Q3 2024 iCAD Inc Earnings Call
Speaker Change: www.动容可 UNC.edu.au ©2012 The University of Georgia College of Agricultural and Environmental Sciences Finally… we're DCAA. Thanks for watching.
Speaker Change: Greetings. Welcome to the ICAT Incorporated 3rd Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation.
Speaker Change: If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Rosalyn Christian, Investor Relations. You may begin.
Rosalyn Christian: Thank you, operator. Good afternoon, everyone. Thank you for joining us today for ICAD's third quarter 2024 earnings call. On the call, we have Dana Brown, our President and Chief Executive Officer, and Eric Lonnqvist, our Chief Financial Officer.
Rosalyn Christian: Before turning the call over to Dana, I would like to remind everyone that we'll be making forward-looking statements on the call today.
Rosalyn Christian: These forward-looking statements are based on ICAD's current expectations and are subject to uncertainty and changes in circumstances.
Rosalyn Christian: 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 filings with the U.S. Securities and Exchange Commission.
Rosalyn Christian: ICAD undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.
Rosalyn Christian: 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.
Speaker Change: You can find a reconciliation of our gap to non-gap measures at the end of the earnings release. With that, I'll turn the call over to Dana.
Dana Brown: Thank you, Rosalyn, and good afternoon, everyone. I'm pleased to announce Q3 was another successful quarter for ICAD, with revenue growth of 4% compared to the third quarter of 2023.
Dana Brown: In the quarter, we saw continued progress with our transformation strategy, including the transition to cloud, or software as a service, through the growth of our profound cloud platform, as well as global expansion of our products and technology.
Dana Brown: Before we dive into the highlights of this quarter, I'd like to provide some details on how ICAT is positioned for sustained growth by multiple industry drivers.
Dana Brown: ICAT is uniquely positioned in the rapidly expanding AI powered breast cancer detection market where our solutions are backed by more than 50 clinical studies and presentations and key global clearances including from the FDA.
Dana Brown: Our technology can reduce radiologists reading time by 52% and we empower providers to detect cancer earlier and with greater confidence.
Dana Brown: While we have a market-leading position, AI adoption in mammography remains low, with approximately only 37% of U.S. sites currently using AI.
Dana Brown: This presents a substantial opportunity for expansion, particularly as our global presence spans more than 50 countries and is growing.
Dana Brown: In case you missed it, yesterday we announced FDA clearance for ICAD's Profound Detection version 4.0.
Dana Brown: This new version marks another significant milestone in our track record of industry-leading, high-performance AI solutions for breast cancer detection.
Dana Brown: This latest version offers a 22% improvement in detecting challenging and aggressive cancers over our previous version, version 3.
Dana Brown: Empowering radiologists to quickly and accurately identify hard-to-find cancers with greater precision.
Dana Brown: Version 4.0 now also integrates prior exam analysis and the AI calculation, emulating a radiologist's own comparative approach, which enhances diagnostic confidence and accuracy.
Dana Brown: With an 18% reduction in false positives, it also improves reading efficiency, diagnostic accuracy, and patient experience by minimizing unnecessary follow-ups.
Dana Brown: This clearance not only strengthens our competitive edge, but also supports revenue growth as both new and existing customers upgrade to version 4.0.
Dana Brown: This new version, combined with the recent launch of Profound Cloud, marks our shift to a software-as-a-service model, enabling scalable, seamless updates and creating a high-margin, reoccurring revenue stream.
Dana Brown: With our pioneering technology, strong market foothold, and strategic shift to SaaS, ICAD is well positioned to capture substantial growth opportunities in the years ahead.
Dana Brown: Turning to our Q3 deal highlights, in the third quarter we closed a total of 85 deals, 52 perpetual, 20 subscription, and 13 cloud.
Dana Brown: UCSD licensed 2D and 3D detection plus density and UCSD performs around 90,000 exams per year.
Dana Brown: Last quarter we announced our partnership with U.S. radiology specialists and specifically that Winsome Radiology, one of their premier imaging providers, would be the first to champion implementation of our profound AI breast health suite.
Dana Brown: You may recall U.S. Radiology is one of the country's premier providers of diagnostic imaging services, with more than 175 outpatient imaging centers across 13 states.
Dana Brown: This quarter, we secured Charlotte Radiology, another imaging provider for U.S. Radiology. It's a three-year cloud deal.
Dana Brown: Other new deals won this quarter include Alexandra Marine General Hospital, Madison Regional in Wisconsin, Allegheny Memorial in North Carolina, and Parkview Medical in Texas.
Dana Brown: Turning to some examples of existing customer migrations, Orlando Health signed a deal to migrate from their on-prem solution with no support or service agreement to a three-year subscription agreement.
Dana Brown: El Rio helped signed a migration deal to move to cloud as well as upgrade to the latest 3D solution.
Dana Brown: Citizens Memorial upgraded and expanded their on-prem solution to add in 3D.
Dana Brown: Simon Med added five additional locations for Profound to their existing footprint of over 300 locations.
In this quarter, we also expanded ICAD's growing global reach.
Dana Brown: We forged new commercial distribution alliances in countries such as Dominican Republic, France, Spain, Turkey, United Arab Emirates, and with leading healthcare technology companies, including Temur, Ozil, and Deep C.
expanding the availability of our profound AI solutions globally.
Dana Brown: We received regulatory clearance in South Africa and secured our first deal in collaboration with our AI platform partner Blackford, a subsidiary of Bayer.
Dana Brown: Blackford is an experienced partner in the radiology AI space with over a decade of experience working in partnership with leading hospitals and groundbreaking health care technology providers.
Dana Brown: Blackford provides a core AI platform where ICAD solutions, including profound AI detection, density, and risk, are delivered as a single source technology platform to improve patient outcomes.
Speaker Change: Our first joint customer is SCP Radiology in Cape Town, South Africa, who implemented 2D detection and density on the Blackbird AI platform.
SCP radiology processes 22,000 exams per year.
Speaker Change: Lastly, expansion opportunities are well underway in Chile, Argentina, Mexico, and Japan. We expect to be active in these countries in the next 12 months.
Speaker Change: Turning now for a quick review of our marketing efforts and third quarter conference and publication activity.
Speaker Change: In August, our U.S. team participated in the 28th Annual Mammography Conference in Santa Fe, New Mexico.
Speaker Change: This is a smaller, highly targeted show whose audience is primarily radiologists and imaging professionals.
Speaker Change: We were selected to participate in the show's AI workshop, where radiologists were able to compare their reading of up to five cases against selected AI detection technology.
Speaker Change: We also attended the annual meeting of the Association of Medical Imaging Management.
Speaker Change: With over 600 attendees, AHRA represents management at all levels of hospital imaging departments.
Speaker Change: freestanding imaging centers, and group practices. Our commercial team generated numerous leads and met with several of our large key accounts.
Speaker Change: Also of note, as of September 10, 2024, the Food and Drug Administration requires that all mammogram reports in the United States include a breast density assessment.
Speaker Change: The report must state whether the patient's breasts are dense or not dense.
Speaker Change: The report should also include information about the risk of developing breast cancer and how dense tissue can make it harder to detect breast cancer on a patient's mammogram.
Speaker Change: The decision was originally published as an update for U.S. mammography regulations in March 2023.
Speaker Change: Prior to the update, 39 states and the District of Columbia complied with Dense Breast Reporting.
Speaker Change: Based on the Breast Imaging Reporting Data System or BI-RADS, there are four categories of density.
Speaker Change: Mammograms are considered the gold standard in breast cancer detection, and the only form of imaging modality proven to reduce breast cancer mortality.
Speaker Change: However, the effectiveness of mammograms can be compromised by breast density.
Speaker Change: It is important for patients to learn about their breast density because density often results in an increase in false positive findings and a reduction in cancer detection.
Speaker Change: ICAD's Profound Density Solution uses AI to analyze the mammography images to determine the BI-RADS density classification.
Speaker Change: Our solution is unique in that it is, one, an image-based, two-part AI algorithm, and two, more closely aligned to the current radiologist's approach to assessing density versus other automated solutions.
Speaker Change: The FDA mandate for mammography facilities to disclose breast density information is a crucial step towards improving breast cancer detection and prevention.
Speaker Change: While the requirement provides patients with valuable knowledge about their breast health, it's also essential to address the ongoing challenges related to insurance coverage and access to additional screening modalities.
Speaker Change: Policies like the FIND IT EARLY Act ensure that all women, regardless of their financial circumstances, have equitable access to the necessary tools for early breast cancer diagnosis and improved outcomes.
Let's now turn to our research and technology updates.
Speaker Change: In the third quarter, we began participation in the Renaissance trial sponsored by the National Cancer Institute.
Speaker Change: Detailed information about this trial can be found on the website clinicaltrials.gov
Speaker Change: In summary, this trial is using ICAD's Profound Density Solution to evaluate the change in breast density over time for premenopausal women
Speaker Change: to determine a personalized approach for breast cancer prevention options by utilizing the lowest effective dose of tamoxifen.
Speaker Change: In addition, ICAT's profound risk will be used to evaluate change in the estimates of the likelihood of developing breast cancer from baseline to 18 months and compare changes by dose group.
Speaker Change: Selection for participation in this study not only validates our technology but it also expands our reach with partners and potential customers.
Speaker Change: You may recall from prior calls that our profound risk has been classified as a de novo device, first of its kind, by the FDA and we are working through this submission process with the FDA.
Speaker Change: In parallel, we received approval for the launch of our own Profound Risk Observational Trial, titled User Acceptance of a Short-Term Image-Derived Risk Tool in Screening Mammography.
Speaker Change: This study is now IRB approved and site identification is underway.
Speaker Change: ICAD's Profound Risk will be available for prospective evaluation on those women who consent to this study.
Speaker Change: Outcome data and survey data will be utilized to assist in operationalizing risk in screening programs.
Speaker Change: Late first quarter, we announced commercial availability of Profound Cloud, powered by Google's cloud architecture and health AI initiatives.
Speaker Change: Profound Cloud continued the momentum that we reported last quarter and we've continued to secure more deals than anticipated for our newly released cloud platform.
Speaker Change: In its first two full quarters of U.S. availability, Profound Cloud has processed over 100,000 cases, showing rapid early adoption.
Speaker Change: Achieving processing speeds more than 50% faster than many traditional on-premises solutions, the Profound Cloud is an efficient solution for deploying the Profound AI Suite.
Speaker Change: With recent global distribution partnerships and regulatory clearances, the availability of profound cloud is expanding around the globe.
Speaker Change: 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: Cloud-based solutions like Profound Cloud address this challenge by providing software as a service to ensure that all customers have access to the latest technology without the initial hardware investment, support contracts, and constant updates.
Speaker Change: Moreover, Profound Cloud provides facility administrators with the ability 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 comprehensive health care analysis.
Speaker Change: This includes 2D and 3D mammography images alongside all cancer images, and in parallel, it stores limited images of benign, recall, and normal cases.
Speaker Change: Profound Cloud also manages profound detection and density assessment results, radiology and pathology reports, while ensuring seamless access to critical diagnostic information.
Speaker Change: 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: We are at the front end of this business evolution with significant transformation expected over the next three years.
Speaker Change: as we will recognize revenue and receive cash on a monthly basis rather than up front.
Speaker Change: It would not be unusual to see top-line revenue flatten out as we go through this transition. That is why, as a metric of success, we provide our annual reoccurring revenue metrics and deal counts.
Speaker Change: Furthermore, as the reoccurring revenue builds, we will be entering each quarter with more and more visibility and predictability.
Speaker Change: As an example of the reoccurring build, the 13 cloud deals closed in Q3 add more than $850,000 to our backlog for both billings and gap revenue.
Speaker Change: To illustrate the short-term impact on top-line revenue and cash, let's look at a hypothetical example.
Assume a perpetual deal is worth $36.
With Perpetual, we recognize revenue and bill all $36 upfront.
Speaker Change: Compare that to a $36 three-year cloud deal. With cloud, we recognize revenue and collect cash over the term of the agreement. Each quarter, we would recognize $3 as revenue.
Billing would be annually in advance at $12.00.
Speaker Change: To compare the impact on revenue in the quarter, we would recognize $36 for Perpetual Deal versus $3 for Cloud.
This illustrates the short-term impact on revenue.
Speaker Change: As we stated, we will be intentionally sacrificing immediate recognition of some gap revenue and cash flow as we go through the transition.
Speaker Change: Top line revenue may flatten or even drop in the short term as we go through this transition. And more and more deals choose cloud versus perpetual. This is a normal cycle experienced by companies going through a perpetual to SaaS transition.
Speaker Change: The long-term benefit of the cloud deal is that it would contribute $33 to backlog for revenue.
Speaker Change: Moving through this transition, our building backlog will result in revenue and cash flow becoming more stable and predictable. In addition to this benefit, ICAD will have the opportunity to renew the deal at the end of the three years.
Speaker Change: Therefore, creating an ongoing revenue stream versus the perpetual one and done.
Eric Lonnqvist: I'll now turn the call over to Eric for a detailed review of our Q3 2024 financials.
Good afternoon, everyone, and thank you, Dana.
Eric Lonnqvist: I'll now summarize our financial results for the third quarter ended September 30, 2024.
Eric Lonnqvist: 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 improved ability to predict future cash flow.
Eric Lonnqvist: That said, this shift will also create lower GAAP revenue and negative cash flow in the short term as our SAS revenues grow.
Eric Lonnqvist: To help illustrate our progress in this transition, we began reporting the following annual recurring, or ARR, metrics in Q3-23.
Eric Lonnqvist: Total ARR or TARR represents the annualized value of subscription license, maintenance contracts, and active cloud services at the end of a reporting period.
Eric Lonnqvist: Maintenance Services ARR, or MARR, represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period.
Eric Lonnqvist: Subscription ARR, or SARR, represents the annualized value of active subscription or term licenses at the end of a reporting period.
Eric Lonnqvist: Cloud ARR or CARR represents the annualized value of active cloud services contracts at the end of a reporting period.
Eric Lonnqvist: Total ARR, or TAR, was $9.3 million as of September 30, 2024, up from $8.4 million in the third quarter of 2023.
Eric Lonnqvist: Maintenance Services ARR, or MARR, was $6.7 million, down from $7 million at the end of the third quarter of 2023.
Eric Lonnqvist: This decline relates in part to service customers migrating to our subscription or cloud products.
Eric Lonnqvist: Subscription ARR, or SAR, was $2.2 million, up from $1.4 million at the end of the third quarter of 2023.
Eric Lonnqvist: Cloud ARR or CARR was 0.4 million representing the accumulation of the first two quarters of recurring revenue from our cloud product.
Eric Lonnqvist: The intent of this metric is to illustrate the pure volume of sales without the complexity of the multiple gap revenue streams.
Eric Lonnqvist: We are pleased to report that in the third quarter of 2024, we closed 52 perpetual, 20 subscription, and 13 cloud orders.
Eric Lonnqvist: Year-to-date, we have secured 188 perpetual, 65 subscriptions, and 23 cloud orders.
Eric Lonnqvist: Please note that these counts include all new upsell and migration deals and exclude standard renewals.
Eric Lonnqvist: Revenue for the quarter was $4.2 million, an increase of $0.1 million or 4% over the third quarter of 2023.
Eric Lonnqvist: The increase is attributable to some of the key deals Dana noted earlier in the call, helping to continue the momentum of our recently expanded sales team.
Eric Lonnqvist: Third quarter 2024 product revenue was $2.5 million, up 14% over the prior year.
Eric Lonnqvist: Service revenue was $1.7 million, down 9% over the prior year.
Eric Lonnqvist: This decline was largely driven by service customers migrating to our subscription or cloud products.
Moving on to gross profit.
Eric Lonnqvist: On a percentage of revenue basis, gross profit was 86% for the third quarter of 2024, which was in line with the third quarter of 2023.
Eric Lonnqvist: On a pure dollar basis, gross profit for the quarter was $3.6 million, as compared to $3.5 million last year.
Eric Lonnqvist: Total operating expenses for the third quarter of 2024 were $5.6 million.
a 0.9 million or 19% year-over-year increase.
Eric Lonnqvist: The largest driver of the increase was investments in R&D and regulatory to support plans for both product and regional expansion.
Eric Lonnqvist: This increase was partially offset by additional streamlining of expenses in GA.
Eric Lonnqvist: Gap net loss from continuing operations for the third quarter of 2024 was 1.8 million or seven cents per diluted share compared with a gap net loss from continuing operations of 1 million or four cents per diluted share for the third quarter of 2023.
Eric Lonnqvist: Non-GAAP-adjusted EBITDA loss for the third quarter of 2024 was $1.5 million compared with $0.8 million in the third quarter of 2023.
Eric Lonnqvist: Moving to the balance sheet, as of September 30, 2024, the company had cash and cash equivalents of $18.8 million compared to cash and cash equivalents of $21.7 million as of December 31, 2023.
Eric Lonnqvist: Net cash used for operating activities for the nine months ended September 30, 2024 was $2.6 million, compared to $3.5 million for the first nine months of 2023.
Eric Lonnqvist: This improvement of 26% year-over-year is due primarily to stronger sales performance in 2024.
Eric Lonnqvist: We believe we have sufficient cash resources to fund our planned current operations with no need to raise additional funding.
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.
Unknown Speaker
Speaker Change: Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions.
Speaker Change: Your first question for today is from Per Ostland with Craig Hallam Capital.
Thanks. Good afternoon, Dana and Eric.
Speaker Change: Let's let's start with let's start with deal counts this quarter. Obviously, you know, I think you've done a good job of communicating.
Speaker Change: The revenue impact of the transition and and you know how we need to be thinking about that. So I think ARR and deal count.
Speaker Change: end up, you know, kind of being, you know, almost, almost equal in terms of where our focus ought to be. How would you characterize third quarter deal count versus your own expectations? It sounds like cloud is running, you know, maybe a little bit ahead.
of Expectation was the overall count.
Speaker Change: You know deal flow. Is that is that a fair characterization?
Dana Brown: Hey Pear, maybe this is Dana, I'll jump in first and then turn it over to Eric. But I think just to the last part of your question around seasonality, that definitely impacts us in third quarter from an OUS perspective.
Eric Lonnqvist: Most, if not all of Europe, it feels like they're on holiday throughout, you know, July, August, maybe sometimes even a little bit into September.
Eric Lonnqvist: I think from a U.S. perspective, you just, you have a little bit of a
Eric Lonnqvist: Once we pass kind of the Labor Day, so those two forces in general.
Eric Lonnqvist: tend to make Q3 a little depressed compared to the other quarters of the year. But I think if you probably went back,
Eric Lonnqvist: through ICAD's timeline, really kind of any software company's timeline, you would see those effects happening. Eric, do you want to chime in with any other either specifics or commentary you might have?
Eric Lonnqvist: Sure. No, I think that was right on, Dana, about the seasonality. We see this every Q3, specifically in OUS, as far as
Eric Lonnqvist: People on vacations and so forth. That said, I think as far as the deal count, the 85 we reported
Continues to exceed our internal plans as far as.
Eric Lonnqvist: How fast we're going to cloud so 10 deals last quarter and 13 this quarter, I think
Both exceed our expectations.
Eric Lonnqvist: So those 13 cloud deals and two of the two of the biggest ones were what Dana talked about with you at UCSD and
The Charlotte Radiology Expansion.
Eric Lonnqvist: We get very little revenue from those deals right now and that are in Q3.
even
Eric Lonnqvist: Even for ARR, very few of those have gone live because it normally they'll go live in the following quarter. So
Eric Lonnqvist: We'll get a bump in ARR when those go live. So the volume and the ARR we'll get from those deals I think is, we were generally happy with on the U.S. side.
Speaker Change: Okay, that's that's very helpful. Thank you on to both of you for that big picture question as.
Speaker Change: cloud is kind of seeded in the marketplace and subscription is, you know, is prominent for you guys. I think I've always felt like those offerings would
Speaker Change: If there are customers out there that may have, let's say, a Hologix system and may be using Hologix AI as well,
Does your ability to offer a subscription or cloud
Speaker Change: and get people to kind of utilize you side by side with something else.
Speaker Change: Well, I think in general, again, following the pattern, right, picking up on the last part of your question.
Subscription and cloud
across.
The whole spectrum of customers, right? So large or small.
U.S. versus O.U.S.
Unknown Speaker
Speaker Change: Okay, that makes sense. It's kind of what I expected, but I don't know why I would ask the question. All right, one more for me for now.
Speaker Change: With the change in density regulations that went into into play in September, you know, you've had a density product for a while.
Speaker Change: Some states were mandating it before, but now that you have it at the, you know, the broader level is that changing conversations with customers potential current and otherwise, in terms of really taking on the full ICAD suite.
Um
probably not in terms of
like
A significant quantity of additional density licenses sold.
Speaker Change: So, you know, I would say the pattern we have seen in our customer base or, you know, imaging centers looking at AI, they already understand the challenges in reading mammography for women with dense breasts, right? So they were already looking for a solution that would help them.
Speaker Change: find those subtle and very hard to find cancers. So one of our, I would say most popular bundle packages, right, is density plus detection. So I think, you know, if anything, it's helped to reinforce
and give a confidence to a decision they already made.
Speaker Change: It probably helps a little bit more in terms of just considering.
an AI solution to assist a radiologist overall.
Speaker Change: Because now there is this, you know, I would say kind of nationwide recognition that density is one of the leading risk factors, and it makes reading mammography, right, or mammograms very difficult. So.
Speaker Change: You know, there was a nice quantity of states that had begun adopting, I'll say, kind of like this guideline, right, or this requirement before the federal, right, or nationwide mandate went into effect in September.
Unknown Speaker
Speaker Change: Speaking right from Komen, right, it was something that we advocated for at a state level and at the federal level from an advocacy standpoint. So
Speaker Change: So it's been something that's been making this kind of slow and steady progress kind of all along. If anything, it just helps reinforce and we, you know, makes this decision to go ahead and buy the bundle, even an easier decision, more straightforward decision.
Speaker Change: Sure, that makes that makes total sense. Thanks. I appreciate the answers. Oh, yeah.
Unknown Speaker
Speaker Change: As a reminder, if you would like to ask a question, please press star 1.
Speaker Change: Your next question for today is from Yale Chen with Laidlaw and Company.
Good afternoon and thanks for taking the questions.
Speaker Change: My first question is that, first, congrats for the FDA approval of the version four. So, the question is that.
Yeah.
Speaker Change: Is it perpetual? And then we'll make the decision of which implementation platform will come out first with 4.0. But we're only talking a matter of weeks, right? So, the first shipment, if you will, of 4.0 will probably happen in mid-December, so right after RS&A. And then we'll follow up with the next implementation platform just a few weeks later. So, it'll be a fast process for us.
So going forward for new customs, regardless which
Speaker Change: model they are in, I mean the business model they are in, are they going to immediately get the version 4 to start with, whereas the existing customer may have a time for sort of transition.
Speaker Change: Okay, one more question here is that just from the reporting perspective.
Speaker Change: with the increasing of subscription as well as the cloud model, the product revenue line, would that be going down more quickly, or that's not necessarily the case?
The product versus the service line in the P&L.
Hi Yale, it's Eric. You're talking quarter over quarter.
Speaker Change: Yes, or yes, yeah, so that so in that product line is perpetual subscription and cloud are all in that line. The way it's reported right now. The main the main drop quarter over quarter is perpetual.
Right.
Speaker Change: So the crowd as well as the subscription model revenue portion up will be allocated to or assigned to the product line. Is that correct? Correct. Correct.
Speaker Change: Just to look at over this period of time, we still see a lot of
Speaker Change: perpetual deals. Has that something has that has something to do with the GE part of the business or that's a very different piece where those deals come from?
Speaker Change: Eric, do you want to take that one as well? I can. Yes, GE is 100% perpetual for us for new deals. We do have some service contracts through GE customers, which are ratable and they're in that service line, but all new deals continue to be perpetual through GE. So that's a big portion of the perpetual revenue.
Speaker Change: that flows into our P&L right now. That's correct. Okay, great. Thanks a lot. Congrats on the migration at this point and best luck for the quarters going forward.
Dana Brown: We have reached the end of the question and answer session and I will now turn the call over to Dana for closing remarks.
Thank you, operator.
Dana Brown: In conclusion, I want to just reiterate, as we've demonstrated on the call today, our demand for our technology is continuing to be strong. Also, as we discussed, our clinical trials that we're involved in and other publications, the evidence supporting it continues to grow.
Dana Brown: And as we noted several marquee deals, our team continues to secure opportunities with some of the most prestigious and esteemed health care facilities worldwide.
Dana Brown: On behalf of the management team, I think I'm confident in saying that we remain optimistic about the company and its future. And we firmly believe in our ability to generate significant shareholder value. Thank you all for your time today and have a great rest of the evening.