This conference call transcript was computer generated and almost certianly contains errors. This transcript is provided for information purposes only.EarningsCall, LLC makes no representation about the accuracy of the aforementioned transcript, and you are cautioned not to place undue reliance on the information provided by the transcript.
spk02: Good day, ladies and gentlemen. Thank you for standing by. Welcome to the Alarm Technology second quarter 2024 corporate update conference call. During today's presentation, all parties will be in listen-only mode. Following management's presentation, the conference will be open to questions. If you have a question, please press the star followed by the number one on your touch-tone phone. If you'd like to withdraw your question, please press the star followed by the number two. If you're using a speakerphone, please lift the handset before making your selections. This conference is being recorded today, August 26, 2024. Before we get started, I'll read a forward-looking statements disclaimer. This conference call may contain, in addition to historical information, forward-looking statements within the meaning of the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and other federal securities laws. Forward-looking statements include statements about plans, objectives, goals, strategies, future events of performance, and underlying assumptions, and other statements that are different than historical fact. These far-looking statements are based on current management expectations and are subject to risks and uncertainties that may result in expectations not being realized and may cause actual outcomes to differ materially from expectations reflected in these forward-looking statements. Potential risks and uncertainties include those discussed under the heading Risk Factors in LLM's any report on Form 20-F filed with the Securities and Exchange Commission on March 14, 2024, and any subsequent filings with the SEC. All such forward-looking statements, whether written or oral, made on behalf of the company are expressly qualified by these cautionary statements, and such forward-looking statements are subject to risk and uncertainties, and we caution you not to place undue reliance on these. On the call, the company will also present non-IFRS key business metrics. The non-IFRS key business metrics the company uses are EBITDA and adjusted EBITDA, non-IFRS gross margin, non-IFRS net profit or loss, and non-IFRS basic earnings or loss per share or ADS. The exact definitions of these non-IFRS key business metrics are described in the company's second quarter of 2024 financial results press release. I'll now turn the call over to Shakar Daniel, Alarm Technology CEO.
spk08: Mr. Daniel, the floor is now yours. Mr. Daniels, the floor is now yours.
spk06: Thank you very much and welcome everyone to Alarm Technologies' second quarter 2024 results conference call. With me here is Shai Avnit, our Chief Financial Officer. I will be covering Alarm's performance, recent developments, The trends we are seeing in the market are a strategy from a long-term vision. Today, for the first time, we provided quarterly guidance and are providing additional KPIs as we constantly strive to enhance transparency. Shai will review the financials and our Q3 2024 guidance. I will then conclude the prepared remarks part with a short summary before opening the call for your questions. starting with a review of our Q2 2024 key achievements. The end of Q2 marked the first full year since we announced our shift to focusing on enterprise Internet access. Total revenues for Q2 increased to $8.9 million, of which $8.7 million were attributed to NetNut, our enterprise Internet access arm. Adjusted EBITDA and Q2 reached a record of $3.4 million, more than three times higher than in the same quarter last year. Revenues for the first six months of 2024 increased to $17.3 million, of which $16.8 million was attributed to net net, a 98% year-over-year increase. From the $8.4 million net net revenues in the first six months of 2023, I'm also very pleased with our continued progress in cash flow generation. Q2 marked our first consecutive quarter of positive cash flow, a significant achievement for a company of our size and stage. We ended the quarter with more than $21 million in cash and cash equivalents. Our cash balance well positions us to invest in opportunities that will drive long-term success and provide a foundation for sustained growth. In line with our strategy and long-term vision, we are on track with our three growth engines. First, increasing our market share in the IP proxy network, the IPPN segment. Second, penetrating the data collection and labeling market. And third, providing our customers with data insights. We continue to make progress in each of these growth engines during the past quarter. We added major and highly regarded brand names of our customer base as we continue to expand and further our network. We made substantial progress into the data collection and labeling market with our new and innovative products, the web unblocker and the AI data collector. And we continue to make progress towards adding AI and the knowledge capabilities to our data products. Advancing on this front, Establishing the broadest data collection and inside offering is the foundation on allowance future growth. As to the first pillar, our IPPN customer base, I'm excited to share that during Q2, we have added to our customer base some of the world's largest and most recognized brands. The significance of these new customers, of leaders in their respective fields, speaks to itself, highlighting the power and robustness of our offerings. We are extremely proud of these additions to our evolving and diversified customer base and look forward to seeing them enhance the usage of NetNut's offer over the time. While I cannot share their specific names, I would like to provide some color about them. These new high-caliber customers include one of the largest social media platforms with over 1 billion active users, as well as a leading B2B sales intelligence, and sales engagement software marketplace company with a database of more than 250 million contracts. A third new Q2 noteworthy customer is one of the world's leading screening and background check providers for identity verification, employment, and health screening. This customer, which conducts over 100 million background checks annually, will be able to reduce the number of manual processes attended today thereby improving its operational efficiency. As you may recall, towards the end of 2023, we stated that our growth strategy includes engaging with and attracting Fortune 500 and leading global companies. I am excited to share that in U3, we won a Fortune 100 customer, a leading merchandise retailer. Before selecting NetNut, they've all evaluated our capabilities, verifying they're comprised with their strict performance scalability, and reliability standards. These wins are a clear testament to our robustness of our products, the innovation driving our development, and our growing reputation as an industry leader. As part of our strategy to increase our market share in the IPPN segment, we continue to invest in expanding better our network, which has now become one of the leading networks in the industry. According to the 2024 Proxy Way market research, which is a comprehensive public report on the IPPN industry, NetNet network is recognized as a top performer, which is a significant endorsement of our technology capabilities and potential scale. What really sets us apart in the size of our network is stability and robust functionality coupled with our ongoing global expansions. Our infrastructure now is capable of handling significantly more traffic. This is a remarkable achievement as it will allow us to scale our revenue significantly while improving our gross margin. This highlights both the robustness of our network and our strategy of building an infrastructure that can drive scalable and profitable growth. Moving on to the second pillar, product innovation in the data collection and labeling market. We continue to focus on and invest in broadening the scope of our data collection offerings. Over the past quarter, we made a significant progress with our new products targeting this market, the web and broker, and the AI data collector. The web and broker and the AI data collector are key components in facilitating our long-term growth and accomplishments in a huge multi-billion dollar prospective market. According to both market research data and our internal assessments, the data collection and labeling market is expected to continue and grow rapidly over the next years. I'm happy to share that in Q2, we started generating initial revenues for new customers who placed order for the web and broker. We see a growing pipeline of opportunities for the web and broker, which has been tested and rated as the best on the market by industry experts. The robust web and broker is also a key to the success of our AI data collector. Data data collector will enable enterprises to easily generate a collector within minutes thanks to its intuitive no-code interface. Its advanced AI will enable it to automatically adapt to website changes while ensuring continuous data collection with minimal downtime. With these innovations, we continue to push the boundaries of what's possible in our industry. We also continue to make inroads in our third generation long-term growth pillar data insights. In Q2, we continued working intensively on bringing to life our vision of adding AI and analysis capabilities to our data products, aiming to create the most comprehensive solution in the market. The significant investment we have made in Aetna in the recent years is the gateway to our penetration into the data world. The meteoric rise of the artificial intelligence threatens the underlying principle behind this investment. We all acknowledge the importance of data in every aspect of our lives. The conflict between AI and traditional websites as it relates to access to transparent, high-quality information is at the core of how data consumption and analysis is evolving. AI relies on data sources and on products that generate insights from existing processes, provide recommendations, and focus. I would like to touch upon what we are seeing in the market and specifically in our Q3 business so far. The market we operate in is an ever-evolving and nascent market. Therefore, as we continue to expand our customer base, enhance our offerings, and grow the business, we may experience some short-term variances. Q3 2024 projected revenues assume a year-over-year increase but are also expected to be lower than due to the market dynamics that some of our customers are experiencing, which have impacted revenues since June. However, as we approach the end of August, we are now observing a positive trend with consistent growth in the monthly revenues rate from June to July, continuing into August. This positive trend is driven primarily by the strong performance and retention of our existing customers and complemented by new customers. These represent an excellent opportunity to share some KPIs we use internally to measure our performance and projected mid-term revenue growth. Analyzing data from the past three years shows that on average, our NetNets customers have been generating approximately 15 to 18 times the revenues compared to their initial month activity. In Q2 2024, we generated total revenues of nearly $400,000 from dozens of new customers in their first month of activity. This was approximately 60% higher than the revenues generated from new customers that onboarded in the prior quarter, Q1 2024, and was also approximately 35% higher than the average of the last four prior quarters. According to our model, These new Q2 customers are expected to generate revenues of about $6 to $7.2 million over the next few years alone. This is a clear indicator of the resilience of our business model. In Q3, in line with the projected EOV growth, we expect to continue to enjoy strong, solid customer retention rates across most verticals. In fact, NetNet is expected to surpass the full year 2023 revenue bar within the first three quarters of 2024. Our ongoing growth trend will be driven by continued investment in our record. The success of our new products, expansion of the markets which we anticipate, will lead to increasing demand for our solutions. Allowance is in need for the long run. focused on maintaining a steady focus on sustained growth and profitability. I will now turn the call over to Shai for a review of the financials. Shai, go ahead.
spk05: Thank you, Shachar, and hello, everyone. Over the past quarter, the company has achieved impressive growth, improved its margins, and has become a profitable cash-generating company. This gives us the flexibility and resources to invest in the areas that will drive our future growth. I will summarize the main financial results of the second quarter and first half of 2024, comparing them to our second quarter and first half 2023 results, respectively, unless otherwise stated. All figures were rounded for simplicity. Also, today is the first time that we are providing quarterly guidance in parallel with to the quarterly results announcement. I will provide guidance for Q3 2024 as we aim to enhance transparency for investors. Let's move on to the numbers. Revenue for the second quarter of 2024 increased to $8.9 million, up 27.2% from the $7 million in the second quarter of 2023. The net net portion rose to $8.7 million in Q2 2024, up 72% from $5 million in Q2 2023, while reaching a six-month record of $16.8 million, almost double the $8.4 million net net revenues recorded in the first half of 2023. Non-IFRS gross margin for the second quarter of 2024 increased to 78.5% up from 71% in Q2 2023. The year-over-year increase in gross profit and gross margins was primarily driven by the increase in revenues. We've structured our network in a way that allows us to generate higher revenues while maintaining essentially the same level of fixed costs. This enables us to achieve higher gross margins as revenues increase. Operating expenses in Q2 2024 were down to $4.2 million from $12.8 million in Q2 2023. The Q2 2023 operating expenses included $8.5 million attributed to goodwill and intouchable assets impairments from CyberGeek, our consumer internet access business, which we have been scaling down since Q3 last year. In Q2 2024, we recorded NAMCOSH finance expenses of $2.5 million, resulting from fair value increase of warrants issued in 2019 to 2020, related to the increase in the company's share price. The vast majority of the warrants are due to expire in 2025. As a result, we recorded a $0.4 million IFRS net loss for the second quarter of 2024 compared to a net loss of $7.7 million in Q2 2023. Excluding these financial expenses and other non-cash costs, our adjusted EBITDA for the second quarter of 2024 was $3.4 million, three times higher than the $1.1 million adjusted EBITDA in the first quarter of 2023. Q2 2024 non-FRS basic earnings per share was $0.04 per share or $0.41 per ADS compared to $0.04 basic earnings per share or $0.45 per ADS in Q2 2023. As of June 30, 2024, The company's shareholders' equity totaled $20.4 million, up from $13.2 million on December 31, 2023. The increase in net profit combined with warrants and options exercises contributed to this $6.8 million increase. The company's cash and cash equivalents balance at the end of Q2 2024 was $21.6 million, up from $10.9 million as of December 31st, 2023, as we have successfully been generating cash flow from operations. Moving on to the guidance. We are expecting Q3 2024 revenue to demonstrate year-over-year growth with an estimated revenue range of $7 million plus minus 3%. As a reminder, The net net portion of our revenues in Q3 2023 was $6.1 million. Q3 2024 adjusted EBITDA is expected to range between $0.8 million to $1 million. To summarize my part before I turn the call back to Shachar, operating results and cash generations achieved over the past quarter have resulted in improved profitability metrics and a positive adjusted EBITDA, as well as a solid cash balance, all of which are outstanding for a company of our size. And they provide us with the flexibility and resources to invest in the areas that will drive the company's future growth. With that, I'll turn the call back over to Shachar.
spk06: Thank you, Shai. In Q2 2024, Alarm has once again delivered solid results. As a long runner, Alarm is focused on expanding its customer base and investing in technological innovation. We are confident that this investment will yield benefits for the company and its various stakeholders. The expansion of our network enables us to serve more and more customers, drive scalable and profitable growth across various verticals today and in the future. We intend to continue and release new products designed to meet evolving market requirements. We will continue to embark on our strategy by adding data insights and AI capabilities to our existing products, ensuring that we stay at the forefront of the industry. We have a clear vision of where we want to go, and we are executing our plan with discipline and focus. We are laying the foundation for future success as a leader in the global data collection market through innovation, strategic investments, and a determined focus on execution. We will now open the call for Q&A session. Operator?
spk02: Thank you, sir. We'll now be conducting the question and answer session. If you'd like to ask a question today, you may press star 1 from your telephone keypad, and a confirmation tone will indicate your line is in the question queue. You may press star 2 if you'd like to withdraw your question from the queue. For participants that are 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, and that, again, is star one.
spk08: Thank you. Our first question is from the line of Brian Kinslinger with Alliance Global Partners.
spk02: Please receive your questions.
spk04: Thanks so much for taking my questions. With your revenue being all subscriptions for the most part and therefore recurring, the net retention revenue was 1.66 in the first quarter and 1.59 in the second quarter. Reconcile those if you could with the major drop in revenue sequentially.
spk08: Can you repeat the last part of the question?
spk04: I'm curious with revenues recurring and your retention rate has been suggesting your existing customer's usage is much higher. Why in the third quarter would revenue drop so steeply? What's causing that?
spk08: Okay.
spk06: Okay. So just to refresh the audience and our annual memory, so the NIR indicator that we're using, and not only us, it's an industry standard, is basically make four measurements. It compares four quarters to the previous four quarters, then moving one quarter back, doing the same, and another two times, meaning it takes the big data into the calculations.
spk08: So, till now, you remember it, Brian? Yeah.
spk06: So, okay, so even if you see a drop or a dip of sequential quarters or quarter over quarter, it doesn't say that you will see the impact directly in the NLR because the NLR is, as I mentioned, measuring four times, four quarters versus four quarters, four times. Now, for the second part of your question, so as I mentioned in my pitch just a few minutes ago, in the third quarter, we experienced a kind of slowdown for some of our customers, which basically made, as we just mentioned, made the revenues to go a little bit back from Q2 to Q3, but from the other side, After we saw this slowdown in May, so in June, we started to see the positive growth trends of the company going back directly on track. And in July, we see a growth versus June. And we projected August. We see that August is going and we're about to finish August in a few days. It's going to show also a growth comparing to July. But it didn't come back to the same point that And that may was hope it answered your question.
spk04: A little bit. So I want to make sure I understand first, have you lost any customers? And second, if I'm understanding what you're saying is several of your existing customers are expecting to have significantly less usage. So they're going to be paying less. Is that what you're saying? No, no, no. Okay.
spk06: So for your question, if we lost customers, so I cannot formally, I cannot say that we lost customers because losing a customer meaning he announced or let you know that he's terminating the agreement and stop the usage, going back, you know, leaving you for a competitor or something like this. It's not the case here. If you remember, our model is based on duration and consumption. So in the middle of Q3, some of our customers slowed down their usage. And that's what we call a drop or a kind of a dip that made them to renew or not to renew in the next month, meaning in June, for example, or in July. Even if they renewed, they bought much smaller packages from a bandwidth perspective, and this is why you see these revenues are going back. From the other side, the other customer, which is the major portion of our customers, continue to show consistency, growth, and that's why we see a growth from July to June and then from August
spk04: Okay. I'm wondering if you could share any customer concentration metrics. For example, what percentage of the total revenue in the first half of the year came from the top 5, 10, or 20 customers?
spk06: Okay. So, basically, by the way, I don't have this data now, these calculations in front of my eyes. But I want to be more specific. So if we will talk about May versus June. So in May versus June, you can see that, you know, it's not MRR, it's MR, let's call it the monthly revenues. Due to this slowdown or scale down of their usage, you can see around 20% of the monthly revenues decreased from May to June, or sorry, in June comparing to May, and then we start to go back from this 20% level, going back to grow up and to grow again to July and August.
spk08: Okay, just a follow-up.
spk04: Is your top 20 customers more than half of your revenue? Top 20 customers? Top 20, are they more than half of your monthly revenue or quarterly revenue? Okay.
spk06: So we also discussed about it. I can tell you what we see now, okay, for the first half of 2024, okay? So what we see now, this is the, one second, okay. So for the first half of 2024, we have the pyramid, okay? That in this pyramid, we have around a little bit more than 400 customers that we took, we are measuring only the customers that are performing more than $100. And from this pyramid, you can see that five customers generated more than $500,000 in the first half of 2024, an aggregate number of $6.8 million, meaning an average of 8.3% per each customer for these five customers. The next level, I will give you just the next level, is 38 customers that generated between 50,000 to 500,000 aggregate number of $7.2 million. And each customer generated in average 1.15% of the revenues of the company in the first two quarters of 2024. So an aggregate number of $14 million in the first half of 2024 generated by total amount of 43 customers of the company. I hope it gives you some light.
spk04: That's helpful. Very helpful. Last question for me. That's very helpful. The last question for me, you mentioned, you made a comment. I didn't quite get it. What were the over $2 million of expenses on other expenses? You said something about finance. And are those cash costs, all of it?
spk05: Brian, you mean the finance expenses?
spk04: Yes. Yeah, below the line, you have over $2 million of expenses.
spk05: Yes, $2.5 million of finance expenses. These are actually, we discussed it, probably you will remember, on the first quarter. These are expenses that are related to the valuation of old warrants from 2019 and 2020, that according to accounting standards, are classified as a liability, and therefore, we need to evaluate them each quarter end, and it is based on the share price.
spk04: The higher the share price... They're not in cash. It's not a cash expense.
spk05: Now, it's only non-cash expenses. It has nothing to do to our operating cash flow. It's all economy, and, you know, it goes both ways. And, you know, because the share price goes up, This will be okay?
spk04: Yeah, not material. Thank you so much.
spk08: Thank you, Brian.
spk02: Our next question is from the line of Kingsley Crane with Canaccord Genuity. Pleased to see you with your questions.
spk00: Hi, and congrats on the strong results. So I would like to dive just a bit deeper into the ADCL market opportunity. I'm curious how you're thinking about your data collection capabilities and feature sets. outside of text-based web scraping and just more on the product roadmap in that regard. Thank you.
spk06: Okay. Just to clarify your question, you are talking about outside of data scraping? What do you mean outside of data scraping?
spk00: Or rather, just the total picture of data collection, whether that includes text or images or video or other forms of alternative data as well.
spk06: Okay, okay, okay. So I'll do it in a very short way. So the market, the stake of the market is basically assembled from three pillars. One is the infrastructure for data collection, which is the IP proxy network, which basically is our product. And, you know, it allows you to collect data and not to be blocked to get a transparent, real, and accurate data. This is our major product. This is the IP proxy network. The next stage in the stack is the data collection and labeling, meaning data collectors, scrapers, and other products that allows you basically to collect data and basically to convert data from unstructured to structured data. And we are working now, as I mentioned, we are progressing tremendously in our AI collector, which according to now and according to our best knowledge should be one of or maybe the most innovative product in the market. The second product that will be released even before the AI data collector is our web and broker. As I mentioned, this product basically is fighting against websites that are trying to block you. Of course, trying to block your technology perspective, trying to block you from coming in and transparent and public available data. So this product is tested by a few experts. They found it as the most innovative and robust product in the market. And as we see now, the demand is amazing because companies and customers cannot find a suitable solution. And hopefully, as it goes out, we are now in the scale stage of this product. Hopefully, if it goes out to production mode, it can be a huge success. The next stage, which also I mentioned, is the stage you know. So I let you come in. Now you collect the data. Now you have the data structured. But now you want the insights and the recommendations and the projections. So basically, this is which some of our customers basically AI companies that with their AI algorithms knows how to analyze to get a data in a JSON file, for example, and it is the input and the output is the analyzing and provide recommendations in each and every space. It can be in e-commerce. It can be in many, many other verticals. And this basically is closing the loop. I will let you come in. You will collect the data. You will get the insights. insight story and you close the loop. So this is how we see the market. As I mentioned, we are just now in the stage of data collection and labeling. We established an internal committee and we are now investigating deep the next stage of the insight and AI stage. And hopefully in 2025, it will be our major task and innovative solution.
spk00: Okay. Thank you, Sherhar. That was really helpful. And And so this one is probably more for Shai. But and again, I really appreciate some of the additional metrics you provided. And also understand that this is the first quarter that you provided quarterly guidance. So I think the market's still figuring out some of that philosophy. But with respect to that, I'm curious on the $7 million target with plus or minus 3%. Should we think of that as something like a 95% confidence interval or You know, how much certainty would you say is around that range of guidance? And just kind of curious, you know, how much revenue could come in in the final months of the quarter? Just trying to get a sense of the upside here. Thank you.
spk08: Well, we quoted the number of $7 million.
spk05: because we feel this is the most likely number we are aiming for. And the plus minus 3% gives you, you know, the range that we are positive that we'll be in probably 90% or more.
spk00: Okay. That's simple. That's helpful. Okay. That's it for me. Thank you.
spk02: Thank you very much. Our next question is from the line of Yi Fu Li with Cantor Fitzgerald. Please proceed with your question.
spk01: Thank you for taking my question. Good morning, Sachar and Shai. You know, great solid set of results. In terms of like moving up market, you know, we see some wins on a Fortune 100 and you guys landing larger with customers spending $400,000 and more. Was wondering if you could discuss any changes in the go-to-market sales strategy to help Allerium penetrate the upper market and landing larger?
spk08: Yeah, okay.
spk06: Hi. So it was part, if you go back and you will see our presentations and the statements in the last one here, as we felt that we built the network, it's all about performance and network. As we felt that we built the network that can serve the quality level and the scalability level of these customers, we target our team and ourselves that it's going to be one of our special strategic vision or targets for this year and for the future to scale up for this huge customer of Fortune or other huge customers because we have the level of confidence that we will go into a POC, a proof of concept, and we will meet all the requirements also from financial perspective, not only technology-wise. So, yes, now we are aiming some of our sales reps, you know, that basically have more skills or experience in enterprise sales, which is a little bit different skills than online sales, and we are starting to target these customers. And I can say very proud and happy to say that some of them even, we won them by inbound, meaning they approached us. So it shows us the level of awareness and the level of awareness of our brand and the place that we are now.
spk01: Okay, and then a follow-up to try or you try, like on the AI data collection, from the last question is, I understand it's probably more of a next-year opportunity. I was wondering, what are some of the enhancements you're thinking of making here, and what are the M&A targets do you guys, you know, have an interest in?
spk06: Okay, so M&A target is, as you know, is something that as you get into the process, so you're starting to be more specific in M&A. But I will tell you exactly what... I told last time and it will not change, but basically it will stay the same. M&A, yes, for sure. It's something positive for each and every company and also for Alarm. It's a great way to scale. We can leverage the fact that we are generating cash and we can leverage our grant and we can go into the panel very fast and basically to accelerate our progress. On the other side, so what we are, in case we will go deep and we find ourselves looking specifically for M&A targets here, so yes, it should be the next stages in our stack, as I mentioned before. It's going to the data collection and labeling or jumping to the next stage, which is data insights, which is basically AI, companies, ventures, that are analyzing data. It's all your own data, yes? Analyzing data and providing insights, recommendations, and projections. So in high level, as we will start to be more aggressive about M&As, we will take the decision that M&A is really the next stage. That will be our target. For now, we established a committee, as I mentioned, we mentioned to the market a few quarters ago. We brought one of the leaders in Israel to lead our committee, and we are investigating all the opportunities, including internal development, potential M&As, potential combination of M&A and internal development. Everything is on the table. Everything looks good, but we will need to take the best decisions for the company.
spk01: Thanks for the call. Just one last question. It's more macro in general. I understood there were some slowdowns in consumption during the end of the quarter, but it sounds like the commentary in July, it starts to pick up back again in terms of the consumption. I understand you guys don't have a crystal ball, but in terms of the rest of the year, how should we think about the, I guess, volatility in the consumption aspect? of the usage in this market. And that's it for me. Thank you very much.
spk06: Okay, good. So just to make sure I understand your question. So you're asking if you're looking a little bit more to the future for Q4, for example?
spk01: Correct. For the rest of this year. For the rest of this year. Okay. Because, like, if there's any slowdowns you're expecting, like, what would trigger the slowdown? Like, what are you seeing in the pipe, I guess?
spk06: Okay. To be honest, we did not release guidance for Q4. We are growing, and every time we are increasing the level of transparency, but we did not release guidance for Q4. But on the other side, and by the way, that's what we do internally all the time, we are measuring indicators that are showing us the trend. Of course, it's not 100%. Everything is not 100% for the future, but it shows the trend. So as I mentioned in the call, a few indicators are very positive. First, and very important, is after there was a kind of one-time drop in May for June, then in June, we get back on track for growth, meaning the current customers plus new customers showed great retention, and new customers that came in And the growth went back, came back after he left us for one month, and then he came back, and then we kept the growth from June to July, and then to August. Second is the indicator of new customers. You know, our business basically is built from the retention of current, but from new customers that are coming in and starting to generate revenue. So first of all, we see a very strong growth. between Q2 to Q1, and these Q2 new customers that generate in their first month $400,000 support, according to our model, to generate in the next two and a half years 15 times, meaning around between $6 million to $7 million in the next quarter. So the combination of the retention and the growth that came back from June to July, July to August, and the greater retention, sorry, the growth of the new customers from Q2 to Q1 increase us and give us the level of confidence that we are growing, we are in a growth trend. And you can take a look by yourself and make your own calculations, but this is something that I can now talk free and expose. Hope it gave you some light.
spk08: Yeah, thank you very much for that. Very good call. Thank you. Thank you. Our next question is from the line of Shahar Cohen with Loose Capital.
spk02: Please proceed with your question.
spk08: Hi, guys.
spk03: A few things. A, what was the main cause to publish the focus right now? Why now? A. B, some people say that you have some business related to the U.S. election. Can you say it loud and clear?
spk06: Sorry, I didn't hear you. Can you repeat the second question? Some people say.
spk03: You have some revenue, maybe not measurable revenue, from the U.S. election. Maybe they don't portray themselves as parties. They can come undercover.
spk07: But can you say loud and clear that you have no business related to the U.S. election?
spk08: Who is talking? Shachar from Lucid Capital. Okay.
spk06: So for your first question, if you track our company in the last two years or one and a half years, And we took a decision that as part of our maturity and growth, we will start to expose more and more indicators, KPIs, and data to the market in order to increase transparency. So we did it in the last quarters. This time we decided to release a few more indicators. A few of them are the KPIs. One of them is the projection for the coming quarter. And with transparency, I think it's a good sign. And second, to the U.S. election, to be honest, it's the first time I hear about it from someone. So the answer is no.
spk07: So you don't have business related to the U.S. election as far as you know?
spk06: The answer is, from my best knowledge, I don't have any business related to the U.S. election. Maybe, but you can tell us.
spk08: Okay, thank you. Thank you. At this time, I will hand the call back to management for further remarks. Okay, thank you, operator.
spk06: Thank you, all of you, for your time today. We look forward to hosting you on Along Technologies Q3 2024 with Zaltz. Thank you.
spk02: Thank you. This will conclude today's call. You may disconnect your lines at this time. Thank you for your participation.
Disclaimer