Q4 2024 iCAD Inc Earnings Call
Greetings. Welcome to the iPad Inc. 4th quarter and full year 2024 Financial Results Conference call. At this time, all participants are in listening only mode.
Speaker Change: A question and answer session will follow the former presentation. If anyone should acquire 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 at ICAP.
You made it again.
Speaker Change: Good afternoon everyone. Thank you for joining us today for ICAD's fourth quarter and four year 2024 earnings call. On the call we have Dana Brown, our President and Chief Executive Officer, and Eric Lonnqvist, our Chief Financial Officer.
Speaker Change: 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.
Speaker Change: These forward-looking statements are based on ICAD's current expectations and a subject to uncertainty and changes in circumstances.
Speaker Change: 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 US Securities and Exchange Commission.
Speaker Change: IKAD 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 that they view the operating performance of the company.
Speaker Change: You can find a reconciliation of our gap to non-GAAP measures at the end of the earnings release and with that, I'll turn the call over to Dana.
Dana Brown: Fourth quarter marked another strong quarter for ICAD with our top line results exceeding expectations as reflected in revenue of 5.4 million.
Dana Brown: We recorded increased bull year 2024 revenue of 19.6 million and ARR of 9.8 million.
Dana Brown: Our growth reflects the momentum we are seeing in our transformation strategy, including the accelerating adoption of profound cloud and our broader shift to a software-as-a-service business model.
Dana Brown: Linearly proven technology that reduces radiologist reading time by 52% and improved cancer detection by over 23%. Our solutions are used by health care providers in over 50 countries in 'twenty 'twenty four we received FDA clearance of profound.
Dana Brown: Detection version 4.0, the most advanced AI detection solution, we've launched to date.
Dana Brown: Or as you borrow delivers a smarter AI with a 22% improvement in detecting aggressive cancers compare diversion three including a 50% increase in sensitivity for dense breast tissue and a 60% improvement and identifying invasive lobby alert cancers.
Dana Brown: With an 18% reduction in false positives. It also enhances workflow efficiency and reduces unnecessary follow ups, improving both the patient experience and clinical outcomes.
Dana Brown: Additionally for the first time, our AI now integrates prior exam analysis.
Dana Brown: Replicating a radiologist owned comparative reading approached to increase diagnostic confidence.
Dana Brown: Coupled with our fast expansion through profound cloud. The version 4.0 is a key milestone and I cads long term growth strategy.
Dana Brown: Our transition to a reoccurring revenue model strengthened financial predictability positioning us for continued success as we move through 'twenty 'twenty five we remain focused on driving innovation, expanding our SaaS footprint, ensuring that our AI solutions reach more providers and patients worldwide.
Dana Brown: Good.
Dana Brown: Turning now to our Q4 deal highlights in the fourth quarter, we closed a total of 106 deals.
Dana Brown: For perpetual thirty-three subscription and 19 cloud.
Dana Brown: Some of these deals included expanding at Sutter health via our partner firm, where we have I catch solutions installed and running at 16 of their 42 hospitals in breast centers.
Dana Brown: The image care in Pink breast center in New Jersey signed a multiyear cloud contract with an upgrade to the latest profound AI and Hartford healthcare added three D detection and density to their existing two D license.
Dana Brown: On the partnership front, we signed a partnership agreement with Iliad for their breath scape MRI AI solution and last month, we also announced a new partnership with <unk> medical providing radiologists with an AI powered pathway for breast U S with the call.
Dana Brown: He owes smart ultrasound solution.
Dana Brown: This partnership broaden the scope of offerings for ICANN in North America to align best in class AI solutions with the care path of the patient from screening mammogram, two breast ultrasound and breast MRI. These new partnerships not only expand I cads commercial opportunities in north.
Dana Brown: Erika, but also provide clinicians with a more complete end to end AI powered approach to breast cancer screening and detection that enhances workflow efficiency and diagnostic accuracy. We've.
Dana Brown: We've also begun a new push in Quebec, and Ontario, Canada with private medical center, starting to move to three D imaging and the need for both AI detection and density assessment.
Dana Brown: On the global partnership front, we signed a distribution agreement with a new distributor in South Africa Med in B and are already actively engaging in several new accounts.
Dana Brown: Men in B focuses on hosting implementing and supporting radiology department applications throughout South Africa, and this is part of our O U S expansion strategy Med N b will be reselling, our full suite of solutions.
Dana Brown: We also signed our first deal with sector on this sector amplifier platform at London Northwest University Health care in H S. Trust. This is a very important first step in expanding our sector channel. This is a doctor implementation, meaning on the sector is AI play.
Dana Brown: One amplifier.
Dana Brown: Northwest London as part of the NHS and serves approximately 1 million patients across London.
Dana Brown: We also signed a new distributor in Portugal part of our O U S expansion strategy in the EU and lastly, we secured final regulatory approval enjoyed it a new expansion country for us.
And now for an update on our SaaS transition.
Dana Brown: During 'twenty 'twenty four we made tremendous progress with our transition to a SaaS based model a pivotal shift that is fundamentally changing how we deliver our technology and how we generate revenue.
Dana Brown: This transition is enabling us to expand accessibility to our AI solutions and <unk>.
Dana Brown: <unk> financial predictability and position I CAD for long term sustainable growth.
Dana Brown: In the fourth quarter, we saw continued momentum in cloud adoption with 19 of our closed deals coming through profound cloud compared to 13 deals in Q3, and 10 cloud deals in Q2, which was the first quarter of its availability.
Dana Brown: This reinforces the increasing preference for software as a service solutions that eliminate large upfront Pos while ensuring continuous access to cutting edge AI advancements as a result annual reoccurring revenue or a R. R grew 11% year over year demonstrating.
Dana Brown: Strong customer demand and the scalability of our cloud platform.
Dana Brown: We believe there is a significant opportunity for ICANN to increase market share by providing a cost effective flexible alternative to traditional perpetual licensing models. Our cloud platform allows facilities to implement AI solutions more efficiently without the burden of large hardware investing.
Dana Brown: H I T maintenance or software update costs.
Dana Brown: Well, we are encouraged by the strong adoption trends. It is important to note that SaaS transitions can impact near term GAAP revenue recognition. She was perpetual license sales provide immediate revenue, whereas with cloud deals revenue is recognized over time for example.
Dana Brown: Petrol deal would traditionally generate all its revenue upfront well a cloud deal of the same value would be recognized quarterly over its contract term.
Dana Brown: In the short term this dynamic may cause some flattening in reported GAAP revenue, but at the same time it creates a backlog of recurring high margin revenue that builds quarter over quarter, leading to greater financial stability and visibility over time.
Dana Brown: To drive this transition we are leveraging our strong cash position to support the expansion of profound cloud.
Dana Brown: This includes investing in scaling our cloud infrastructure, onboarding, new customers and expanding our commercial reach.
Dana Brown: Our reoccurring revenue base grows we expect to see improvement in profitability and cash flow.
Dana Brown: Eric will provide more details on the financial impact of this transition, but we remain highly confident in the long term benefits of SaaS, both for our customers who gain access to a continuously improving AI solution and for I CAD as we build a more predictable scalable and high margin revenue model.
Dana Brown: Turning for a quick review of our conference participation in industry engagement in the fourth quarter at J F. Our 'twenty 'twenty four I CAD debuted the global commercial availability of profound cloud, marking a key milestone in our transition to a SaaS based model.
Dana Brown: In the first two full quarters of U S availability profound cloud processed nearly 100000 cases, demonstrating rapid adoption and delivering AI powered breast imaging solutions with more than 50% faster processing speeds compared to traditional on Prem solutions.
Dana Brown: <unk>.
Dana Brown: The platform scalability affordability and regulatory clearances in key markets, including South Africa, and the U a E position it as a transformative solution for health care providers worldwide.
Dana Brown: At artist and a 'twenty 'twenty four we announced a groundbreaking partnership with Cascade health to launch profound health a virtual second read service, providing AI powered breast health insights to patients who otherwise wouldn't have access to AI based screening this initiative.
Dana Brown: Aligns with our mission to democratize access to early breast cancer detection and support health equity in mammography.
Dana Brown: Closing out the year at S. A b C. S. 'twenty 'twenty four I can showcase for novel research abstracts, demonstrating the impact of AI in improving early breast cancer detection.
Dana Brown: Assessing disparities across diverse populations and exploring the link between breast arterial calcification or b, a C and cardiovascular risk.
Dana Brown: Notably our research highlighted a higher prevalence of Bac and women with memory graphically detected breast cancer, suggesting that AI powered Bac detection could play a role in integrating cardiovascular risk assessment into routine breast cancer screenings.
Dana Brown: On the Investor front in Q4, I can't participated and the LD Micro main event 17, and the Craig Hallum Alpha Select conference engaging with institutional investors to discuss our strategic fast transition recent regulatory milestones and long term growth trajectory.
Dana Brown: Most recently in February we participated in the V. T. I G 12 annual Med Tech digital Health life Science, and diagnostic tools conference in Snowbird, Utah, where we continue to build relationships with investors and provide updates on our progress.
Dana Brown: And I'll now hand, it over to Eric for a review of our financial performance.
Eric Lonnqvist: Good afternoon, everyone and thank you Dana.
Eric Lonnqvist: Before I cover our results I want to take a few moments to add more contracts to our outlook for the SaaS transition.
Eric Lonnqvist: Historically transitions like this can take up to three years.
Eric Lonnqvist: We expect 2025 represents a significant phase of this shift as cloud adoption accelerates and begins to represent a larger portion of our overall business.
Eric Lonnqvist: As noted in prior calls this transition will result in a short term headwind to both GAAP revenue and cash flow.
Eric Lonnqvist: We do however view this as a necessary step toward a more predictable and high margin financial model.
Eric Lonnqvist: We also recognize the importance of offering flexibility through both subscription and perpetual options, particularly for our OEM partners, ensuring we can meet a broad range of customer needs, while continuing to scale our business.
Eric Lonnqvist: I'll now summarize our financial results for the fourth quarter and year ended December 31 2024.
Eric Lonnqvist: As a reminder, we are reporting annual recurring revenue metrics to help illustrate our progress during our SaaS transition.
Eric Lonnqvist: Totally our R. A T. A R represents the annualized value of subscription license maintenance contracts and active cloud services at the end of a reporting period.
Maintenance services, there are or M. A R. R represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period.
Eric Lonnqvist: Subscription E. R. R. R S air or represents the annualized value of active subscription or term licenses at the end of a reporting period.
Eric Lonnqvist: Cloud a R. R. R. C. A R. R. <unk> represents the annualized value of active cloud services contracts at the end of the reporting period.
Total error or or T air or was 94 8 million at the end of the fourth quarter 2024 up from $8 8 million at the end of the fourth quarter towards 'twenty three.
Eric Lonnqvist: Maintenance services there are for M. A R. R was $6 4 million at the end of the fourth quarter 2024 down from $7 1 million at the end of the fourth quarter of 2023.
Eric Lonnqvist: This decline is driven largely by customers migrating to subscription and cloud offerings.
Eric Lonnqvist: Subscription <unk> S. A R was $2 6 million at the end of the fourth quarter of 2024.
Eric Lonnqvist: From $1 7 million at the end of the fourth quarter of 2023.
Eric Lonnqvist: Cloud a R. R. R. C. A R was $48 million at the end of the fourth quarter of 2024, representing the accumulation of the first three quarters of recurring revenue from our cloud product.
Eric Lonnqvist: We are pleased to report that in the fourth quarter of 2024, we closed 54 perpetual thirty-three subscription at 19 cloud ores.
Eric Lonnqvist: For the full year period, we have secured 242 perpetual 98 subscription and 42 cloud orders. Please.
Eric Lonnqvist: Please note that these accounts include all new upsell and migration deals and exclude staggered renewals.
Eric Lonnqvist: It is important to note that Q4 was a particularly strong quarter with some deals that we expected in Q1 of 2025 moving into Q4.
Eric Lonnqvist: Revenue for the quarter was $5 4 million, an increase of <unk> 7 million or 14% over the fourth quarter of 2023.
Eric Lonnqvist: For the 2020 for full year period revenue was $19 6 million compared to $17 3 million in 2023.
Eric Lonnqvist: Fourth quarter 2020 for product revenue was $3 7 million up 24% over the prior year.
Eric Lonnqvist: For the full year period product revenue was $12 5 million compared to $9 9 million in 2023.
Eric Lonnqvist: Fourth quarter 2024 service revenue was $1 7 million flat versus prior year.
Eric Lonnqvist: For the full year service revenue was $7 1 million compared to $7 4 million in 2023.
Eric Lonnqvist: This decline was largely driven by service customers migrating to our subscription or cloud products.
Eric Lonnqvist: Yeah.
Eric Lonnqvist: Moving on to gross profit.
Eric Lonnqvist: On a percentage of revenue basis gross profit was 86% for the fourth quarter of 2024, which was down from 91% in the fourth quarter of 2023.
Eric Lonnqvist: The year over year decline is driven largely by a one time benefit in Q4 23, along with amortization of our cloud products completed in Q1 24.
Eric Lonnqvist: On a pure dollar basis gross profit for the quarter was $4 7 million as compared to $4 3 million last year.
Eric Lonnqvist: Total operating expenses for the fourth quarter of 2024 were $5 5 million.
Eric Lonnqvist: $8 5 million or 10% increase year over year.
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: For the 2020 for full year period total operating expenses were $22 9 million compared to $22 5 million in 2023.
Eric Lonnqvist: GAAP net loss from continuing operations for the fourth quarter of 2024 was $49 million or three cents per diluted share compared with a GAAP net loss from continuing operations of <unk> 5 million or <unk> <unk> per diluted share for the fourth quarter of 2023.
Eric Lonnqvist: For the full year period, GAAP net loss from continuing operations.
Eric Lonnqvist: $5 6 million or 21 cents per diluted share compared to $7 million or 27 cents per diluted share in 2023.
Eric Lonnqvist: non-GAAP adjusted EBITDA loss for the fourth quarter of $2024 5 million.
Eric Lonnqvist: Paired with <unk> 4 million in the fourth quarter of 2023.
Eric Lonnqvist: For the full 2024 year period non-GAAP adjusted EBITDA loss was $5 4 million compared to $6 8 million in 2023.
Eric Lonnqvist: Moving to the balance sheet as of December 31, 2024, the company had cash and cash equivalents of $17 2 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 2020 for 12 month period was $3 9 million compared to $5 million for the 2023 to 12 month period.
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.
Thank you at this time, we will be conducting a question and answer session. If you'd like to ask a question. Please press star one on your telephone keypad.
Speaker Change: Confirmation tone will indicate your line is in the question queue. You May Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
Speaker Change: Again, that's star one if you wish to ask a question on one moment. Please while we poll for questions.
Speaker Change: And our first question today is coming from Murray to bolt from P. T O G.
Speaker Change: Maria Your line is live.
Speaker Change: Hi, good afternoon. Thanks for taking the questions wanted to congratulate you on the nice momentum to end the year, but Eric I heard the commentary about you know thinking about things being a little more flattish going forward that there were some orders pulled forward into Q4 from Q1. So I wonder if you could just kind of give us a holistic outlook for how you're thinking.
Speaker Change: About you know the Capex environment, the budget environment for hospitals and centers. This year anything on cadence on a quarterly basis anything on kind of momentum more sequential increases we might expect in the cloud deal count any more detail on that would be great.
Eric Lonnqvist: Yeah, Hi, Marie.
Eric Lonnqvist: Yeah, I think you can see from the last few quarters that.
Eric Lonnqvist: We're still having some lumpiness in revenue. So Q3, historically has been one of our slower quarters Q4 has been one of our stronger quarters and you'll see that in the numbers.
I think theres a lot of momentum in cloud. So we've seen now the three quarters, we've had cloud.
Eric Lonnqvist: Commercially available and we've seen a growth in deals and.
Eric Lonnqvist: The conversations are continuing it's a great experience is performing very well and twenty-five we we do expect this momentum to continue for cloud.
Eric Lonnqvist: Q4, I think two things happened one.
Eric Lonnqvist: Really strong execution by the sales team, but there were there is some timing still in the business with perpetual and since some of this is subscription revenue.
Eric Lonnqvist: A few deals slip from Q3, so on the Q4 and are also a number of deals as we noted.
Eric Lonnqvist: Originally we were slated for Q1 'twenty five that were pulled in to Q4.
Eric Lonnqvist: So there will be some timing variances as we go through this transition, but I think the.
Eric Lonnqvist: The biggest benefit of getting to a SaaS based business will be to eliminate.
Eric Lonnqvist: Just this kind of lumpiness that we're seeing.
Speaker Change: Sure we look forward to that visibility to okay very helpful. And then I wonder if I could get some feedback on kind of the early reactions to front from customers to profound detection version 4.0, what you're hearing from the field if you're seeing that this is catalyzing a more interest you know X.
Speaker Change: Tolerating deal closings at any kind of feedback on that are what I know, it's very early on our lunch. Thank you.
Speaker Change: Hey, Mary So I actually spoke with our chief product Officer yesterday, I'm, hoping that we would get this kind of question today [laughter] I'm kind of an update on the performance of forero.
Speaker Change: In terms of its accuracy, which is its ability to get more cancers right.
Speaker Change: And more no cancers right. So if you kind of think of you want your accuracy to be at kind of both ends of the spectrum.
Speaker Change: And you don't want a lot of calls if you will to be in the middle which is kind of that gray zone, its actually performing even better or more accurately out in clinical practice than it even did against our regulatory dataset that we used for the F. D. A clearer it so we're thrilled.
Speaker Change: We were very pleased with its accuracy when we.
Speaker Change: Did the FDA submission, but we're actually seeing even higher accuracy. When it comes to patient all comes out in the field. So so are our marketing team and our sales team now that it's been out for Oh, I guess, you would call. It a full quarter right since a it got cleared up right around Thanksgiving and then we had to have.
Speaker Change: Finish up it's packaging so it could actually be shipped and are just now beginning to kind of take this message out to prospects and customers looking to upgrade so hopefully by the time. We're on this call with you next quarter, we'll have more evidence of kind of what the pull through based on those results have been.
Speaker Change: Okay, that's very encouraging thanks for taking the questions. This evening.
Per Ostlund: Thank you. The next question is coming from per Ostlund from Craig Hallum capital.
Speaker Change: Your line is live.
Speaker Change: Great. Thank you very much and good afternoon, Dan and Eric.
Speaker Change: It was a fantastic quarter.
Speaker Change: Much better than even the prerelease would've suggested.
Speaker Change: Kind of piggybacking off of <unk> question, I think you alluded to the pull forward and I appreciate the commentary about maybe some slippage from Q3.
Speaker Change: Hum.
Speaker Change: How much I'm curious.
Speaker Change: You also did talk about before there as well, but how much did the control just before clearance right before ours.
Speaker Change: So a little bit more because they might have just been a little bit more importantly in the quarter that that might have triggered some quicker decision making.
Speaker Change: On the part of your customers.
Speaker Change: So I'll go first and Eric I mean totally comfortable if you have a different point of view or when they add some other color commentary, but I really think Q4.
Speaker Change: One I don't think that exceeding our expectations right in Q4.
Speaker Change: Had very much to do with version four cause.
Speaker Change: You don't know until literally you'll get the memo from the FDA that it's going to be cleared so and that happened. So late right around <unk> and then there's only like a few shopping weeks left in December I think to the point Eric made earlier the performance in Q4 had to do more with one sales team execution.
Speaker Change: It kind of wrapping up a full year with some of the revamping of that team that we did I do think that the marketing team is also hitting its stride and getting out the right messaging them they've been able to.
Speaker Change: Develop some very effective.
Speaker Change: Targeted customer programs, so not just lead gen, but even with existing customers and then you just have budget timing right that always helps and creates a lift in fourth quarter people are anxious to use budgets, they're not sure what might happen in the upcoming year. So I think it's just you know everything lined up.
Speaker Change: Right.
Speaker Change: In Q4.
Speaker Change: Okay.
Speaker Change: Sure sounds like it did yes.
Speaker Change: Yeah.
Speaker Change: Yeah.
Speaker Change: The market issues of this company are.
Speaker Change: Some go lives.
Speaker Change: The trigger for inclusion.
Speaker Change: Last quarter when we.
Speaker Change: This on this very call I think Oh that trigger point was probably lost one.
Speaker Change: So a lot of people certainly myself included.
Speaker Change: You had some bigger deals it hadn't gone live.
Speaker Change: Pointed at the end of Q3, so they weren't in here now.
Speaker Change: Now we did see that they are or go up from Q3 to Q4, how does that dynamic now look as we exit Q4 are there meaningful deals because again you had a nice sequential bump up in deals are there meaningful deals that language.
Speaker Change: Q2 that hasn't hit yet in Q4.
Speaker Change: Justin This is the kind of thing would you be chasing every single quarter, because we're always going to be.
Speaker Change: But just kind of curious on how youre looking at that overall dynamic.
Speaker Change: If I can just making sure we understand that.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Dan.
Dan: Sure, Let me comment yeah, Yeah, I think that what we're experiencing the cloud implementations there's more security.
Speaker Change: Checks involved so the implementations take little bit longer so I think it's fair enough.
Speaker Change: I assume about a quarter lag so when you report deal counts those or.
Speaker Change: When the deals are closed not lives and to your point they don't hit our ore until they go lives. So I think every quarter.
Speaker Change: Then we sell more cloud deals you can add more on the backlog. So just anecdotally we sold more deals in cotton in Q4 for cloud I would expect kind of a bigger bump from those deals in Q1 'twenty fives. So.
Speaker Change: I think you're thinking about it right.
Speaker Change: We've discussed internally.
Speaker Change: We'll be reporting.
Speaker Change: More backlog metrics this year and I think it will help to show up.
Speaker Change: What revenue billing and Andy R. R.
Speaker Change: <unk> is in the backlog to be recognized at a later date.
Speaker Change: So I think more to come on that but I think just anecdotally with more deals in Q4.
Speaker Change: You can expect more in backlog from cloud.
Speaker Change: From Q4 deals that will hit in Q1.
Speaker Change: Okay.
Speaker Change: Makes sense I, just did not want to lose lose the plot on that because it.
Speaker Change: I hadn't.
Speaker Change: Anticipated that last quarter properly and so I just wanted to make sure that.
Kevin: This is Kevin.
Speaker Change: The rest of us.
Speaker Change:
Speaker Change: David you talked about.
Dana Brown: Will you both talked about sales force execution, Dana you mentioned.
Speaker Change: Jim hitting its stride mhm.
Speaker Change: When you announced these more recent collaborations coils medical's.
Speaker Change: Oh gosh.
Speaker Change: Help us understand how they kind of fill in the blanks around.
Speaker Change: Doing internally how.
Speaker Change: How do they contribute.
Speaker Change: How how we see that kind of manifest itself.
Speaker Change: So our approach to partnerships I'm and I'm going to call them technology partnerships that round out the patient care journey.
Speaker Change: After screening happens.
Speaker Change: Have been driven by customer requests writer inquiry, so up and they won't necessarily name a company named but they'll say for example.
Speaker Change: It's great right that your AI detection is helping me find cancers faster.
Speaker Change: And earlier do you have anything that can help in follow on diagnostics, you know I'm using ultrasound I'm using MRI.
Speaker Change: And so we've been looking for partners that can help us field. These questions and requests from our customers along those lines I'm in and it also is a great way for us to understand market adoption on somebody's because if you look at the overall I'll say kind of size of the mammography market. Some.
Speaker Change: And the follow on imaging, it's not as necessarily larger is well covered and so its a great way for us to number one.
Speaker Change: Meet the requests from the customer's number to learn a lot more about the market dynamics and some of the follow on areas and helping form you are our corporate roadmap going forward do we continue to partner is something that we would build is it something that maybe in the future. We're in a position where we could actually acquire.
Speaker Change: But for right now I would say, particularly you know some of the ones that we've announced over the past year, it's been going really well and it's like we've already begun we've already been working with them in the field before we formalize it or memorialize it as a partnership.
Speaker Change: Oh, Okay very good.
Speaker Change: Thanks for that color I appreciate it mhm.
Speaker Change: Thank you next question will be from Yale Jen from Laidlaw <unk> company.
Speaker Change: Yes.
Speaker Change: Good afternoon, and I might add my congrats on a great quarter as well.
Speaker Change: We talked a lot about the topline.
Speaker Change: So I went a little bit on the operating expense side.
Speaker Change: We noticed that for the last two years, the operating expenses roughly be rough.
Speaker Change: Roughly the same almost.
Speaker Change: Almost the same.
Speaker Change: So should we anticipate for example, 25 or maybe even 420 states that will be the level, we should be model.
Speaker Change: Good.
Dan: Dan you want me to take that one.
Yes, that'd be great.
Speaker Change: Okay.
Speaker Change: No I wouldn't assume that Ah I think theres a number of initiatives we have on track for this year.
Speaker Change: <unk>.
Speaker Change: So I don't think you can assume that the opex run rate now will continue into the future.
Speaker Change: So I should assume that it will be some.
Speaker Change: Upper.
Speaker Change: <unk> expenses increased.
Speaker Change: In general.
Speaker Change: Sort of Directionally speaking.
Speaker Change: No.
Speaker Change: I can't really give too much guidance on the future Opex.
Speaker Change: I think it's you can see the trend of where we've been.
Speaker Change: And Dennis script, she announces some of the initiatives we're undertaking.
But I can't really.
Speaker Change: I can't really guide on.
Speaker Change: On that yeah.
Speaker Change: Okay.
Speaker Change: And.
Speaker Change: Maybe on the top line of sight in terms of.
Speaker Change: N D C a R.
Speaker Change: We know that has increased.
Speaker Change: Over the years and that's only a.
Speaker Change: Very positive.
Speaker Change: We're actually hoping again.
Speaker Change: Or was some any kind of color or guidance you guys may offer in terms, what let's say total for this year.
Speaker Change: How should we see that understand there's a lumpy somehow some level of lumpiness or maybe this is the last piece to that but nevertheless, any colors, we can gain.
Speaker Change: Yeah, I think so we had that that uptick of approximately a $1 million or they are in the last year I think.
Speaker Change: Without guidance and.
Speaker Change: Anecdotally now that we have our cloud business, our cloud product are three quarters under our belt.
Speaker Change: Deals had been growing.
Speaker Change: Every quarter.
Speaker Change: And we expect that momentum to continue for cloud.
Speaker Change: And that should.
Speaker Change: Just mathematically that should fuel.
More of our growth.
Speaker Change: So internally one of our biggest initiatives is if not the us to grow IRR and convert to this recurring base.
Speaker Change: It's about a lot, but I think.
Speaker Change: I think this and I would pay attention to the mixed shift of deals nearly released with perpetual and subscription and cloud.
Speaker Change: And the more we see that that shift going forward.
Speaker Change: It should mathematically it should translate to faster <unk> growth.
Speaker Change: That's.
Speaker Change: Oh, that's strategic plan.
Speaker Change: Plan internally.
Speaker Change: Okay, maybe the last question here that are again congrats on.
Speaker Change: The prove up 4.0 do you guys anticipate goal one full.
Speaker Change: 000 version four we'll have a much more.
Speaker Change: Significant impact in terms of the adoption because of it.
Speaker Change: Yeah, So Rob Who's made matrix has been being your pool, whereas the last version and how.
Speaker Change: How should we think about that as well and I think as well.
Speaker Change: Addressing those questions mhm.
Speaker Change: Yeah.
Speaker Change: So I think in general, Yes, I think we're going to see.
Speaker Change: Better adoption well, let me let me pause just a second because they think you know four O as in its first few months of availability and I think if you probably rolls back the clock to when I can first released version three mm. It also probably help to accelerate adoption.
Speaker Change: Customers choosing high CAD and its first several months of release as well so but I think if you look at four O. Today. The good news is is that dresses several big request that came from customers one was reducing the number of what we call busyness right our marks.
Speaker Change: On the mammogram that the radiologist didn't need to spend a lot of time on so we increased you know not only the accuracy, but we also reduced the number of kind of busy marks the other thing that we did with four O that was requested by radiologist, whereas incorporate the analysis of priors.
Into the algorithm, which is better replicates the way a radiologist read manually mammogram. They look at the prior image and then they compare that to the current image. The one that was just taken we actually do that inside the algorithms. So we don't process them individually, we actually process them.
Speaker Change: Together, so that's a huge improvement and meet them, a very high demand and ask from radiologists out. There. So those are kind of two unique differentiators for four O them, but you know we're already thinking about what comes next.
Speaker Change: Releasing enhancements and updates already are in place for four O. So hopefully we can actually improve the speed with which we come out with updates minor upgrades before we get to the next version.
Speaker Change: Okay, Great I appreciate it and maybe if there's one.
Speaker Change: And one more questions.
Speaker Change: Oh, no it will be.
Speaker Change: The deep broad launch product to all costumes or as well as weather.
Speaker Change: Our existing costs and will be upgraded to 4.0, how this though in Florida, they need to pay for a fee for doing that and the thing.
Speaker Change: So so it would depend on whether or not the customer was current on our maintenance and support agreement them. If they are.
Speaker Change: And they're ready to update it because remember it could require some additional training you know rollout communications. So it's not something that they're necessarily going to let just happen right overnight, but if they are current on maintenance and support they can get the new version if theyre not current on maintenance and.
Speaker Change: Support then there is a fee to kind of get them current on maintenance and support agreements and then we would go in and do the implementation of Boral.
Speaker Change: Okay, great. Thanks, again and congrats on.
Speaker Change: Great quarter.
Speaker Change: Thank you and the next question will be from June Manheimer from Freedom capital markets Junior line of five.
Speaker Change: Thank you.
Speaker Change: Congrats on a great finish to the year.
Speaker Change: I had a question on some of the components of the E. R. R. So in particular maintenance so maintenance AOR declined what looks to be about 9% and Eric you talked about that.
Speaker Change: As you know maybe by design as you convert more customers to subscription and cloud.
Speaker Change: But I'm just curious if there was any outsized churn in.
Speaker Change: In the quarter that we should be aware of driving that number or is that is that would you characterize it as normal churn.
Speaker Change: Yeah, Thanks gene yes.
Speaker Change: You are interpreting all all of that correctly in terms of the shift.
Speaker Change: We churn is another one we mentioned backlog a little bit earlier in the call churn as a metric we've discussed reporting externally we've got a number of questions on that.
Speaker Change: So even though we don't report I would say that there was nothing unusual.
Speaker Change: As far as churn in Q4.
Speaker Change: I would point to or no large customer I would say it was in line with prior quarters as far as the decline being driven by expiring service contracts that converted over to a cloud or subscription deal.
Speaker Change: We haven't released those percentages.
Speaker Change: Oh.
Speaker Change: Percent of customers that do migrate at this point, but it's it's been very successful in the last I'd say three to four quarters since we had cloud.
Speaker Change: Sales team is really you got the sales.
Speaker Change: Process down and in terms of showing the benefits of these customers are moving off maintenance and getting onto a to acquire a subscription deal. So this is.
Speaker Change: Positive for the year.
Speaker Change: I don't think there's any anomalies in Q4 I would point to.
Speaker Change: So that's that's great to hear and then my other question just relates to some of the partnerships that you know Dana called out I think.
Speaker Change: There was one earlier this month with Ram soft and maybe I missed that but I don't I don't know if you've if you've talked about that one I was just curious.
Speaker Change: How that works Dana and you know.
Speaker Change: There were notable organization been around for a long time wondering what how you might quantify or talk about the impact of that one on incremental business.
Speaker Change: Yeah, I actually getting chat about it I was going to save it to the next call [laughter]. Okay. Oh, it's really new so so I don't have I wouldn't say any yeah anything kind of anecdotal yet they're more of a general reseller a value added partner then.
Speaker Change: For example, you know co Ceos right that has something like directly it's kind of like a you know a counterpart to watch for.
Speaker Change: They're down in the diagnostic the follow on screening type of technology. So that's kind of the differences.
Speaker Change: Between those two in terms of overall partnership so.
Speaker Change: Mhm Okay.
Speaker Change: Florida economy, Yeah on on Ram shocked.
Speaker Change: Very good okay, well. Thank you appreciate it.
Speaker Change: Uh huh.
Speaker Change: Thank you. This does conclude today's Q&A session I will now hand, the call back to Dan O'brien for closing remarks.
Speaker Change: Thank you operator.
Speaker Change: 'twenty 'twenty four was a pivotal year for iPad marked by the successful launch of profound AI version for the accelerating adoption of profound cloud and our continued progress transitioning to a SaaS based model.
Speaker Change: Demand for our technology remains strong and the growing body of clinical evidence supporting its positive impact further reinforces our leadership in AI powered breast health solutions as.
Speaker Change: As we move through 2025, we remain focused on expanding our SaaS adoption driving revenue growth and deepening our partnerships with imaging centers and partners. We anticipate further global expansion of profound cloud and continued momentum in regulatory approvals.
Speaker Change: As more health networks and imaging centers transition to cloud based AI solutions, we are well positioned to capture a growing share of the market, while improving operational efficiency for our customers.
Speaker Change: With this strong foundation in place a clear strategic vision and a dedicated team I am confident in our ability to continue delivering innovative.
Speaker Change: Solutions, improving patient outcomes and creating long term value.
Speaker Change: You all for your time today and I look forward to updating you on our continued progress throughout this year. Thank you and have a great day.
Speaker Change: Thank you. This concludes today's conference and you may disconnect. Your lines at this time. Thank you for your participation.