of the.
Second quarter, we had 467000 business users or 38% of core <unk>.
Total core users an increase of 18000 from Q1.
Yes.
Our blended average monthly subscription and services revenue per core user or <unk>.
Increased 5% year over year to $14 51.
Driven by an increase in mix of business users, including higher IOP August pro and pro plus users.
During the second quarter, we continued to see a healthy August pro and <unk> plus take rate with 55% of new office users opting for these higher tier services, which was up from 47% in the prior year quarter overall, 27% of whom are office users have now.
Subscribe to a crowd or pro plus tier.
Our annual exit recurring revenue grew to $215 $4 million and was up 15% year over year.
Our net dollar subscription retention rate for the quarter was 99% as compared to 99% in the first quarter.
Now some details on our gross margin.
Our subscription and services gross margin for the second quarter was 72% as compared to 74% in the prior year.
As a reminder, subscription and services gross margin for the second quarter. This fiscal year included the impact of onset gross margin, which is running lower reactivity Umar subscription gross margin of 73% when onset is excluded.
Q2 subscription and services gross margin. This year was also impacted by certain upfront investments, we made for our largest customer as we prepare for further expansion into new regions in the second half of this fiscal year.
Product and other gross margin for the second quarter was negative 73% as compared to negative 31% for the same period last year.
As mentioned on our last call the decline in Q2 product gross margin this year versus last year it was anticipated.
And what's.
It was primarily due to the following three factors.
First we saw the sell through impact of certain higher cost components that we had procured in the last fiscal year to stay ahead of pandemic driven supply chain issues.
Second net prior year Q2 product gross margin benefited from certain accessories sales that did not recur this year.
And third we incurred nonrecurring facility cost as we completed our move to a new warehouse facility during the quarter.
We continue to expect product and other gross margin for the remainder of fiscal 2024 to be negatively impacted by onetime excess component costs running through the P&L and currently estimate product and other gross margin for the second half of this fiscal year to be in the neighborhood of negative $60.
5%.
On an overall basis total gross margin for Q2 was 63% as compared to 65% in the prior year quarter.
And now some details on operating expenses.
Total operating expenses for the second quarter were $33 2 million up $2 1 million or 7% from the same period last year.
Excluding the impact of onset that total operating expenses increased $1 1 million or 4% from the same period last year.
Sales and marketing expenses for the second quarter was $17 7 million or 30% of total revenue up 7% year over year, driven by higher marketing and channel development activity for <unk> business, which includes agile as well as the addition of onset related expenses.
Research and development expenses were $10 6 million or 18% of total revenue up 7% on a year over year basis from $9 9 million.
Driven by investments in new features for both Luna office and Umar enterprise.
As well as new products, such as agile a portion of that year over year increase R&D expense was also for the activities related to international expansion with our largest customer and the addition of <unk>.
G&A expenses were $4 9 million or 8% of total revenue for the second quarter compared to $4 5 million for the prior year quarter. The year over year increase in G&A expenses was primarily due to an increase in personnel costs and the addition of <unk>.
non-GAAP net income for the second quarter was $3 8 million or diluted earnings per share of <unk> 14.
As compared to 12.
In the prior quarter.
Adjusted EBITDA for the quarter was $4 9 million or 8% of total revenue and represented 22% increase over $4 million for the prior year quarter.
We ended the quarter with total cash and investments of $29 $5 million, which increased from $28 4 million at the end of Q1.
We generated cash from operations of $3 6 million.
Which was up from $2 2 million in the same period of last year.
On the head count front, we ended the quarter with 708 employees and contractors.
Now I'll provide our guidance for the third quarter and for fiscal year 2024 hour.
Our guidance is on a non-GAAP basis and has been adjusted.
<unk> expenses, such as stock based compensation amortization of intangibles and certain nonrecurring expenses.
We expect total revenue for the third quarter of fiscal 2024 to be in the range of 59 million to $59 6 million.
Which includes three $7 million to $4 million of product revenue.
We expect third quarter net income to be in the range of three eight to $4 1 million.
non-GAAP diluted EPS is expected to be between 14 to 16.
We have assumed $26 3 million weighted average diluted shares outstanding for the third quarter.
For full year fiscal 2024, we expect total revenue to be in the range of $235 5 million to $237 million.
The adjustment to the high end of the guidance range is related to our expectation around the timing of AD product revenue within this fiscal year.
While we are very excited about growing pipeline of <unk> opportunities. We believe some shipments of Ed hardware will be deferred to next fiscal year, primarily due to customer driven timelines.
Okay.
Asphalt business subscription and services revenue.
For the year, we expect a year over year growth rate of 18% to 20%, which is unchanged from our prior expectation.
In terms of revenue mix for the year, we expect approximately 93% of total revenue to come from subscription and services revenue and the remainder from products and other revenue.
In terms of our profitability, we are raising the bottom end of our prior guidance range.
We expect non-GAAP net income for fiscal 2024 to be in the range of $15 5 million.
$16 5 million.
Based on this guidance range, we estimate our adjusted EBITDA for fiscal 2024 to be $19 5 million to 24 $25 million.
Or approximately 9% of revenue at the upper end of the range.
We expect non-GAAP diluted EPS for fiscal 2024 to be in the range of <unk> 59.
<unk> 63.
We have assumed approximately $26 4 million weighted average diluted shares outstanding for fiscal 2024.
In summary, we are pleased with our solid performance in our second quarter and remain focused on executing to our long term strategy to achieve profitable growth.
I will now pass it back to Eric for some closing remarks, Eric Thank.
Thank you Sheng.
This month marks 20 years since the original two founders of whom are hired a small team and got to work.
In that time since we have developed into a successful growing public company with over 2 million users in over 100 employees and contractors.
Over the last 20 years, we believe we have saved our customers billions of dollars in the aggregate compared to what they would have paid with traditional phone service solutions.
We're also bringing them advanced features previously unavailable to smaller businesses and consumers.
Perhaps most exciting for us that we have become a leader in the disruptive change underway in communications made possible by cloud technology.
With the strong market position, we have built over the last 20 years and the multiple growth initiatives. We have underway, we're excited about our outlook.
Thank you we will now take your questions.
As a reminder, if you would like to ask a question.
Star followed by the number one and your telephone keypad.
Your first question comes from the line of Mike Latimore with Northland capital.
Your line is open.
Great. Thanks, Chad Congrats on a good solid results there.
The pro largest partnerships interesting what are the next steps there in terms of getting that fully launched.
It will it will take at least a few weeks, maybe a little longer it depends on how fast they move.
They have to.
Put us into their essentials platform, which is a.
Web page.
Based.
<unk> solution for their customers to draw and they have certain categories of capabilities. They have in that platform.
We will be kind of a new area for them with communications, but I think it's not only important for being part of the essentials platform, but also I think it demonstrates the whole week community.
<unk>.
What <unk> can bring and I know many Reits out there look to pro largest because they are.
Clearly a leader in the world in that space. So I think it was important for us to get the press release out and just continue the.
Awareness building that we're trying to do for for that space.
Great and then on your largest customer.
You talked about seeing a path towards a 100000 users there.
Can you just mentioned like what is the user count presently and also just highlighted some of your <unk> customers pushed out their timing.
Okay.
So.
With our largest customer that's.
Obviously, taking a combination of whom office Numa enterprise from us.
We're over 80000 users with them today and.
I can see us being at 100000 or more by fiscal year end and.
We've always thought we'd get there, but I feel.
I have even more visibility now than we've had about our path there it's great to have our new <unk>.
<unk> up and running in a new region of the world and to have some customers on it already and be planning the the major rollout that now comes with that.
Having got that one up and running I think we've worked out the Kinks, a fair bit in terms of putting up the next one and the next one so I feel like we did some lifting in Q2 and we're in great position as we go forward to Q3 on the Airedale front. The second part of your question.
It Baffles me, a little bit Mike because we save our customers so much money compared to what parts is now costing them.
It Baffles me, sometimes why they don't move faster.
But.
The savings are clearly compelling and I think thats, what I really turned to in terms of.
My confidence in air dial and where we're going.
To be honest, we just need to look forward with what we know and not speculate on what we think we can also achieve an and.
I can tell you we have a significant pipeline we have deals out for signing they are a lot of things that we think are going to come in the back half of this year, but.
But we'll have to.
It's a little bit harder to predict in our traditional areas of the company that we've been out longer and which are more steady so.
As things happen, we will keep you guys updated and we will see where we're at at the end of Q3.
Sounds good thanks.
Yes.
Your next question comes from the line of Matt Stotler with William Blair.
Your line is now open.
Hey, guys. This is Alex on for Matt Thanks for taking my questions.
Just a first one for me maybe could you touch on the progress that's been made with jazz where and next how those partnerships that were announced earlier in the year.
Is the progress going with those Rollouts and maybe how those how you see those layering into the overall business going forward.
Sure.
So on the first one the progress with <unk>, where they are.
A partner of ours for.
The hospitality space with our enterprise solution and that's gone well, we continue to grow in that space.
Mike I was just describing for air dial we have some significant opportunities in front of us as well are there more of a technology enabler for us because with the <unk> capability combined with ours.
We can make our system do more for the customer.
So I would say Thats rolling well next health.
I think we had slower progress than anticipated in Q2, and that's turning around now for Q3.
As we brought the solution into the market, we realize some additional integrations that we wanted to have.
With that we.
And they together and so.
We have we have customers using it and things and all that but but we did some further development in Q2 and I think we are.
We're really just turning up sales efforts on it more this quarter.
Got it sounds good thank you for that and then.
Maybe just one on <unk> can.
Can you give us an update on how the how the acquired business from onset is integrating with the rest of the day on the portfolio alongside maybe any any growth contribution you can share to the overall business. Thanks.
Sure so on.
From an integration into our business standpoint, it's been seamless and everything we planned and more.
The members of the onset team and folded into <unk>.
Some.
Some activities had changed for some people some people are working on.
On on what we were doing on the EMA side before we got together, but nonetheless on the onset platform we continue to.
Drive development and some in certain areas and.
Certainly continue to drive sales and marketing for it I will tell you that.
When we make our decisions now we don't think so much about we want to do this for on separate them into that <unk>, we think about customer acquisition cost payback.
And channels to market and we're always measuring what we do and so I would say that we arent spending all that much on growth for the onset platform. Today, we found that that some of the things we're doing more with the under the <unk> brand. If you will have been more powerful for us, but we are still investing in onset and they brought on.
A meaningful number of users last quarter, but we're not seeing we're not.
Driving a lot of growth in onset per se.
But certainly it's fungible, where we spend the money with onset appeared there positively contributing to our bottom line and we have sales and marketing budget from that and we just allocate where we think we can make the biggest impact so.
That's kind of how we look at it and we were fortunate onset was a very mature platform that runs very very well, we did bring out I should say they are already well along with but we finished up and brought out a new admin portal that I think is a nice step forward for them. We've made some additions in change.
As to their mobile app, but really.
We can kind of view this as part of the <unk> portfolio now and kind of run our sales and marketing as one company and that's how we're that's how we're doing it.
Got it perfect. Thank you I'll pass it on.
Thank you thanks, Alex.
Your next question comes from the line of Josh Nichols with B Riley your.
Your line is open.
Yeah. Thanks for taking my questions just to dig in a little bit more it's good to hear about all the new wins.
Funnel for for a while.
But where do we stand today as far as how many units have been installed and if you could participate a little bit about where the backlog goes today in terms of number of units. So we can get some idea.
Idea of what that growth potentials should look like when the deliveries and installations do you start to them.
So I can frame it a little for you Josh as you know we haven't given those specifics yet.
When we get a large customary can take six months to do rollout in fact, our large customer from last fall that we announced two quarters ago.
I think where mopping up now the stragglers, but there's a handful of installations still to go but they are pretty much getting done after six months of effort frankly, a month or two of planning and then six months of effort. So rollout does take time I think we've gotten a lot better at rollout.
We work with multiple third parties for.
When a customer wants to.
Have a third party do installation and pay for it by the way it's.
It's something we charge for.
And with some of those new third parties are relatively new compared to where we started.
We've revamped our team internally we have <unk>.
<unk> discovered that we need to dedicate more resources to this.
We are actively hiring in the sales.
Dan.
Sure.
Sales engineering's side of our company to try to support the growth of air dial I don't feel like we're keeping up with the opportunities we're seeing in the market and I know, it's ashamed to say that but it's kind of a new area for us this kind of a direct strategic sales capability and.
<unk>.
We've got significant ambitions to add to the team through the balance of this year on the partner front.
We've had some big wins, I mean T mobile now U S cellular.
Frankly pro largest because of what they represent in the industry and.
We're achieving new partners every quarter on air dial and takes a little while to train on takes a while to get out in the market, but I can tell you that.
We routinely get surprised when a partner we expect some of these partners to deliver opportunities that are a few lines here are a few lines here, but.
It's amazing how some can bring in a larger sized opportunity so.
It's an exciting time for us but.
I don't feel like we have enough presence in the market and I worry about the deals we're not seeing.
I think if you look at our well I know if you look at our pipeline.
Our pipeline, which is to say.
Opportunities in our sales funnel funnel, which are not yet closed there are tens of thousands of lines and <unk>.
That's the kind of opportunity, we aspire to achieve but.
In any case I hope that brings in a little bit I know it.
Is maybe a little frustrating not to know it more specifically than that but you do have our overall guidance and and.
And you know what we're trying to do and.
Yes.
Just wins that we achieve I have been announcing those and it gives you a sense that that there is bigger potential here I hope as we go forward.
Thanks Herb.
Providing a little bit of clarity there.
And then last question for me.
You mentioned it just now in your comments.
<unk> talked about it too much I know.
We have some partnerships with T mobile.
On air Dial, but also some residential solutions just any updates on progress that's going on with that partnership.
Sure that participant in place for over a year now and it's been pretty steady.
In the greater sense over last.
Several quarters.
We get.
We get some customers out of that relationship that mainly are our customers there to soar.
Our presence on T Mobile's website and.
Feel they want to get phone service with their internet.
What T mobile has not done as.
Enabled.
Marketing, if you will marketing sales through their inside teams and some other things due mainly the system's challenges and other things so.
It has not been a big driver of our residential business today, but it's a nice adder we.
Do see other opportunities similar in some respects to this to go after.
Sure.
I don't.
I don't know how far we will get with those but but we are working other opportunities as well to try to use partners as well as our own sales activities on the residential side of our business.
Great. Thank you.
Thanks.
Your next question comes from the line of Brian singer with Alliance Global Partners. Your line is open.
Great. Thanks for taking my questions first can you comment on how active T mobile and U S cellular had been at.
As partners to air Dow and have either closed deals.
Oh goodness both of closed deals I talked about the very first deal from U S cellular that happened even before.
They announced the program formally do their sales teams.
Yes.
Our two largest deals from last quarter, both came through partners.
And.
So.
It takes time to ramp up there is no question. It takes time for salespeople to get comfortable with things and to be honest with you. There's a lot to know about <unk>. It's not the typical kind of thing that some of these entities would normally sell but we have staff to work with them in deals into.
And support the process and.
I think it's a really important part of our strategy because we also sell air dial through our channel partners that also sell in particular, <unk> enterprise and Theyre, finding us a lot of deals, but a lot of the deals they find us are a.
A few lines, where it doesn't lines.
And I think what will really make air dial the breakout success that we all aspire for it to be is winning the 501000 or even bigger line opportunities and.
Our partners have good relationships for that and.
Where we.
We're excited about what we're seeing with them.
Great and then what is it that takes.
Six months for a large implementation that the process needs to be changed for customers. This technology have to be changed to prepare and named once the actual.
Once the customer's ready how long does it actually take for <unk> to actually install.
So.
You need to wrap your head around a little bit.
The scope of a large customer, let's say that.
That loss that large customer I've talked about from last fall.
More than 2500 lines more than 700 locations.
If youre going to do it.
Do this in six months Youre doing what 115 locations.
A month.
30 locations a week.
And it starts to and every location you don't really know maybe where your lines even terminate in your building and and once you.
Find them and get the Airedale put in and.
Test it.
Its reception, which.
Usually works fine, but we can switch as we've talked in the past to a variety of cellular providers if needed to get better reception, but once you get the announcements in and tested then you've got to plug the equipment into it and test the equipment, but all that said.
Couple of hours three hours will get an installation at a site done 10 installation needs to earn six lines.
It goes pretty fast.
Per location so.
It's really the number of locations that drives the timeline and the effort just the project planning and the.
And the pre installation.
Analysis, you need to do to know how you're going to make the conversion happen.
Got it last question for me is on the International front, you've obviously used your largest customer to expand internationally.
What point does the company.
Make the investment necessary to begin selling to other customers outside.
This large customer is that.
In the next 12 to 24 months is there too much on your plate to think about that right now.
While it is not in our plan for this fiscal year, which is the next six months, but.
I think it's fair to say that we aspire to it being an.
In the timeframe, you mentioned or something like that.
Uh huh.
We're also going to have to question.
Ah.
What we lead first with internationally.
We see tremendous airedale opportunity internationally as well, but most likely if we're going to dovetail off what we've done with this large customer we would begin selling our home office solution in particular.
Probably in Western European countries.
And.
To third parties to other other other parties.
We would love to do that with certain partners or certain entrees into the market and we are thinking about our strategy in that regard, but this year.
We don't we are not working on those on those next steps yet.
Great. Thanks for taking my question.
You bet.
As a reminder, if you would like to ask a question press star followed by the number one on your telephone keypad.
Your next question comes from the line of Matthew Harrigan with benchmark.
Your line is now thank you.
Thank you congratulations on the results and the guidance I just had a couple.
Thanks Juan.
Yes, I guess in the nature of course, a vacuum category <unk> got a huge tam for aratana aisle.
Clearly, there's a crying need right now are you seeing anything in the way of incipient competition or people you see who are at least <unk>.
There are some coming in the space and then anecdotally in the U S. I mean, despite there.
<unk> working hard to phase out copper lines, and all of that Youre seeing something almost price gouging in terms of what they're charging.
For an alternative.
Are you seeing the same type of pricing.
Looking at Europe , and other markets in terms of.
Capitalized.
Way out of whack.
Increasing the urgency of people wanting to move on thank you.
Yes.
So on your second part of your question it varies a little bit.
We don't see it so much in Canada I believe in Canada pricing is still relatively controlled although we are seeing Canadian customers in need of air dial and asking for it and currently we're not providing air dial in Canada.
So even even though the market I don't think is as far along as it is here in the U S certainly going that way, but it's not there yet when we look at Europe .
It varies a little bit by country.
In fact varies a lot by country. Some countries haven't started their journey, but they know they need to.
And.
In the very early days of looking for what they might do others are kind of getting started and it's.
And now looking at.
What's the best approach to take and I feel like whenever we can get in front of us.
Our partner in one of these countries because keep in mind, we need a cellular provider provider to at least provide the.
The Internet connection that goes with air dial.
We find that.
Once we explain what <unk> does and how it works. There is there is no product like it in the market and.
So it's a really compelling story.
And I really believe that and it's just getting better every day two we have made so many improvements to and even over the last six months and extensions to it so.
Yes.
We're actively thinking that at that level more broadly than the U S. But.
I don't think Theres, new I don't think the other markets have turned the corner like the U S has over the last 12 months over the last 12 months really over the last six months, even since the start of this year, we've seen customers a lot more aware of the need to do something.
I think where it starts to get out and stay start to notice their bills and so.
And so the USO clearly farther along than other countries, but.
But you can definitely see it coming.
I hope that addresses your question I'll answer the first part of your question I didn't get to our knowledge. The first part of your question is really <unk>.
On competition I know Theres a long.
Sales cycle, it takes a while to get product out and all of that but it does the crying need the massive market opportunity do you see anyone at all or at least working on a comparable.
<unk>.
It's apparently because it doesn't feel like you would necessarily have a four or five years.
The address this massive market before someone else or are there people aggressively came in.
I don't know of anyone that's working on a new solution for this market or any development underway to change the solutions that are out there today.
I think I think the.
The biggest challenge we face is making sure.
Customers know, we have our dial and know what it can do for them and we need a lot more outreach and branding and marketing.
To do that.
But.
If you're if euro.
If you're a large aggregator today.
You have a lot of pots lines that you sold and you know where they are and you can just walk into those customers, we need to get them realize theres a viable alternative we have a significant opportunity we're working right now where.
They got introduced to us through.
A third party.
They were just thrilled to find out about us, but they had no idea. They just didn't know and its kind of customer we should we should be reaching out to and so we're really trying to build our sales and marketing capability.
To be able to do do more of that.
And that's I think what will drive the business.
Great nice problem to have thanks, Eric.
Thank you.
There are no further questions at this time and concludes our Q&A session I'll turn the call back to Eric's closing remarks.
Well. Thank you everyone. We were excited to outperform on the revenue and frankly, our $3 $6 million in cash flow from operations is I think the most we've ever had as a company and we're doing it while we're investing in these new strategic initiatives.
I feel like we're on track and.
I realize.
From all the questions here and just in general talking with all of you, we as well want to be able to show you even more aired our success and I want you know, we're working hard towards that.
With that thank you everyone. We'll stop here. Thank you.
This concludes today's conference call you may now disconnect.