Q1 2024 iCAD Inc Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the ICAD Incorporated first quarter 2024 earnings call. At this time, all participants have been placed in a listen-only mode, and the floor will be open for questions and comments following the presentation. If you require any operator assistance today on your call, please press the star key followed by zero. Please note that this call is being recorded. It is now my pleasure to turn the floor over to your host, Mr. Jeremy Bennis. Sir, the floor is yours.

Good day, ladies and gentlemen.

Welcome to the icon incorporated first quarter 'twenty 'twenty four earnings call.

Speaker Change: At this time, all participants have been placed on a listen only mode.

Speaker Change: And the floor will be opened for questions and comments following the presentation.

Speaker Change: If you require any operator assistance today on your coal. Please press the star key followed by zero.

Speaker Change: Please note this call is being recorded.

Speaker Change: It is now my pleasure to turn the floor over to your host Mr. Jeremy.

Mr. Jeremy: Sir the floor is yours.

Jeremy Bennis: Thank you, Operator. Good morning, everyone, and thank you for joining us today for ICAT's first quarter Fiscal Year 2024 Earnings Call. On the call today, we have Dana Brown, our President and Chief Executive Officer, and Eric Lonnqvist, our Chief Financial Officer. Before turning the call over to Dana, I would like to remind everyone that we will be making forward-looking statements on the call today. These forward-looking statements are based on ICAT's current expectations and are subject to uncertainty and changes in circumstances.

Mr. Jeremy: Thank you operator, good morning, everyone and thank you for joining us today for <unk> first quarter fiscal year 2024 earnings call on the call today, we have data Brown, our president and Chief Executive Officer, and Eric Lindquist, Our Chief Financial Officer before turning the call over to Dana I would like to remind everyone that we will be making forward looking statements.

Jeremy Bennis: Actual results may differ materially from these expectations. For a list of factors that could cause actual results to differ, please see today's press release and our findings with the U.S. Securities and Exchange Commission. ICAD undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call. Also, please note that management will refer to certain non-GAAP financial measures. Management believes that these measures provide meaningful information for investors and reflect the way they view the operating performance of the company. You can find a reconciliation of our gap to non-gap measures at the end of this earnings release. With that, I'll turn the call over to Dana.

Speaker Change: Call today. These forward looking statements are based on <unk> current expectations and are subject to uncertainty and changes in circumstances.

Speaker Change: Our results may differ materially from these expectations for a list of factors that could cause actual results to differ please see today's press release and our filings with the U S Securities and Exchange Commission.

Speaker Change: <unk> undertakes no obligation to revise or update any statements to reflect events or circumstances. After the date of this conference call.

Speaker Change: Also please note that management will refer to certain non-GAAP financial measures management believes that these measures provide meaningful information for investors and reflect the way. They view the operating performance of the company you can find a reconciliation of our GAAP to non-GAAP measures at the end of the earnings release with that I will turn the call over to Dana.

Dana R. Brown: Thank you, Jeremy. And good morning, everyone. On our last call, I recapped the progress we've made executing a three-phase transformation. We completed phases one and two, which were realigning our base and strengthening our foundation. In these two phases, we were focused on stabilizing our cash burn, strengthening our leadership team, and divesting the ZOPT business.

Dana R. Brown: Thank you Jeremy and good morning, everyone.

Dana R. Brown: Let's begin with a business update.

Dana R. Brown: Phase 3, Investing in Growth Initiatives, began in the first quarter 2024, with the focus on expanding into key accounts and new markets with our existing solutions. This phase is focused on maximizing revenue from our sizable installed base, including reengaging customers who've lapsed on annual maintenance service agreements, upgrading customers to new versions, including the transition to the cloud, and accelerating deployments across large national accounts. To set us up for success, we have developed and launched Targeted Lead Gen programs. Previously, a reliable and consistent inflow of new leads and a documented and measured pipeline management process did not exist.

Dana R. Brown: On our last call I recap the progress we've made executing a three phased transformation, we've completed phases, one and two which we're realigning our base and strengthening our foundation.

Dana R. Brown: And these two phases, we were focused on stabilizing our cash burn and strengthening our leadership team and divesting the docs business.

Dana R. Brown: Phase three investing in growth initiatives began in first quarter 'twenty 'twenty four with the focus on expanding into key accounts and new markets with our existing solutions.

Dana R. Brown: This phase is focused on maximizing revenues from our sizeable installed base, including re engaging customers, who relapsed on annual maintenance service agreement.

Dana R. Brown: Upgrading customers to new versions, including the transition to cloud and accelerating deployment across large national accounts.

Dana R. Brown: To set us up for success, we have developed and launched targeted lead Gen programs.

Dana R. Brown: Previously a reliable and consistent inflow of new leads and a documented and measured pipeline management process did not exist.

Dana R. Brown: We've revamped our commercial model. We've reorganized our team structure, how we target and segment our market, and revised messaging, pricing, and account management strategy. And as noted on a prior call, we believe U.S. sales declined in part due to a significant reduction in the sales force in fiscal year 2022. As of Q3 2023 in the US, we had six sales reps versus 12 in Q3 2022. After a thorough analysis of rep performance over the past three years and our large addressable market opportunity, we believed adding additional sales reps focused on new business and a more orchestrated effort on account retention and expansion would result in increased revenue. In December 2023, we announced the hiring of Peter Graham as head of North American sales. In the first quarter, he added four new reps to the sales team.

Dana R. Brown: We've revamped our commercial model, we've reorganized our team structure, how we target and segment our market revised messaging pricing and account management strategies.

Dana R. Brown: And as noted on our prior call. We believe U S sales had declined in part due to significant reduction in the sales force in fiscal year 2022.

Dana R. Brown: As of Q3 2023 in the U S. We had six sales reps versus 12 in Q3 2022.

Dana R. Brown: After a thorough analysis of Brett performance over the past three years and our large addressable market opportunity. We believe adding additional sales reps focused on new business and a more orchestrated effort on account retention and expansion would result in increased revenues in.

Dana R. Brown: In December 2023, we announced adding Peter Graham as head of North American sales in first quarter. He added four new reps to the sales team.

Dana R. Brown: Let's turn now to a few brief Q1 deal highlights. Dignity Health, a part of Common Spirit, signed a four-year subscription deal. They are using our technology on their Hologic gantries. The initial deal was for a portion of their gantries, so there will be room to expand as we go forward.

Dana R. Brown: Let's turn now to a few brief Q1 deal highlights dignity health are part of common spirit signed a four year subscription deal, they're using our technology on their Hologic gantries.

The initial deal was for a portion of their gantries that there will be room to expand as we go forward.

Dana R. Brown: Raleigh Radiology, a perpetual license deal, was a competitive head-to-head win against Hlodzic. Raleigh Radiology serves over 80,000 patients in the Raleigh market. Northern Navajo.

Dana R. Brown: Raleigh radiology, a perpetual license deal with a competitive head to head win against Hologic Raleigh Radiology serves over 80000 patients in the Raleigh market.

Dana R. Brown: While a smaller deal, it's important to our strategy to serve the First Nation. We will be working together to roll out continued education and support to expand the reach to Native American women. This was also a perpetual deal.

Dana R. Brown: Northern Navajo well the smaller deal it's important to our strategy to serve the first nation, we will be working together to rollout continued education and support to expand the reach to native American women. This was also a perpetual deal.

Dana R. Brown: The University of Chicago Medical Center is an expansion for us with upgraded software and added exam volumes in 2024. This is a subscription deal with room to continue to expand their use over the coming years. Avera McKinnon Hospital chose ICAD because of our ability to move them closer to a total virtual platform. We're supporting their 2D mammography today via a new VM platform with future plans to expand support to 3D and cloud. Hancock Regional Hospital, a perpetual deal, purchased the 2D and 3D profound detection solutions for use with their halogic system.

Dana R. Brown: University of Chicago Medical Center is an expansion for us with upgraded software and added exam volumes in 2024.

Dana R. Brown: This is a subscription deal with room to continue to expand their use over the coming years.

Speaker Change: Ah Vera Mckinnon Hospital chose I can't because of our ability to move them closer to a total virtual platform.

Speaker Change: We're supporting their two D mammography today via a new vehicle platform with future plans to expand support to three D in cloud.

Speaker Change: Hancock Regional hospital, a perpetual deal purchased the two D and three D profound detection solutions for use with their Hologic systems.

Dana R. Brown: Indiana University Health Arnett, a perpetual deal, also purchased both 2D and 3D profound detection solutions. They are the largest health system in Indiana and are continuing to expand use of ICAD's AI in a mixed gantry environment that's predominantly halogic. There's additional room for expansion within this account as well.

Speaker Change: Indiana University health, our net a perpetual deal also purchased both two D and three D. Profound detection solutions. They are the largest health system in Indiana and are continuing to expand use of I catch AI in a mixed gantry environment, that's predominantly hologic, there's additional room for expansion.

Speaker Change: Within this account as well.

Dana R. Brown: University of Texas, Tyler, an upgrade of an existing perpetual deal. The value add for this upgrade was to improve detection accuracy and overall outcomes for their patients by adding 3D detection to find cancers earlier, reducing false positives, and improving workflow efficiency. And lastly, we expanded into five additional solar sites. Standardization with ICAD's profound AI suite across all existing and new SOLUS sites enables SOLUS to remain the industry leader that provides both state-of-the-art technology and a best-in-class patient experience.

Speaker Change: University of Texas, Tyler and upgrade of an existing perpetual deal the.

Speaker Change: The value add for this upgrade was to improve detection accuracy and overall improve the outcomes for their patients by adding three D detection defined cancers earlier, reducing false positives and improving workflow efficiency.

Speaker Change: And lastly, we expanded into five additional solar sites.

Speaker Change: Standardization with I catch profound AI suite across all existing and new solar sites enables solus to remain the industry leader that provides both a state of the art technology with the best in class patient experience.

Dana R. Brown: In the first quarter, we also achieved several milestones with our OUS sales channel, further expanding ICAD's global reach. In Turkey, profound detection has recently been implemented in one of the largest and most important hospitals in Istanbul, Andalou Medical Center. This center has a strategic relationship with John Hopkins Hospital, providing continuous access to the latest innovations and technology advances. This relationship provides ICAD significant exposure within this Eastern European region.

Speaker Change: In first quarter. We also achieved several milestones with our O U S sales channel further expanding <unk> global reach.

Speaker Change: In Turkey profound detection has recently been implemented and one of the largest and most important hospitals in Istanbul and dilutive Medical Center. This center has a strategic relationship with John Hopkins Hospital, providing continuous access to the latest innovations in technology advancements this really.

Speaker Change: <unk> provides I catch significant exposure within the eastern European region.

Dana R. Brown: In Serbia, we secured our second sale at a large oncology site in Vojovodina, expanding our presence within this country. In Poland, we celebrated our first installation of profound detection at one of the largest oncology sites just outside of Warsaw. Radomsky Syndrome, Oncology.

Speaker Change: In Serbia, we secured our second sale at a large oncology site in Voya with Dena expanding presence within this country.

Speaker Change: In Poland, we celebrated our first installation of profound detection and one of the largest oncology sites just outside of Warsaw.

Speaker Change: <unk> syndrome oncologists.

Dana R. Brown: In Israel, to complement the 13 licenses at profound detection and risk already sold to the Qalit Hospital Network, one of Israel's leading medical groups, we sold the 14th license to the Qalit Research Center, where they will be conducting a research study leading to future publication. In France, our direct sales force signed an agreement with one of the largest multi-site private clinics called Oradenaise to facilitate the implementation of profound detection across their 100 clinics in France. Lastly, in the first quarter, ICAD received international television exposure featuring interviews with several radiologists using profound detection from different countries. Interviews aired on French, Belgian, and Israeli television.

Speaker Change: In Israel to complement the 13 licenses a profound detection and risk already sold to their call Elite Hospital network, one of Israel's leading medical groups. We sold the 14th license to the Elite Research Center, where they will be conducting a research study leading to future publications.

Speaker Change: In France, our direct Salesforce signed an agreement with one of the largest multi site private clinics.

Speaker Change: Or are there needs to facilitate implementing profound detection across their 100 clinics in France.

Speaker Change: Lastly, in the first quarter I cant received international TV exposure featuring interviews as several radiologists using profound detection from different countries interviews aired on French and Belgium, and Israeli TV.

Dana R. Brown: Turning now to marketing and clinical research, a quick review of our first quarter conference and publication activity. In January, ICAT participated in Arab Health in Dubai, the largest health care exhibition in the Middle East, attracting over 52,000 professionals from 176 countries. During this event, we announced our new partnership with Imatec Healthcare Solutions, our distributor in the UAE. With Imatec, we engaged in meetings with three prominent hospital groups, Prime Healthcare, EHS, and Brzeal, and with the UAE Ministry of Health.

Speaker Change: Turning now to marketing and clinical research a quick review of our first quarter conference and publication activity.

Speaker Change: In January I kept participated in Arab health in Dubai, the largest healthcare exhibition in the middle East attracting over 52000 professionals from 176 countries.

Speaker Change: During this event, we announced our new partnership with AMETEK healthcare solutions, our distributor in the UAE with AMETEK, we engaged in meetings with three prominent hospital groups Prime health care E Jets in Brazil, and with the UAE Ministry of Health.

Dana R. Brown: In late February, we attended the European Society of Radiology, or ECR, in Vienna. ECR is the largest and most important medical imaging conference in Europe. This year, the conference drew just under 19,000 attendees from 127 countries, including over 12,000 radiology professionals. We hosted an event with over 40 of our European distributors and their customers coming from 13 different countries.

Speaker Change: In late February we attended the European Society, Radiology or E. C. R V. I N E. C. R is the largest and most important medical imaging conference in Europe. This year. The conference drew just under 19000 attendees from 127 countries, including over 12000 radiology professionals.

Speaker Change: We hosted an event with over 40 of our European distributors and their customers coming from 13 different countries.

Dana R. Brown: ICAD was also prominently featured in four clinical presentations covering a variety of topics. For example, a retrospective study at the Reggio Emilia Breast Screening Program in Italy, led by Andrea Notrosi, Ph. D., aimed to assess the efficacy of implementing ICAD's ProfoundAI case-scoring strategy in a breast screening program to expedite the reading process. Their study concluded that adding artificial intelligence, case scoring, and a breast screening program can overcome delay and improve prioritization in most probably true positive cases.

Speaker Change: <unk> was also prominently featured in four clinical presentations covering a variety of topics.

Speaker Change: A retrospective study at their Reggio Emilia breast screening program in Italy led by Andrea Nitro C. Ph D aimed to assess the efficacy of implementing I cats profound AI case, scoring strategy and our breast screening program to expedite the reading process.

Speaker Change: The study concluded that adding artificial intelligence case, scoring and our breast screening program can overcome delay and improved prioritization in most probably true positive cases.

Dana R. Brown: A second retrospective study by this same group aimed to assess the integration of ICAD's case malignancy scoring into a breast screening program to alleviate workload without compromising accuracy. Analyzing data from over 31,000 screening exams, including 92 proven tumors, the study simulated two integration AI and human reading protocols. Results showed that implementing ICAD's deep AI could substantially reduce the number of human readings and workload by up to 30%, with a modest improvement in recall rate and no increase in false negatives observed.

Speaker Change: Second retrospective study by the same group aim to assess the integration of ipads case malignancy, scoring into a breast screening program to alleviate workload without compromising accuracy.

Speaker Change: Rising data from over 31000 screening exams, including 92 proven tumors, the steady stimulated to integration AI and human reading protocols.

Speaker Change: Results showed that implementing I catch profound AI could substantially reduce the number of human readings and workload by up to 30% with a modest improvement in recall right and no increase in false negatives observed.

Dana R. Brown: Jonas Sebelak, a research associate and PhD candidate, along with others from the University of St. Gallen and Krebs-Liske-Ostwitz in Switzerland and Radiology Amtheater in Germany, presented a retrospective evaluation of interval breast cancer using cutting-edge advances in AI for radiological imaging, using AI to reduce the number of interval carcinomas by using AI diagnostic software. And Dr. Chirag Pargi, Chief Medical Officer for Solus Mammography, was awarded an ECR Certificate of Merit for his presentation on breast arterial calcification, or BAC, as a proxy for broader vessel disease. In addition, we showcase at two GE-sponsored educational events.

Jonas Similac, our research associate and Phd candidate along with others, then the University of St gallon, and Craigslist get pushed rates in Switzerland and radiology.

Peter Graham: Peter in Germany presented a retrospective evaluation of integral breast cancer using cutting edge advances in AI for radiological imaging using AI to reduce the number of integral carcinomas by using AI diagnostic software.

Peter Graham: And Dr Shrunk Parkey, Chief Medical Officer for Solus Mammography was awarded an ECR certificate of Merit for his presentation on breast arterial calcification or Bac as a proxy for broader vessel disease.

Speaker Change: In addition, we showcase that to Ge's sponsored educational events, one focused on the adoption of artificial intelligence in breast imaging by Dr. Corinne Valley Gere head of medical imaging Department, Institut Gustave Russi in France, and the second on the impact of AI and.

Dana R. Brown: One focused on the adoption of artificial intelligence in breast imaging by Dr. Corinne Balaguer, Head of the Medical Imaging Department, Institut Gustave Roussy in France, and the second on the impact of AI in clinical routines for the detection of breast cancer on mammograms by Dr. Axel Gravigold of Germany. Lastly, in March, we showcased our solutions at the National Consortium of Breast Centers Annual Interdisciplinary Breast Center Conference in Las Vegas to over 900 attendees.

Clinical routines for the detection of breast cancer, and Mamograms by Doctor axle driving both of Germany.

Speaker Change: Lastly in March we showcased our solutions at the National consortium of breast centers annual interdisciplinary breast Center conference in Las Vegas to over 900 attendees. This conference focus is to increase the quality of breast care provided to women across the globe through introduce.

Dana R. Brown: This conference's focus is to increase the quality of breast care provided to women across the globe through interdisciplinary education for breast health professionals. Many breast health care practices are not standardized, and this conference provides a learning and networking environment enabling breast professionals to learn about genetics, risk, the latest treatments, technologies, procedures, as well as become certified and sharpen their skills in detecting and treating breast cancer. It was a very engaged audience with strong interest in risk detection and quality programs, and it resulted in several strong leads for our sales pipeline.

Speaker Change: Disciplined aerie education for breast health professionals.

Speaker Change: Many breast health care practices are not standardized and this conference provides a learning and networking environment, enabling breast professionals to learn about genetics risks the latest treatments technologies procedures as well as become certified and sharpen their skills in detecting and treating breast cancer, it's a very engaged.

Speaker Change: Audience with strong interest in risk detection and quality programs and resulted in several strong leads for our sales pipeline.

Dana R. Brown: We hosted a breakfast symposium for nearly 200 of the attendees, featuring a presentation by Dr. Nikki Gidwani, a breast radiologist with Stony Brook University Hospital. Dr. Gidwani discussed how BRIC imaging centers are staying at the forefront with best-in-class AI solutions. She shared her personal journey with Breast AI Solutions and the power of ICAD's newest algorithm in helping imaging centers meet key clinical, operational, quality, and financial business objectives. Additionally, we were proud to announce a philanthropic global health collaboration with RAD-AID International.

Speaker Change: We hosted a breakfast symposium for nearly 200 of the attendees featuring a presentation by Doctor Nikki Good Wanni abreast radiologist with Stony Brook University Hospital.

Speaker Change: Doctor could one ive discussed how breast imaging centers are staying at the forefront with best in class AI solutions. She shared her personal journey with breast AI solutions and the power of ipads newest algorithm and helping imaging centers meet key clinical operational quality and financial business objectives.

We were proud to announce a philanthropic global health collaboration with Rad eight international.

Dana R. Brown: RAD-AID, a nonprofit charitable organization dedicated to improving radiology health care in medically underserved regions, is collaborating with ICAD to introduce mammography AI-based decision support, starting with an implementation in Guiana using ICAD's profound detection. The partnership's primary goal is to improve the speed, efficiency, and accuracy of breast imaging and breast cancer detection by providing low-resource medical institutions with access to technology, education, clinical support, and We've recently installed our solutions in Guiana, where the implementation of our profound AI detection solution, coupled with RAD-AIDS educational and capacity-building initiatives, aims to increase and improve breast cancer detection for patients in need.

Speaker Change: Red aid nonprofit charitable organization dedicated to improving radiology health care in medically underserved regions is collaborating with ICANN to introduce mammography AI based decision support.

Speaker Change: Starting with an implementation in Guiana, using ipads profound detection.

Speaker Change: The partnership's primary goal is to improve the speed efficiency and accuracy of breast imaging and breast cancer detection by providing low resource medical institutions with access to technology education clinical support and hands on training. We've recently installed our solutions in Guiana, where.

Speaker Change: Implementation of our profound AI detection solution.

Speaker Change: Bold with Rad AIDS educational and capacity building initiatives aimed to increase and improve breast cancer detection for patients in need.

Dana R. Brown: Such collaboration endeavors to build AI-supported models for globally reducing healthcare disparities and increasing health equity by widening access to earlier cancer diagnosis. Breast cancer remains a significant global health challenge, particularly in regions where trained clinical personnel and technological resources are scarce and drive deep disparities in breast cancer outcomes.

Speaker Change: Such collaboration endeavors to build AI supported models for globally, reducing healthcare disparities and increasing health equity by widening access to earlier cancer diagnostics.

Speaker Change: Breast cancer remains a significant global health challenge, particularly in regions, where trained clinical personnel and technological resources are scarce and drive deep disparities in breast cancer outcomes.

Dana R. Brown: Dedicated to our mission of creating a world where cancer can't hide, we're honored to partner with RADAID on this transformative program to ensure advances in early cancer detection are available globally. Our deployment of profound AI detection in Guyana represents a significant step forward in the fight against breast cancer in low-resource settings. Together with RAD-AID, we can revolutionize breast cancer detection accuracy and efficiency, ensuring medical professionals have the training and the tools they need to work smarter. When it comes to cancer diagnosis, we believe where you live should not determine whether you live.

Speaker Change: Dedicated to our mission of creating a world where cancer can tide, we're honored to partner with Rite aid on this transformative program to ensure advances in early cancer detection are available globally, our deployment of profound AI detection in Guiana represents a significant step forward in the fight against breast.

Speaker Change: Cancer in low resource settings.

Speaker Change: Together with Red aid, we can revolutionize breast cancer detection accuracy and efficiency, ensuring medical professionals have the training and the tools they need to work smarter when it comes to cancer diagnosis, We believe where you live should not determined whether you live.

Dana R. Brown: From a clinical data perspective, a paper published in The Lancet in February 2024 shows that the performance of profound risk with 2D mammography holds up in five European screening populations that were not used for the development of profound risk for 2D. This paper is an external validation of profound risk for 2D that shows its performance generalizes across the five screening populations with AUCs greater than 0.7. The results also show that profound risk for 2D can predict later stage breast cancers as high risk among women who are currently sent home with a negative mammogram when profound risk for 2D isn't used clinically.

Speaker Change: From a clinical data perspective.

Dana R. Brown: This means that profound risk for 2D could help with earlier identification of women that may carry elevated mortality and morbidity risks associated with late-stage breast cancer and thus could potentially save lives if additional personalized screening strategies are implemented for these women rather than if they just follow the typical average screening regimen. Let's turn now to updates on our technology.

Speaker Change: Per published in the Landsat and February 2024 shows that the performance of profound risk with two D. Mammography holds up in five European screening populations that were not used for the development of profound risk for two D. This paper is an external validation of profound.

Risk for two D that shows its performance generalizes across the five screening populations with AUC is greater than seven.

Speaker Change: The results also show that profound risk for two D. Can predict later stage breast cancers as high risk among women, who are currently sent home with a negative mammogram when profound risk for two D isn't used clinically.

Speaker Change: This means that profound risks for two D could help with earlier identification of women that may carry elevated mortality and morbidity risk associated with late stage breast cancer, and thus could potentially save lives. If additional personalized screening strategies are implemented for these win.

Speaker Change: When rather than if they just follow the typical average screening regimens.

Dana R. Brown: In mid-March, we released new advanced workstation features for our flagship solution, Profound Detection, for both 2D and 3D mammography, aimed at further improving and facilitating radiologists' interpretation of mammograms within their workstation. The new features for the Profound Detection solution are designed to improve the readability of iCAD results through a configuration option to limit to three lesion marks visible on a workstation view This refinement ensures that radiologists can interpret the most critical information, thereby streamlining the diagnostic process for more efficient decision-making.

Speaker Change: Let's turn now to updates on our technology in.

Speaker Change: In mid March we released new advanced workstation features for our flagship solution profound detection for both two D and three D mammography.

Speaker Change: Aimed at further improving and facilitating radiologists interpretation of mamograms within their workstation.

Speaker Change: The new features for the profound detection solution are designed to improve the readability of by CAD results through a configuration option to limit to three lesion marks visible on a workstation view displaying <unk> images.

Speaker Change: This refinement ensures that radiologists can interpret the most critical information, thereby streamlining the diagnostic process for more efficient decision, making.

Dana R. Brown: The introduction of color-coded lesion marks and case scores on the profound scorecard provides an intuitive visual aid, allowing radiologists to discern the suspicion level of detected abnormalities quickly. This color-coded system, based on cancer occurrence per screening population, offers a concise, comprehensive representation of the severity of detected lesions and the overall case, further aiding in accurate diagnoses and prioritization of cases.

Speaker Change: The introduction of color coded leisure marks NK scores on the profound scorecard provides an intuitive visual aid.

Speaker Change: Allowing radiologists to discern the suspicion level are detected abnormalities quickly.

Speaker Change: This color coded system based on cancer occurrence per screening population offers that concise comprehensive representation of the severity of detected lesions and the overall case further aiding and accurate diagnoses and prioritization of cases.

Dana R. Brown: And lastly, the support for fine-tuning score ranges based on a facility's own real-world data enables users to customize the detection system according to their specific clinical needs, enhancing performance and adaptability to varying patient populations. The progression of ICAD's leading breast health AI for over 20 years represents our continuous improvement in technology and functionality, demonstrating our unwavering commitment to advancing cancer detection capabilities and improving patient outcomes. From the inception of ICAD's 2D detection in 2002 to the launch of 3D detection version 1 in 2016, followed by 3D version 2 detection in 2018, and version 3 in 2021, each version has pushed the boundaries of cancer detection solutions. Now, in 2024, the release of Version 3 Detection Service Pack marks another milestone, representing a commitment to ongoing enhancement and ensuring that profound detection remains at the forefront of early cancer detection solutions.

Speaker Change: And lastly, the support for fine tuning score ranges based on the facilities one real world data enables users to customize the detection system. According to their specific clinical needs enhancing performance and adaptability to varying patient populations.

Speaker Change: The progression of ikat, leading breast health AI for over 20 years represents our continuous improvement in technology and functionality, demonstrating our unwavering commitment to advancing cancer detection capabilities and improving patient outcomes.

Speaker Change: From the inception of ipads to D detection in 2002 to the launch of three D. Detection version, one and 2016, followed by three D version to detection in 2018 and version three in 2021. Each version has pushed the boundaries of cancer detection.

Speaker Change: Solutions now in 2020 for the release of version three detection service pack marks another milestone representing our commitment to ongoing enhancement and ensuring that profound detection remains at the forefront of early cancer detection solutions.

Dana R. Brown: We also recently announced commercial availability on Profound Cloud, built on the Google Cloud platform. Our innovative Software as a Service, or SAS, platform provides medical providers with a cost-effective, secure, and scalable means to access and deploy the latest profound breast health suite of AI solutions. With the commercial launch of Profound Cloud, iCAD is enabling interoperability and access to breast AI solutions at enterprise scale, revolutionizing global access to cutting-edge AI solutions in breast health.

Speaker Change: We also recently announced commercial availability of profound cloud built on the Google cloud platform.

Speaker Change: Our innovative software as a service or SaaS platform provides medical providers with a cost effective secure and scalable means to access and deploy the latest profound breast health suite of AI solutions.

Speaker Change: With the commercial launch of profound cloud I cat is enabling interoperability and access to breast AI solutions at enterprise scale.

Speaker Change: Revolutionizing global access to cutting edge AI solutions in breast health.

Dana R. Brown: Powered by Google Cloud Architecture and Google's Health AI innovations, Profound Cloud integrates a lightweight edge client and a cloud-based component. Together, they securely transport and process mammography screening data between imaging sources, such as imaging modalities and picture archiving communication systems, or PACS, and the cloud-based AI. The processed data is seamlessly delivered to systems that utilize AI outputs, including mammography review workstations, PACS, and image and data storage systems. The healthcare landscape is shifting towards technology-as-a-service models, avoiding the pitfalls of investing in rapidly outdated hardware and software. As AI relies heavily on specialized hardware like graphical processing units or GPUs, setting up and upgrading both software and hardware becomes increasingly complex.

Speaker Change: Powered by Google Cloud architecture, and Google's health AI innovations profound cloud integrates a lightweight edge client and cloud based components.

Dana R. Brown: Cloud-based solutions like Profound Cloud address this challenge by providing software as a service to ensure that all customers access the latest technology without the initial hardware investments, support contracts, and constant updates. Moreover, Profound Cloud provides facility administrators the ability to access the administration's site, enabling them to update configurations and perform administrative tasks in multiple languages. Profound Cloud is designed to support patients, providers, and partners while facilitating the management of diverse data types critical for comprehensive healthcare analysis. This includes 2D and 3D mammography images alongside all cancer images in parallel. It stores limited images of benign, recall, and normal cases.

Dana R. Brown: ProfoundCloud also manages profound risk and density assessment results, Radiology and Pathology Reports, and Detection Results, while ensuring seamless access to critical diagnostic information. Importantly, ProfoundCloud securely handles de-identified patient information and provider data, adhering to strict privacy and compliance standards. The comprehensive approach enables robust analytics for informed decision-making.

Speaker Change: Together, they securely transport and process mammography screening data between imaging sources, such as imaging modalities and picture archiving communication systems, or Pacs and the cloud based AI.

The process data as seamlessly delivered to systems that utilize AI outputs, including mammography review workstations packs and image and data storage systems.

Speaker Change: The health care landscape is shifting towards technology as a service models, avoiding the pitfalls of investing and rapidly outdated hardware and software.

Speaker Change: As a I realized heavily on specialized hardware like graphical processing units, our gpus setting up at upgrading both software and hardware becomes increasingly complex.

Speaker Change: Cloud based solutions like profound cloud address this challenge by providing software as a service to ensure that all customers access the latest technology without the initial hardware investments support contract and constant updates. Moreover, profound cloud provides facility administrators.

Speaker Change: The ability to access the administration's site, enabling them to update configurations and perform administrative tasks in multiple languages.

Speaker Change: Profound cloud is designed to support patients providers and partners, while facilitating the management of diverse data types critical for a comprehensive health care analysis. This includes two D and three D. Mammography images alongside all cancer images in parallel it stores limited images of benign recall.

Speaker Change: All in normal cases.

Speaker Change: Profound cloud also manages profound risks and density assessment results.

Speaker Change: Radiology and pathology reports and detection results, while ensuring seamless access to critical diagnostic information.

Importantly, profound cloud securely handles D identified patient information and provider data adhering to strict privacy and compliance standards.

Speaker Change: The comprehensive approach enables robust analytics for informed decision making.

Dana R. Brown: Before turning the call over to Eric, in case you missed the announcements earlier in the first quarter, I also want to note the addition of two new board members. We are pleased to welcome Dr. Hedvig Risak to our board of directors. Dr. Resak is a renowned radiologist and researcher with over 40 years of experience in the field.

Speaker Change: Before turning the call over to Eric in case, you missed the announcements earlier in the first quarter I also want to note. The addition of two new board members.

Speaker Change: We are pleased to welcome Dr. Hedrick, <unk> to our board of directors.

Speaker Change: Dr. <unk> is a renowned radiologist and researcher with over 40 years of experience in the field.

Dana R. Brown: For more than 20 years, she was chair of the Department of Radiology at Memorial Sloan-Kettering Cancer Center in New York City, a position from which she stepped down in January 2023. In addition to her many prestigious roles, she is actively engaged in global health initiatives, promoting international education and collaboration to improve access to oncological imaging and cancer care. Dr. Rieseck has published over 380 peer-reviewed original research articles, more than 300 review articles, editorials, book chapters, and 18 books.

Dr. Hedrick: For more than 20 years. She was chair of the department of Radiology at Memorial Sloan Kettering Cancer Center in New York City, a position from which she set down in January 2023.

Dr. Hedrick: In addition to her many prestigious roles. She is actively engaged in global health initiatives promoting international education and collaboration to improve access to oncological imaging in cancer care.

Speaker Change: Dr. <unk> research has published over 380 peer reviewed original research articles more than 300 review articles editorials book chapters and 18 Bucks.

Dana R. Brown: She served as president of multiple prominent medical societies, a member of multiple boards of directors and advisory boards, and boards of trustees. In recognition of her scientific accomplishments and tireless global outreach, she has received numerous awards, including honorary doctorates from the Ludwig Maximilian University in Munich, Germany, and the University of Toulouse III Paul Sabadier in Toulouse, France.

Speaker Change: She served as president of multiple prominent medical societies.

Speaker Change: There are multiple board of directors, an advisory board and board of Trustees.

Dr. <unk>: In recognition of her scientific accomplishments and tireless global outreach. She has received numerous awards, including honorary doctorates from the Ludwig Maximilian University, Munich, Germany, and the University of to loose the third Paul somebody a in Toulouse, France.

Dana R. Brown: Dr. Rieseck's extensive experience and clinical expertise in radiology research and the development of novel imaging applications will be invaluable as we continue to develop and deploy innovative AI-powered solutions that improve patient outcomes around the world. We also announced the appointment of Mike Doyle to our board of directors. Mr. Doyle is a seasoned technology and healthcare executive with over 35 years of experience. He is currently the CEO of Spire Health, a leading healthcare technology company focused on improving health outcomes for cardiorespiratory patients through continuous virtual patient monitoring.

Speaker Change: Dr. <unk> extensive experience in clinical expertise and radiology research and the development of novel imaging applications will be invaluable as we continue to develop and deploy innovative AI powered solutions that improve patient outcomes around the world.

Speaker Change: We also announced the appointment of Mike Doyle to our board of directors. Mr. Doyle is a seasoned technology and health care executive with over 35 years of experience. He is currently the CEO of spire health, a leading healthcare technology company focused on improving health outcomes for cardio respiratory patient.

Speaker Change: Through continuous virtual patient monitoring.

Dana R. Brown: Spire, along with Mr. Doyle's recent companies, all achieved measurable patient and health outcomes improvement by harnessing the power of AI and machine learning. He has been the CEO and director of seven healthcare companies. Mr. Doyle has also been appointed to numerous private, not-for-profit, and public company boards and brings a wealth of experience in healthcare technology and business strategy to the ICAD Board of Directors. I'll now turn the call over to Eric for a detailed review of our Q1 2024 banana.

Speaker Change: Fire along with Mr. Doyle recent companies all achieved measurable patient and health outcome improvement by harnessing the power of AI and machine learning. He has been the CEO and director of seven health care companies.

Speaker Change: Mr. Doyle has also been appointed to numerous private not for profit and public company Board and brings a wealth of experience in health care technology and business strategy to the ICANN board of directors.

Speaker Change: I'll now turn the call over to Eric for a detailed review of our Q1 2020 for financials.

Eric Lonnqvist: Good morning, everyone. And thank you, Dana.

Good morning, everyone and thank you Dana.

Speaker Change: I'll now summarize our financial results for the first quarter ended March 31 2024.

Eric Lonnqvist: I'll now summarize our financial results for the first quarter ended March 31, 2024. Revenue for the quarter was $5 million, an increase of 0.6 million, or 14%, over the first quarter of 2023. The increase is attributable to some of the key deals Dana noted earlier in the call, as well as some early traction from our expanded sales force.

Eric Lonnqvist: Revenue for the quarter was $5 million, an increase of <unk> 6 million or 14% over the first quarter of 2023.

Eric Lonnqvist: Increases attributable to some of the key deals Dana noted earlier in the call as well as some early traction from our expanded sales force.

Eric Lonnqvist: First quarter 2024 product revenue was $3.1 million, up 26% over the prior year. Service revenue was $1.9 million, in line with the prior year. Moving on to gross profit.

Eric Lonnqvist: First quarter 2020 for product revenue was $3 1 million up 26% over the prior year.

Eric Lonnqvist: Service revenue was $1 9 million in line with the prior year.

Eric Lonnqvist: Moving on to gross profit.

Eric Lonnqvist: On a percentage of revenue basis, gross profit was 83% for the first quarter of 2024, which was up from 82% in the first quarter of 2023. On a pure dollar basis, gross profit for the quarter was $4.1 million as compared to $3.5 million last year. Total operating expenses for the first quarter of 2024 were $5.6 million, a $1.2 million or 18% decrease year over year. This improved run rate reflects the cost-cutting measures implemented previously announced.

Eric Lonnqvist: On a percentage of revenue basis gross profit was 83% for the first quarter of 2024, which was up from 82% in the first quarter of 2023.

Eric Lonnqvist: On a pure dollar basis gross profit for the quarter was $4 1 million as compared to $3 5 million last year.

Eric Lonnqvist: Total operating expenses for the first quarter of 2024 were $5 6 million, a $1 2 million or 18% decrease year over year.

Eric Lonnqvist: This improved run rate reflects the implemented cost cutting measures previously announced.

Eric Lonnqvist: Gap net loss for the first quarter of 2024 was $1.2 million, or $0.05 per diluted share, compared with a gap net loss of $3.1 million, or $0.12 per diluted share, for the first quarter of 2023. This year over year decrease in gap loss per share is primarily due to a combination of operating expense reductions and sales growth, driven by some of the deals noted earlier in the call. Non-gap adjusted EBITDA losses decreased $1.3 million to $1.1 million, and the quarter ended March 31, 2024, from the same period in 2023.

Speaker Change: GAAP net loss for the first quarter of 2024 was $1 2 million or <unk> <unk> per diluted share compared with a GAAP net loss of $3 1 million or <unk> 12 per diluted share for the first quarter of 2023.

Speaker Change: This year over year decrease in GAAP loss per share is primarily due to a combination of operating expense reductions and sales growth driven by some of the deals noted earlier in the call.

Speaker Change: non-GAAP adjusted EBITDA loss decreased $1 3 million to $1 1 million in the quarter ended March 31, 2024 from the same period in 2023.

Eric Lonnqvist: Moving on to the balance sheet, as of March 31, 2024, the company had cash and cash equivalents of $20.3 million compared to cash and cash equivalents of $21.7 million as of December 31, 2023. Net cash used for operating activities for the quarter ended March 31st, 2024 was $1.2 million compared to $1.5 million in the first quarter of 2023. This improvement of 23% year over year is due primarily to cost savings initiatives implemented during the first quarter of 2023.

Speaker Change: Moving on to the balance sheet as of March 31, 2024, the company had cash and cash equivalents of $20 3 million compared to cash and cash equivalents of $21 7 million as of December 31, 2023.

Speaker Change: Net cash used for operating activities for the quarter ended March 31, 2024 was $1 2 million compared to $1 5 million in the first quarter of 2023.

Speaker Change: This improvement of 23% year over year is due primarily to cost savings initiatives implemented during the first quarter of 2023.

Eric Lonnqvist: We believe we have sufficient cash resources to fund our planned current operations with no need to raise additional funding. As noted in prior earnings calls, the steady shift to a recurring revenue model from a perpetual model has numerous benefits, including better business visibility, more efficient expense management, and an improved ability to predict future cash flow. It also has risks, including short-term lower gap revenue and negative cash flow impact for the next three years.

Speaker Change: We believe we have sufficient cash resources to fund our planned current operations with no need to raise additional funding.

Speaker Change: As noted in prior earnings calls the steady shift to a recurring revenue model from a perpetual model as numerous benefits, including better business visibility more efficient expense management, and an improved ability to predict future cash flow.

Speaker Change: Also as risks, including short term lower GAAP revenue and negative cash flow impact for the next three years.

Eric Lonnqvist: To help illustrate our progress in this transition, we began reporting the following annual recurring revenue, or ARR, metrics in Q3-23. Total ARR, or TARR, represents the annualized value of subscription licenses, maintenance, contracts, and active cloud services at the end of a reporting period. Maintenance Services ARR, or MARR, represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period. Subscription ARR, or SAR, represents the annualized value of active subscription or term licenses at the end of a reporting period.

Speaker Change: To help illustrate our progress in this transition.

Speaker Change: We began reporting the following annual recurring revenue or <unk>.

Our our metrics in Q3 23.

Eric Lonnqvist: Cloud ARR, or CARR, represents the annualized value of active cloud services contracts at the end of a reporting period. Total ARR or TAR was $9 million as of March 31, 2024, up from $8.7 million as of December 31, 2023. Maintenance Services ARR, or MARR, was $7 million, in line with $7 million at the end of the prior fiscal quarter. Subscription ARR, or SARR, was $1.9 million, up from $1.7 million at the end of the prior fiscal quarter.

Speaker Change: Total Air R. R. <unk> represents the annualized value of subscription license maintenance contracts inactive cloud services at the end of a reporting period.

Speaker Change: Maintenance services they are <unk>.

Speaker Change: <unk> represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period.

Speaker Change: Subscription IRR.

Speaker Change: <unk> represents the annualized value of active subscription or term licenses at the end of a reporting period.

Speaker Change: Cloud a R. R. R. C. A R. R represents the annualized value of active cloud services contracts at the end of a reporting period.

Speaker Change: Total IRR or <unk> was $9 million as of March 31, 2024 up from $8 7 million as of December 31, 2023.

Speaker Change: Maintenance services, they are or <unk> was $7 million in line with $7 million at the end of the prior fiscal quarter.

Speaker Change: Subscription IRR.

Speaker Change: <unk> was $1 9 million up from $1 7 million at the end of the prior fiscal quarter.

Eric Lonnqvist: With our commercial cloud platform now released, we will begin tracking cloud ARR in upcoming quarters. In addition to the recurring revenue metrics noted above, we also began disclosing the total number of orders relating to perpetual product, subscription, and cloud deals. The intent of this metric is to illustrate the pure volume of sales without the complexity of multiple gap revenue streams. We are pleased to report that in the first quarter of 2024, we closed 76 perpetual and 16 subscription orders. This concludes the financial highlights of our presentation. I would now like to turn the call back over to the operator to lead the Q&A.

Speaker Change: With our commercial cloud platform now released we will begin tracking cloud era or in upcoming quarters.

Speaker Change: In addition to the recurring revenue metrics noted above we also began disclosing the total number of orders relating to perpetual product subscription and cloud deals. The intensiveness metric is to illustrate the pure volume of sales without the complexity of multiple GAAP revenue streams.

Speaker Change: We are pleased to report that in the first quarter of 2024, we closed 76, perpetual and 16 subscription orders.

Speaker Change: This concludes the financial highlights of our presentation I would now like to turn the call back over to the operator to lead the Q&A.

Operator: Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while asking your question, you please pick up your handset, if on speakerphone, to provide optimum sound quality. Please hold while we pull for questions. Thank you. Our first question is coming from Per Ostlund with Craig Hallam. Your line is live.

Speaker Change: Thank you ladies and gentlemen, the floor is now open for questions.

Speaker Change: If you have any questions or comments. Please press star one on your phone at this time.

Speaker Change: We ask that while posing your question please pickup your handset before.

Reeker: Reeker phone to provide optimal sound quality.

Speaker Change: Please hold while we poll for questions.

Speaker Change: Banking.

Speaker Change: Our first question is coming from per ostlund with.

Speaker Change: Craig Hallum. Your line is live.

Per Erik Ostlund: Thank you. Good morning, Dana and Eric. Congratulations on the quarter. I have to say I was pleasantly surprised by the result.

Speaker Change: Thank you good morning, David and Eric Congratulations on the quarter would have to say it was.

Speaker Change: Pleasantly surprised by the result.

Per Erik Ostlund: I want to start with revisiting the key growth initiatives, because obviously, the growth in the quarter was, I think, stellar and a little bit, certainly a little bit ahead of the model. So you cited, Dana, in your prepared remarks, a handful of things. I was fairly quick in writing some of it down, but I missed some of it as well.

Speaker Change: I want to start with.

Speaker Change: And when you're visiting the key growth initiatives for us.

Speaker Change: Obviously.

Speaker Change: The growth in the quarter was was I think stellar and a little bit certainly a little bit ahead of model.

Speaker Change: So you cited data in your prepared remarks, a handful of things.

Speaker Change: Fairly quick in writing some of them are dealt with them to solve it as well.

Speaker Change: Let's start with the sales team I know you've talked about it being still having gone.

Per Erik Ostlund: I know you talked about it being, having gone from 12 down to six in the US as of 3Q last year. You bring in Peter Graham at the end of the year, and then four additions here in the first quarter. Are there more to come there? Or do you think that, you know, kind of, replenishing the team to the extent you have is sufficient for where you know where you want to be at this?

Speaker Change: $12 six in the U S.

Speaker Change: <unk> last year.

Speaker Change: You bring in Peter ramp at the end of the year and then for additions here in the first quarter.

Speaker Change: Are there are there more to come there or do you think that.

Speaker Change: Kind of kind of where you're feeling.

Speaker Change: Team to.

Speaker Change: To the extent you have.

Speaker Change: Is sufficient for where you want to be at this point.

Speaker Change: Yeah. So first good morning, and thanks for the thanks on the quarter.

Dana R. Brown: So first, good morning. And thanks for the thanks on the quarter.

Dana R. Brown: I think from the sales team perspective, we're stable. We might switch some players around as we begin to see who's, you know, gaining better traction in winning new business versus what we call kind of expanding land. Right. In terms of existing accounts. So there may be, you know, some shifting of roles going forward. But I think from a quantity perspective, we're good for the rest of this calendar year.

Speaker Change: I think from the sales team perspective, we're staple we might switch some players around as we begin to see who's gaining better traction in winning new business for US is what we call kind of expand and land the right in terms of existing accounts. So.

Speaker Change: There may be some shifting of roles going forward, but I think from a quantity perspective, we're good for the rest of this calendar year.

Speaker Change: Okay very good.

Per Erik Ostlund: Okay, very good. So then the other couple of things that you cited in the in the in the release and your remarks about, you know, the growth initiative. So you noted that the lead generation targeted lead generation effort. You know, you kind of felt like there wasn't one really one in place there before. Where is that at kind of an implementation? Is there any color around, you know, what that entails? And then when you talk about a revamped commercial model.

Speaker Change: So then the other couple of things that you cited in the AR.

Speaker Change: In the release.

Speaker Change: Marks about.

Speaker Change: Our growth initiatives.

Notice that the lead generation targeted lead generation effort.

Speaker Change: Got it felt like there wasn't really one in place there before whereas that kind of an important implementation is there any.

Speaker Change: Color around.

Speaker Change: What that entails and then when you talk about a revamped commercial model.

Per Erik Ostlund: You know, I think you alluded to a couple of things there in the press releases or in your comments as well, but I was just wondering if you could circle back to that a little bit and just discuss what you're doing there.

Speaker Change: No I think you alluded to a couple of things that are in the press releases.

Well, but just wondering if you could circle back to that a little bit sure discuss what youre doing now.

Dana R. Brown: Yeah, so you heard correctly. There was not what I call a structured and repeatable and even trackable lead generation process before. I mean, you know, part of a good sales team, especially when you're thinking about those winning new business, is they need to be great at cold calling, at working their Rolodex, or their network. And that's a big part of the equation, but you always want to supplement the sales team with qualified leads.

Speaker Change: Yeah. So so you've heard correctly there was not what.

Speaker Change: What I call like a structured.

Speaker Change: And repeatable and even trackable lead generation process before I mean.

Speaker Change: Part of a good sales team, especially when youre thinking about those winning new business is they need to be great at cold, calling at working their rolodex Raider their network and that's a big part of the equation, but you always want to supplement them. The sales team with qualified leads.

Dana R. Brown: So, you know, in the business we're in, that's a B2B lead generation strategy. So we've been leveraging platforms like, you know, LinkedIn, making a more concerted effort around the trade shows, conferences, seminars that we attend, really targeting that audience. I think this sales team, in particular, when you think about attending a trade show, they have just been knocking it out of the park with regard to scheduled and organized meetings, like with agendas, with desired outcomes when they attend those trade shows.

Speaker Change: So either in the business. We're in that's a b to B strategy lead Gen strategy. So we've been leveraging platforms like you know Linkedin.

Speaker Change: I'm, making a more concerted effort around the trade shows conference seminars that we attend at really working that audience I think dish sales team in particular, when you think about attending a trade show they have just.

It's been knocking it out of the park with regard to our scheduled and organize meetings like with agendas with desired outcomes. When they attend those trade shows and so walking away with either very qualified leads are actually making progress right on a deal so and we're just beginning to move into the phase of more.

Dana R. Brown: And so walking away with either very qualified leads or actually making progress, right, on a deal. So, and we're just beginning to move into the phase of more, truly, I call it even hovering above the funnel type of lead gen activity.

Speaker Change: More.

Speaker Change: Truly the I call it even hovering above the funnel type of lead Gen activity. So part of the leadership additions. We brought in last year was a new VP of marketing and then Michelle strong who's our C. O O has a really strong lead gen digital marketing type background in b to B actually both beta.

Dana R. Brown: So part of the leadership additions we brought in last year was a new VP of marketing. And then Michelle Strong, who's our COO, has a really strong lead gen digital marketing background in B2B, actually both B2B and B2C. So the combination of those areas of expertise as well as just more organization, right, is helping there. So it is exciting to see, you know, when we kick off the lead generation campaigns and then track, right, the results in terms of winning new leads and then having the follow-up conversations. In terms of like overall, like the restructure for the commercial model, what we did. So, first of all, I would say this is all pretty much focused on the US.

Speaker Change: B and B to C. So the combination of those you know.

Speaker Change: Areas of expertise as well as just more organization right is helping there. So it is exciting to see you know when we kick off the lead Gen campaigns and attacking right there the results.

Speaker Change: In terms of winning new leads and then having a follow up conversations in terms of like overall like the restructure for the commercial model. What we did so first of all I would say this is it's all pretty much focused on the U S.

Dana R. Brown: We've done a little bit of upgrading and expanding OUS distributors, but most of these changes have come in the US market. So, you know, first, we built these lead generation programs because we wanted to see what type of pipeline we could develop and then use that to model how many sales reps would be optimal to add. When we outsourced the sales reps, we also structured their focus. So instead of having everyone do everything and then, consequently, maybe not doing things well and having other people gravitating towards areas they're naturally most comfortable, we did structure them into more segmented roles.

Speaker Change: We've done a little bit of upgrading them and expanding of O U S distributors, but most of these changes have come in the U S market.

Speaker Change: So you know first was building these lead generation programs, because we wanted to see what type of pipeline, we could develop and then use that to model. How many sales reps would be optimal to add when we added the sales reps. We also structured theyre focused so instead of having everyone do everything.

Speaker Change: And then consequently, maybe not doing things well or people gravitating towards areas, you're naturally most comfortable we did structure them into more segmented roles. So that is more focused on new business that is more focused on retention and expansion of existing business. We did revamp our pricing models one.

Dana R. Brown: So those more focused on new business, those more focused on retention and expansion of existing business. We did revamp our pricing models. One, you know, cloud introduced a whole new cost structure for us and way to deliver the solution. So that then, you know, kind of drove changes all the way back into perpetual.

Speaker Change: One you know cloud introduced a whole new cost structure for us and way to deliver the solution. So so that then you know kind of drove changes across the board all the way back into perpetual you've seen us reporting our a R. R. Now so that's based upon a subscription pricing model so getting those price.

Dana R. Brown: You've seen us reporting our ARR now. So that's based upon a subscription pricing model. So getting those pricing models tighter and obviously well-documented and communicated among our sales team so they know the price book and how to use it. And then last but not least, even within our existing accounts, doing a better job of internally marketing the solution. You know, ICANN is fortunate in that we have some really large customers.

Speaker Change: <unk> model.

Speaker Change: Tighter and obviously well documented and communicated right among ourselves team. So they know the price book and how to use it and then last but not least is just even within our existing accounts doing a better job of internally marketing. The solution you know I can't just fortunate and then we have some really large cut.

Speaker Change: <unk>, Yeah, we I talked about that today trying to give some more color just because we win a deal doesn't mean, we're done with that deal right. There's room to expand so oftentimes we need to be more involved than even the internal marketing within that account to enable radiologists and others to understand the solution and why it's it's.

Dana R. Brown: You know, we talked about that today, trying to give some more color. Just because we win a deal doesn't mean we're done with that deal, right? There's room to expand. So oftentimes, we need to be more involved in even the internal marketing within that account to enable radiologists and others to understand the solution and why it's, you know, gonna make a difference, right, in their practice.

Speaker Change: Gotta make a difference right in their practice.

Per Erik Ostlund: That's, that's a great color, Dan. Thank you.

Speaker Change: That's great color. Thank you.

Speaker Change: As far as the quarterly numbers, specifically for a second because I think normally the first quarter as a step back sequentially from the fourth quarter than the fourth quarter I think ran a little bit a little hot with a couple of deals slipping out of Q3, So we already had a pretty good.

Per Erik Ostlund: As far as we let's go to the numbers specifically for a second, because I think normally the first quarter is a step back sequentially from the fourth quarter, and then the fourth quarter, I think ran a little bit too hot with a couple of deals sliding out of Q3. So we already had a pretty good foundation from Q4, so I would have thought we would see a step back. And we clearly didn't; we saw a step forward.

Speaker Change: Our foundation from Q4 would've thought we would see a step back we clearly didn't we saw a step forward.

Per Erik Ostlund: And I think the deal count in the first quarter was an aggregate of a little over 90, and it was right around 90 in Q4. So did anything pull forward here in the first quarter, or was this really just some of those initial efforts from new sales folks from lead gen from, you know, the commercial, you know, model ship that you're talking about?

Speaker Change: The deal count.

Speaker Change: In the first quarter in aggregate was a little over 90 and it was right around 90 in Q4, so did any pull forward here in the first quarter or was this really just.

Speaker Change: Some of those initial efforts all new sales folks from lead Gen home.

The commercial model shifts that you were talking about.

Yeah, Eric do you want to dive in on this one.

Eric Lonnqvist: Eric, do you want to dive in on this one?

Eric Lonnqvist: Yep. Hi, good morning, Per.

Eric: Yes, hi.

Eric: There.

Yeah, I can answer that so we had a couple of big drivers. This quarter. So there was one deal in particular Dana mentioned.

Per Erik Ostlund: Yeah, I can answer that. So we had a couple big drivers this quarter, so there was one deal in particular Dana mentioned with Raleigh Radiology that the team had been working on for over a year that came in that was over $300,000 in revenue in itself. And then, you know, Dana also mentioned the SOLAS expansion. So there are another four or five sites that came in there that we expanded. So, you know, between those two kinds of drivers, that was close to $500,000 of revenue this quarter.

Speaker Change: Rally radiology that the teams have been working on for over a year that came in that was over $300000 revenue.

Speaker Change: In itself.

Speaker Change: And then.

Speaker Change: Dan also mentioned the souls expansion. So there's another four or five sites that came in there that we expanded so between those two kind of drivers that was.

Speaker Change: Close to $500000 of revenue this.

Speaker Change: This quarter so.

Speaker Change:

Per Erik Ostlund: That caused the bump, really. So Q4, you're right; there was some sliding from Q3 into Q4, causing that 4.9 we had last quarter. So this quarter, I think, you know, it's part of our model to be a little bit lumpy because of the perpetual nature of it. Yeah, it's a... I'm not sure it's a structural change that will come on yet. You know, there could still be lumpiness going forward.

Speaker Change: That caused the bond rally so Q4, you're right there were some sliding from Q3.

Speaker Change: Into Q4 are causing that $4 nine we had last quarter.

Speaker Change: So this quarter I think it is.

Speaker Change: Part of our model is a little bit lumpy because of the perpetual nature of it.

Speaker Change: So.

Speaker Change: Yes. It is.

Speaker Change: Uh huh.

Speaker Change: I'm not sure it's a structural change that we can.

Speaker Change: Come on yet.

Speaker Change: There still could be lumpiness going forward.

Eric Lonnqvist: No, that's entirely fair. I don't think anybody expects differently.

No that's entirely fair I don't think anybody expects differently I was just curious.

Per Erik Ostlund: I was just curious about a couple of those pieces, so I appreciate that. Last question for me. I promise, this will be it for now. We didn't really talk about things that are in front of the FDA a whole lot. It's only been a couple of months since you last updated us on this, Dana, but do you look at, you know, 4.0? Do you look at heart health as still tracking toward late 24-type opportunities for you, where they kick in, or where they get their approvals?

Speaker Change: No a couple of those pieces so I appreciate that.

Last question for me I promise this will be it for now.

Speaker Change: We didn't really talk about things are front of the FDA a whole lot. It's only been a couple of months in June of last updated us all this data.

Speaker Change: Do you look at four point out or you look at heart health is still tracking toward.

Speaker Change: <unk> 24 type opportunities for you whether they kick in.

Hurdles.

Dana R. Brown: Yeah, I definitely mean, you never know with the FDA. But I would say it's always going to skew longer than faster.

Speaker Change: Yeah, I definitely I mean, you know you never know with the FDA, but I would say you know, it's always going to skew longer than faster [laughter]. So yeah. I think best case scenario would be into this calendar year. You know for example, with four O detection algorithm you heard me mention I mean many.

Many prior versions.

Dana R. Brown: So, yeah, I think the best case scenario would be into this calendar year, you know, for example, with the 4.0 detection algorithm. You heard me mention many, many prior versions, and they usually went very smoothly. The review of the algorithm itself is going very smoothly, but there's a whole host of new cybersecurity requirements. And this is the first time, right, FDA is rolling those out, and we're going through them. So that's taking a little bit longer, right, as they structure their questions back to us, and then we think we understand what they're asking, right, and respond.

Speaker Change: And they usually went very smoothly.

Speaker Change: The review of the algorithm itself is going very smoothly, but theres a whole host of new cyber security requirements and this is the first time right if days rolling those out we're going through those so so that's taking a little bit longer right as they structure their questions back to US and then we think we understand what they're asking right.

Speaker Change: Respond so that's just taking a few more iterations.

Dana R. Brown: So that's just taking a few more iterations. And then, same thing for, you know, heart health, right? So working on firming up the data that they need to see. Luckily, we have a predicate device, right, that has come on the market. So that's helping to, you know, clear some of their questions because they have something that they can refer to and help understand. But yeah, the messages that you heard about the best case scenario being the end of the year are still our plan. Okay, next.

Speaker Change: And then same thing for you know heart health right. So working on firming up like the data that they need to see Luckily we have a predicate device right that has come onto the market. So that is helping to clean.

Speaker Change: Clear some of their questions because they have something that they can referred to and help understand but yeah I'm. The messages that you've heard about best case scenario being ended the year is still solar plan.

Per Erik Ostlund: Okay, excellent. Thanks for all the answers. I appreciate it.

Speaker Change: Okay excellent. Thanks for all the answers I appreciate it.

Speaker Change: Thank you.

Operator: Our next question is coming from Yale Chen with Laidlaw & Co. Your line is live. Good morning, and thank you for joining us today.

Speaker Change: Our next question is coming from Yale Jen with Laidlaw <unk> Company. Your line is life.

Yale Chen: Good morning, and congratulations on the good quarters. I have maybe two or three questions here. The first one is for the first quarter. The perpetual versus the subscription deals you have, particularly in the subscription deal, you have increased quarter over quarter compared to the last two quarters. Do you anticipate this trend to continue going forward, and how would you see this dynamic?

Yale Jen: Good morning, and my congrats to the.

Yale Jen: Good quarters.

Yale Jen: Maybe two or three questions here.

Speaker Change: So first one for the first quarter the perpetual versus the subscription deals you have particularly in the subsequent question deal you have increased.

Speaker Change: Quarter over quarter compare to the last two quarters.

Speaker Change: Do you anticipate this.

To continue full were and how would you see this.

Speaker Change: This dynamics.

Speaker Change: Yeah.

Yale Chen: Eric, do you want to take that one? Yeah, sure. Good morning, Gail.

Speaker Change: Eric do you want to take that way now.

Eric Lonnqvist: Yeah, we were up with 16 subscription deals. It was a good quarter for subscriptions. But it still will have some ebbs and flows. There are customers that prefer perpetual, You know, for one reason or another, for security or so forth, but we are trying to get more and more to a recurring revenue model organizationally. So not only will we, the team is pushing on the subscription side a bit, and they're compensated that way to maximize our annual recurring revenue.

Yale Jen: Sure Good morning Yale.

Speaker Change: Yeah. We were we were up was 16 subscription deals was a good quarter for subscription it still will have some ebbs and flows there's customers that prefer perpetual.

Speaker Change: For one reason or another for security or so forth, but we are we are trying to get more and more to a recurring revenue model organizationally. So.

Speaker Change: Not only will be we know.

Speaker Change: The team is.

Speaker Change: Pushing on the subscription side a bit in there their comp that way to maximize our annual recurring revenue. So the team is incentive to push on subscription as well as well.

Eric Lonnqvist: So the team is incented to push on subscriptions as well as, with our new cloud release in Q1, there will be another opportunity for recurring revenue through the cloud model. So there will be both subscriptions and cloud pushed by the team. It's hard to say exactly, you know, what the split would be going forward, but the team is incented to push on these recurring revenue deals.

With our new cloud release in Q1, there'll be another opportunity for recurring revenue.

Speaker Change: Through the cloud model, so it will be both subscription and cloud.

Speaker Change: Push by the by the team.

Speaker Change: It's hard to say exactly what the split would be going forward, but.

Speaker Change: The team is incentive to push on these recurring revenue deals.

Yale Chen: Okay, great. And the next question is that in terms of the profound problem, [inaudible] The two-part question, first of all, the first is that is this system ready to go and that you can actually sign deals based on what you have right now, or are you still improving? And secondly, one off on that part is that what might be the hurdles, as you guys see it, to eventually get the first deal in this phase closed? Mm-hmm.

Speaker Change: Okay great.

Speaker Change: Next question.

Speaker Change: In terms of the bank.

Speaker Change: Uh huh.

Two part question first of all first is that is this.

Speaker Change: Uh huh.

Speaker Change: Ready to go and then you can actually sign deals based on what you have right now where you're still improving and secondly.

Speaker Change: On off on desktop.

Speaker Change: What might be the hurdles you guys see it.

Speaker Change: Two of agents, who did the first deal closed.

Speaker Change: Close mhm.

Dana R. Brown: So yes, our profound cloud is commercially available, and the sales team is actively selling it. We already have our first deal on the cloud. It actually occurred in the second quarter here. So that's why I didn't chat about it, but you'll hear a lot.

Speaker Change: So yes, there are profound cloud is commercially available. So the sales team is actively selling it.

Speaker Change: We already have our first deal on the cloud I'm. It actually occurred in second quarter here. So it's why I didnt chat about it that you'll hear a lot more right on our next earnings call.

Speaker Change: Okay.

Speaker Change: Okay, Great that's very helpful and congrats on that.

Last question here.

Speaker Change: Yes.

Speaker Change: I remember those days.

Speaker Change: You guys are talking about seasonality in <unk>.

Speaker Change: Yes.

Speaker Change: Net revenue quarter.

Speaker Change #100: In the fourth quarter, some quarters, some model higher some might be lower for that perspective.

Speaker Change #101: Does that apply to nowadays that's totally irrelevant, though.

Paul: Thanks, Paul.

Taking the question.

Dana R. Brown: Okay, great. That's very helpful. And congrats on that. Yeah. Maybe the last question here is that, in the older days, when you guys were talking about seasonality in terms of the revenue quarter, you know, in the four different quarters, some are higher, some may be lower for that perspective. Does that apply nowadays, or is that totally irrelevant?

Speaker Change #103: So maybe I'll give my point of view and then Eric would love for you to chime in especially if you have a different point of view I think seasonality still applies and the primary driver of that is just the budget cycle. So many.

Speaker Change #103: Of our customers are on a calendar year budget, so they tend to.

Speaker Change #103: To wait a bit till towards the end of the year see budget remaining I think there's also a bit of.

Speaker Change #103: Training.

Speaker Change #103: Training, if you will that's happened, especially in the software industry, where customers know you know the later they wait in a year the better the deal theyre going to get right because everybody is trying to capture as much business as possible. So you can get into it you know maybe better discount land.

Speaker Change #103: It's a longer kind of you wait so I'm. So I think those two factors together just kind of drive you know this mindset. So it's a little bit less about if I don't have it now right. It is directly impacting my business they can afford to wait a bit in.

Speaker Change #103: And their decision making process.

Speaker Change #104: Okay, Great that's very helpful and congrats on the good performance this quarter.

Speaker Change #105: Thank you. Thanks. Thank you.

Yale Chen: Thanks for watching! I'm taking the call. Hello.

Speaker Change #106: This concludes our question and answer session. So I learned like to turn the call back over to Dana Brown for any closing comments.

Dana R. Brown: So, maybe I'll give my point of view, and then Eric would love for you to chime in, especially if you have a different point of view. I think seasonality still applies. And the primary driver of that is just the budget cycle. So, many of our customers are on a calendar year budget, so they tend to wait a bit till towards the end of the year, see how much budget remains. I think there's also a bit of training, if you will, that's happened, especially in the software industry, where customers know, you know, the later they wait in the year, the better the deal they're going to get, right, because everybody's trying to capture as much business as possible.

Dana R. Brown: So you can get into, you know, maybe better discounted land, you know, but the longer you wait. So, I think those two factors together just kind of drive this mindset. So it's a little bit less about if I don't have it now, right, it is directly impacting my business. They can afford to wait a bit in their decision-making process.

Yale Chen: Okay, great. That's very helpful. And again, congrats on the good performance.

Operator: Thank you. Thank you. This concludes our questions and answers session, so I'd now like to turn the call back over to Dana Brown for any closing comments.

Speaker Change #107: Thank you operator.

Dana R. Brown: Thank you, Operator. In conclusion, I would just like to reiterate that demand for our technology continues to be strong. The evidence supporting it continues to grow, and our team continues to secure opportunities with some of the most prestigious and esteemed healthcare facilities worldwide. I remain optimistic about the company and its future, and I firmly believe in the bright future of the company and our ability to generate significant shareholder value. Thank you, and I hope each of you have a great day.

Dana R. Brown: In conclusion, I would just like to reiterate demand for our technology continues to be strong the evidence supporting it continues to grow and our team continues to secure opportunities with some of the most prestigious and esteemed health care facilities worldwide.

Dana R. Brown: I remain optimistic about the company and its future and I firmly believe in the bright future of the company and our ability to generate significant shareholder value. Thank you and hope each of you have a great day.

Dana R. Brown: Okay.

Dana R. Brown: Thank you.

Operator: Thank you. This does conclude today's event. You may disconnect your lines at this time and have a wonderful day, and we thank you for your participation.

Speaker Change #108: This does conclude today's event.

Speaker Change #109: You may disconnect your lines at this time and have a wonderful day, we thank you for your participation.