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spk03: ...industries where we either already have, can acquire, or develop expertise, and therefore the ability to become a significant player exists. Currently, these industries are retail, logistics, and healthcare, where we have established customers, industry-specific solutions, the right technology partners, and several under or unpenetrated subsegments for us to go after. Our value proposition to customers is clear. We enable frontline workers, employees, to make better, faster, more accurate business decisions inside and outside the four walls, and create operational efficiency and effectiveness to drive better customer experiences and business outcomes. Traditionally, we've been a value-added reseller, or a VAR, of handheld devices such as scanners, printers, point of sale, and other mobile devices. Our OEM partners include Zebra, HP, Apple, Honeywell, Verifone, DataLogic, GradlePoint, and distributors BlueStar, ScanSource, and Ingram. We also have an excellent annuity-type business replenishing consumables for these devices. However, over the past three years, we have been moving more aggressively upmarket, to include various high-margin services, especially ones that generate recurring revenue. Managed services, where companies outsource certain IT functions, are a key investment area for our services-led strategy. We offer a comprehensive product portfolio of managed services designed to simplify the complexity of designing, deploying, managing a mobile solution. These managed services include provisioning, monitoring, and help desk services to improve on the visibility and status of their device landscape. In addition to managed services, we offer professional services, including consulting, staging, deployment, installation, repair, and customer-specific software customization and hardware and software maintenance support. We're also opportunistically building our high margin reoccurring revenue SaaS solutions portfolio, which today includes both packaged and custom developed software solutions, such as Mobile Conductor and Route Manager for the direct store delivery or DSD industries, and VigiTrace, which helps manage an RFID implementation. Moving to our four pillar growth strategy. The first is to increase share in our current verticals, specifically grocery, specialty retail, supply chain, healthcare, warehousing, distribution, and transportation. The second pillar is to leverage our experience in these verticals into adjacencies. Examples would include big box retailers, hospitality, and supply chain logistics. The third pillar is to drive growth and margin expansion by increasing services and software attach rates. These include professional services, managed services, ISV, SAS services, software from partners, and repair and maintenance services. The fourth pillar is geographic expansion, where we can pick up new customers, expand field sales, and increase our coverage. Our M&A strategy supports these four pillars, and we expect to remain active in this field to complement our organic growth. With respect to M&A, we aren't going to just make acquisitions to achieve more scale. We have specific requirements of the companies we target. These include a track record of positive revenue growth in EBITDA, integration-ready solutions and operations, and cultural compatibility. By focusing on these areas, we have developed a successful integration strategy that allows us to move quickly to reduce SG&A costs, streamline operations, and drive revenue synergies by expanding their offerings nationwide throughout our system. As I mentioned on our last call, we acquired two companies during the first quarter, Boston Technologies and Advanced Mobile Group. I'm happy to say that our integration plans are moving forward quickly. We expect to have digested these acquisitions by the end of the current quarter and to move back into acquisition mode during the second half of the year. Moving to our first quarter highlights, we had a record quarter of revenue growing 23% and nearly hitting the $20 million mark, while adjusted EBITDA increased by 39% to 1.1 million. We saw broad-based strength across our verticals and actively realized M&A synergies as our cross-selling efforts are beginning to bear fruit. In fact, the sales teams had between 10 and 20 active cross-selling campaigns and deals in progress with experienced existing customers during the quarter. Speaking of M&A, we made the advanced mobile and Boston technology acquisitions with cash on hand. And still our cash balance increased during the quarter by nearly $7 million to $9.3 million. Beyond this, we also completed the relocation of our executive offices to Delray Beach, Florida, and moved our primary operations and warehousing to a larger facility that is three times the size of the old one to facilitate and support our anticipated growth and our services strategy. We have already seen the benefits of having a larger facility. Due to our strong relationships with our partners, we were able to reduce our supply chain risk by taking on incremental inventory to ensure we can meet customer demand in the coming quarters. As we look to the remainder of the year, we are well positioned to continue our growth trajectory. We now expect to generate between $79 and $82 million in revenue, or approximately 22% to 26% growth. In terms of mix, we currently expect approximately 19 million of that to come from services. From an adjusted EBITDA perspective, I would expect that we deliver between $3.5 and $3.9 million within those revenue ranges. Please note that these numbers do not include any potential acquisitions we may make during the second half of the year. As we look to provide some clarity beyond the current year, we are targeting at least $100 million in revenue for 2023, which would include one to two more acquisitions and would represent an increase of more than 20% over our current year guidance. In closing, we had a great start to the new year, and we expect that this is just the beginning as we continue to execute on our growth strategy. I want to thank our dedicated employees for their hard work, and I look forward to speaking with you again on our second quarter call. Now, I will turn the call over to Melinda to review our first quarter financial results in more detail. Melinda?
spk04: Thank you, Steve. Details of our first quarter operating performance compared to 2021's first quarter were as follows. We saw strong demand in Q1, with total revenue up 22.7%, to $19.7 million. During the quarter, we worked through a portion of our $31.2 million backlog from last quarter and rebuilt it to around $21 million, which is still about three times our historical terms. This strong performance came in light of the global supply chain issues that are impacting many companies. As a result, our clients are putting in orders with longer lead times, and we have fortunately been able to leverage our strong partnerships with OEMs and distributors to to gain access to products to ship and build inventory. Moving to gross profit, we saw a 21.8% increase from the prior year. Product mix was heavy on the hardware side, which led to a slightly lower growth rate when compared to revenue. GAP operating expenses increased by about 0.9 million, mainly as a result of the acquisitions of Advanced Mobile and Boston Technology. As we move forward with our integration, we expect to realize the benefit of cost synergies and leverage. Within operating expense, sales and marketing expenses increased by about 3 million, 0.3 million, and G&A increased by about 0.6 million. Gap net income and diluted EPS were approximately 0.9 million and 11 cents. These were down year over year. due to a $1.1 million gain on extinguishment in debt last year, partially offset by 0.7 million income tax benefit from the exercise of employee stock options in Q1 of 2022. Our non-GAAP net income and diluted EPS were 0.5 million and 0.06 compared to 0.2 million and 0.02 last year. The non-GAAP net income and EPS numbers excluded the following. Stock-based compensation of $0.2 million this year versus $33,000 last year. M&A-related expenses of $0.2 million versus $64,000 last year. The $1.2 million gain on the extinguishment of debt last year, that did not repeat this year. The $0.7 million income tax benefit this year related to the exercise of the employee stock options. Adjusted EBITDA was 1.1 million compared to 0.8 million last year. Turning to our balance sheet, we ended the quarter with cash and cash equivalents totaling 9.3 million versus 2.6 million on December 31st, 2021. As I mentioned earlier, we continue to receive orders with long lead times leading to a $14 million increase in our deferred revenue. Total debt at the end of the quarter was about 150,000, flat to year end, and we had no borrowings under the line of credit. Net cash provided by operating activities increased to $11.7 million and $1.3 million last year. And as you can see, we had a very strong start of the year and currently believe our business is positioned for continued growth for the remainder of 2022. With that, Brian, we can move to questions.
spk02: Thank you. Ladies and gentlemen, at this time we will be conducting a question and answer session. If you'd like to ask your question, you may press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. 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 key. Our first question comes from the line of John Noble with Taglish Brothers. Please proceed with your question.
spk01: Hi, good morning, Steve and Melinda. Well, thanks for the call and for taking the questions. I have just a couple here. The first one, I was curious because, you know, Advanced Mobile was probably a decent part of your first quarter numbers. So I was wondering if you could actually break out what you believe Advanced Mobile contributed to your revenue in this quarter.
spk03: John, I can answer that. Go ahead. Yes, Melinda will take it. Yep.
spk04: Hey, John, of the $19.7 million of revenue, they consisted about 12.6% of our revenue.
spk01: Okay, 12.6% of that came from Advanced Mobile, which actually wasn't even a full quarter. That was more February and March, I think, was the contribution. I have to think back to when the acquisition actually went in.
spk04: January 3rd, 1st, yes, correct, two months.
spk01: Okay, so it was really two-thirds of... of a quarter there. And I assume that Boston Technologies, I don't think I saw a press release on that, so I assume that that was probably a smaller, much smaller acquisition. I don't think you had that. Okay. Well, let's see. Your current services revenue, when I do the math this quarter, it was about 20% of total came from your services revenue. Now, when I do the math on your yearly guidance, it's anywhere between 23% and 24% of total revenue coming from services. So I was wondering, you said that you're going to increase that, obviously, but I was hoping you could actually put some specifics out there on how you plan to drive that increase in your services revenue.
spk03: Yeah, sure, John. I mean, in short, there's about... 8 to 10, maybe even 12 elements of our portfolio of services that we offer our customers. So we expect a broad-based execution of just selling more services to existing customers. They include repair services and staging services and installation services and deployment services and software services. So there's not any one area we believe that we are poised to deliver on those services, number one, and support them in a best-in-class way. And as such, our customers will opt into other elements of our portfolio. That's just the way services get sold. And while we're on site, they ask us, what else can you do? And before you know it, we're telling them, and we're securing business around it. There's no one specific area. Just as we roll out projects, we'll continue to leverage the portfolio of services we offer, and customers will take advantage of that as we go.
spk01: Okay, and I'm sure with the acquisitions just completed in the quarter, that cross-selling is going to be a decent driver of services revenue?
spk03: Well, it'll be a decent driver, period. Yes, services revenue is for sure. You know, decision point, the company, prior to making these acquisitions, we stood up this portfolio and we started to build it out two years ago. It was an investment we made in the business. And so when we acquired these companies, the go-to-market team found in their portfolio of things they could sell existing customers an incremental level of services that they didn't have prior to the acquisition. So we think that's a very fertile ground for low-hanging fruit, and it just depends on our execution, which we are executing. I'm very encouraged with the level of activity that way. We're only into the AMG acquisition for three months, and I want to say that there are between 10 and 20 active sales campaigns ongoing right now that didn't exist prior to the acquisition.
spk01: Okay. And I just have one final question. I know supply chain issues... are impacting everybody, but I'm just curious to know if you might even be able to quantify what you think was the impact on your top-line numbers, which I know is a record amount. What you feel that supply chain issues might have impacted that number?
spk03: Well, we put several risk mitigation strategies in place to offset the supply chain issues. Namely, we expanded our facility by 3x And the bulk of that space was warehouse space, John. So we were no longer at the mercy of keeping product on site with our distributors. We can actually take the product and put it on the shelf and just have it poised and ready to ship to our customers. So that was probably the most profound element of our risk mitigation strategy. Could we have shipped a million or two more? I don't know. We had several pull-ins. We took advantage of a product that we took early and put it on the shelf to distribute and sell to our customers to satisfy backlog. Don't forget we reduced our backlog ending December 31st from 31 million down to 21 million or 30 million down to 21 million. So we did feed off that backlog a little bit and that is a strategy that we're going to continue to embark upon in an effort to mitigate the risk of the supply chain challenges.
spk01: Now, your deferred revenue did increase over the quarter. Forgive me, I forgot what Melinda had said it was at the end of the quarter. How much was your deferred revenue?
spk04: Our deferred revenue is approximately $18.5 million.
spk01: $18.5 million. And what did that increase by over the quarter?
spk04: That increased by about $14 million, John.
spk01: Okay. All right. That's all I have. Thank you.
spk02: You're welcome. There are no further questions in the queue. I'd like to hand the call back over to Steve Smith for closing remarks.
spk03: Yeah, I want to thank everybody for joining today's call, and we look forward to giving you our next update after Q2, which should be around 45 days after the quarter closed. We look forward to seeing and speaking to you then. Thank you.
spk02: Ladies and gentlemen, this does conclude today's teleconference. Thank you for your participation. You may disconnect your lines at this time, and have a wonderful day.
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