Boxlight Corporation

Thank you for holding, ladies and gentlemen, and please remain on the line. The box light conference call will begin momentarily. Thank you for your patience. Thank you and welcome to the BoxLight Third Quarter 2023 Earnings Conference Call. By now, everyone should have access to the press release issued this afternoon. This call is being webcast and is available for replay. The remarks today will include statements that are considered forward looking within the meanings of securities laws, including forward looking statements about future results of operations, business strategies and plans, customer relationships, market trends, and potential growth opportunities. In addition, management may make additional forward looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today and are subject to certain risks and uncertainties and may cause the actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in the company's most recent Form 10-K, Form 10-Q, and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, management will refer to non-GAAP measures that, when used in combination with GAAP results, provide additional analytical tools to understand the company's operations. The company has provided reconciliations to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the investor relations section of the company's website at BoxLight.com. And with that, I'll hand the call over to BoxLight's chairman and chief executive officer, Michael Pope.

Hello, everyone, and thank you for joining our Q3 earnings call. Following my remarks, you will also hear from Mark Starkey, our president, and Greg Wiggins, our chief financial officer. Greg is joining from our corporate office in Atlanta, Georgia. Mark and I are joining from Singapore, where we're attending the largest education conference and exhibition in Asia. As part of our company's growth strategy, we're evaluating geographic expansion in the Asia-Pacific region, particularly in Indonesia, Singapore, Taiwan, Thailand, the Philippines, and Vietnam. We're meeting with several distribution and retailer partners at the conference this week. For the third quarter, we reported $50 million in revenue, $18 million in gross profit, and $4.9 million in adjusted EBITDA. Revenue declined by 28 percent for the quarter and by 23 percent for the nine months ended September 30th over the same periods last year. The revenue decline was largely the result of softer industry demand. However, we also didn't capture market shares anticipated specifically in key geographic markets and with certain product categories. We did maintain a strong gross profit margin, reporting 36 percent for the quarter and 37 percent for the nine months ended September 30th, both an improvement over 31 percent and 28 percent for the respective periods last year. In planning for the next several quarters, we have committed to be more financially conservative by reducing both our growth expectations and operating expense budget to ensure improved profitability. For the fourth quarter, we expect revenue and adjusted EBITDA to be in line with Q4 last year. For the full year 2024, we anticipate modest revenue growth driven by investments in one, our enterprise vertical, two, certain geographic regions, and three, our expanded product suite. To drive improved profit margins, we will be reducing certain G&A expenses that we expect will have minimal impact on short-term growth.

We ended the quarter with a strong balance

Please remain on the line while we reconnect Michael's line. Thank you for holding and please remain on the line while we reconnect the speaker line. Thank you for holding and please remain on the line while we reconnect the speaker line.

Hello, sorry about the technical difficulties.

I believe we're back now. Great. So I'm going to jump back a little bit in our talk script. So I believe we talked about the fourth quarter expectations. Greg, did we talk about fourth quarter expectations? Okay. So for the fourth quarter, we expect revenue adjusted EBITDA to be in line with Q4 last year. And then for the full year 2024, we anticipate modest revenue growth driven by investments in, one, our enterprise vertical, two, certain geographic regions, and three, our expanded product suite. To drive improved profit margins, we will be reducing certain G&A expenses that we expect will have minimal impact on short-term growth. We ended the quarter with a strong balance sheet, including $61 million in working capital, $18 million in cash, and $44 million in inventory. Our debt balance at quarter end was $48 million. Subsequent to quarter end, we paid down our debt facility by an additional $4 million, resulting in a current debt balance of approximately $44 million. Over the last 12 months, including the $4 million payment, we have reduced our debt facility by $15 million. In the near term, we plan to refinance our debt with a lower-cost facility, which will provide more favorable loan covenants and result in a substantial interest expense savings. During the third quarter, we officially introduced our Google EDLA interactive panels, CleverTouch Impact Lux and Mimeo Pro-G. These new additions to our interactive panel lineup are the first to feature direct access to the Google Play Store. They're equipped with 50 touch points, cutting-edge micro antibacterial glass, and integrated NFC for quick user profile loading. Every Google EDLA-certified ImpactLux and Mimeo Pro-G display also includes accelerated Level 1 and Level 2 Google-certified training. We also launched our new range of CleverTouch commercial displays powered by our award-winning digital signage platform, CleverLive. We're proud to offer a complete digital signage portfolio that supports all types of screen deployment requirements for customer environments in both our education and enterprise verticals. Our CleverTouch CM Series display range includes high-bright panels, kiosks, 16x7 and 24x7 displays, menu boards, and LED video walls. During the third quarter, we were honored to win nine Best of Back to School awards from Tech and Learning. The awarded products bear hardware, software, curriculum, and more, categorized by grade levels. We earned awards in both primary and secondary categories for our Mimeo wall LED displays, Mimeo DS digital signage series, Mimeo MiBot Recruit, Clever Touch Impact Luxe Interactive Display, and Front Row Teacher Action Mic powered by Elevate Wireless Technology. This past Friday, Clever Live was also selected as the Digital Signage Technology of the Year by the renowned AV Awards, a highly respected industry recognition judged by experts from end-user organizations, consultants, and industry leaders. This victory solidifies our position as a leading player in the digital science market. We published multiple success stories in Q3, including our success of teacher Daniel Thompson at Ron Clark Academy in Atlanta, Georgia, inspiring student engagement with our LabDisc all-in-one science lab, and of Cameron Heffner, a STEM teacher at Liberty Local School District in Youngstown, Ohio, who has enriched STEM learning with our award-winning My STEM Kit STEM curriculum. CleverTouch's success stories showcase comprehensive solutions for Lynx whiteboard software and CleverLive that enhance interactive learning, transforming classrooms into engaging hubs of education. We had two major rollouts with Worthy Down, part of the defense services in the UK. The initial rollout was for 75 CleverTouch Impact Touch panels with some on cards for collaboration and ad hoc signage. The second phase enhanced campus communication via a cloud-based digital signage system using Clever Touch CM series displays and Clever Live for easy content management. These examples highlight BoxLight's commitment to innovative and effective solutions, empowering all users. Lastly, I'd like to thank our shareholders, employees, Reshello partners, and customers for your continued support. With our dedicated employees and industry-best solutions, we expect a return to revenue growth in 2024 and with stronger profit margins. With that, I will now turn the time over to our president, Mark Starkey.

Thank you, Michael, and good morning, good afternoon, and good evening to everyone on the call. Q3 was a tougher quarter than we had expected, and we continue to face challenging market conditions in both the U.S. and EMEA, Despite this, we managed to book $48.5 million of orders in the quarter, which represents an 11% increase on Q3 last year. The return to growth order intake is key because it is an early indicator of revenue growth, and our expectations are the business should start to return to moderate revenue growth in 2024. The US accounted for 48% of our total order intake during Q3, with 51% coming from EMEA, and 1% coming from the rest of the world. Our market share for interactive flat panels increased marginally in EMEA in Q3 from 6.6% to 6.7%, but decreased in the US from 8.4% to 6.3%, due in the main to some large one-off deals with other vendors. On a year-to-date basis, our market share in the US has declined only marginally, from 6.9% to 6.2%, and in EMEA, it is broadly the same at 6% versus 6.1% last year. One of the main things that we have focused on is maintaining higher gross profit margins, and we have deliberately avoided some very low margin tender business, especially in Southern Europe, which is part of the reason for the marginal decline in market share. In other markets, we have made some strong gains, such as Australia, where we have increased our market share from 14.9% to 18.8% over the past year. In Finland, we grew our market share from 36.9% to 40.1%. And in Switzerland, we grew from 14.4% to 19.9% compared with last year, according to data from FutureSource. We have very high market share in some other European countries, such as Austria, where we have 36.7%, Ireland, where we have 34.7%, Belgium with 28.1%, and Denmark with 22.7%. The most important market in EMEA remains Germany. And this is where we have the largest opportunity, as our market share is relatively low at 5.2%. Over the past 12 months, we have doubled the size of the German sales team. and our expectation is that we can achieve double-digit market share within the next two years. Some of our key orders in the U.S. included $7 million from ELB, currently our fastest-growing partner, $5 million from Bloom, $2.6 million from Cameramundi, based in Puerto Rico, and $1.2 million from GDI, a U.S. distribution partner. Overseas, we had some excellent orders, including $2.3 million from ID&S in the U.K., $1.2 million from CanCom in Germany, and $1 million from Charmax International in Spain, to name a few. Our new generation of Google-accredited Cleartouch screens started shipping during Q3, and customer feedback has been excellent. Our Google-accredited Mimeo screens will start shipping during Q4 in the US. We believe these fully integrated Google screens will prove very popular with school districts. In the US, we had some fantastic wins, including over 3,000 panels and stands shipped to El Paso School District in Texas via our partner ELB. We also continued to supply more than $1.2 million of panels to Las Cruces in New Mexico, again via ELB. We had some great wins in Michigan with over $1 million of screens and audio solutions delivered by our partner DAT. In Dayton, Ohio, we won a very large order to supply a front row audio solutions across the district. worth over $1.5 million via our partner Bloom. In the UK, we supplied our first shipment of 1,100 screens to the Welsh schools via our partner IDNS, worth approximately $1.7 million. We also had some great wins in Germany, shipping 600 screens under the KID tender via our partner CanCom, worth approximately $1.2 million. We also won the Dusseldorf tender for 400 screens, which shipped during the quarter, worth approximately 800K. In summary, despite Q3 revenues being down, we booked the first increase in order intake in five quarters, and we believe this marks the turning point in the cycle, with a steady return to revenue and EBITDA growth. With that, I will now turn the call over to our CFO, Greg Wiggins.

Thanks, Mark, and good afternoon, everyone. I will now review our third quarter results. Revenues for the three months ended September 30, 2023 were 49.7 million as compared to 68.7 million for the three months ended September 30, 2022, resulting in a 27.7% decrease and was due to lower sales volumes across all markets. Gross profit for the three months ended September 30, 2023 was 18 million as compared to 21 million for the three months ended September 30, 2022. Gross profit margin for Q3, 2023 was 36.3%, which is an increase of 570 basis points over the comparable 2022 quarter. Gross profit margin adjusted for the net effect of acquisition related purchase accounting was 37.2% as compared to 31.6% as adjusted for the three months ended September 30, 2022. The improvement in gross profit margin in Q3, 2023 compared to Q3, 2022 is primarily due to lower manufacturing costs and continued reductions in freight costs over the prior year period. Total operating expenses for Q3, 2023 were 29.6 million and included a goodwill impairment charge of approximately 13.2 million due primarily to lower sales volume stemming from the industry downturn and a change in the company's reporting segments in 2023, which resulted in a change in the company's reporting units. Other expense for the three months ended September 30, 2023 was a net expense of 3.1 million as compared to net expense of 2.8 million for the three months ended September 30, 2022. The increase in expense was primarily due to an increase in interest expense of approximately 400,000 partially offset by gains recognized from the change in fair value of derivative liabilities of approximately $200,000 in Q3 2023. The company reported a net loss of $17.8 million for the three months ended September 30, 2023 as compared to net income of $3.1 million for the three months ended September 30, 2022. Net loss attributable to common shareholders was approximately $18.1 million for Q3 2023 compared with a net income attributable to common shareholders of 2.8 million for Q3 2022 after deducting the fixed dividends to Series B preferred shareholders of 317,000 in both 2023 and 2022. Total comprehensive loss for the three months ended September 30, 2023 was 20.6 million compared to total comprehensive loss of 1.9 million for the three months ended September 30, 2022. reflecting the effect of foreign currency translation adjustments on consolidation with the net effect in the quarter of approximately 2.9 million loss and 5 million loss for the three months ended September 30, 2023 and 2022 respectively. EPS loss per basic and diluted share was $1.90 for Q3, 2023. EPS per basic and diluted share for Q3, 2022 was 31 cents and 28 cents respectively. EBITDA loss for the quarter ended September 30, 2023 was $9.4 million, which included the goodwill impairment charge of $13.2 million as compared to $8.5 million EBITDA for the quarter ended September 30, 2022. Adjusted EBITDA for Q3, 2023 was $4.9 million as compared to $9.9 million for Q3, 2022. Adjustments to EBITDA include stock-based compensation expense, impairment of goodwill, gains losses from the re-measurement of derivative liabilities, gains losses recognized upon the settlement of certain debt instruments, and the effects of purchase accounting adjustments in connection with recent acquisitions. EBITDA loss for the nine months ended September 30, 2023 was $3 million as compared to $12.9 million for the nine months ended September 30, 2022. Adjusted EBITDA for Q3, 2023 was $13.7 million as compared to $16.3 million for Q3 2022. Turning to the balance sheet, at September 30, 2023, BoxLight had $18.4 million in cash, $61.4 million in working capital, $44.1 million in inventory, $180.3 million in total assets, $44.4 million in debt, net of debt issuance cost of $3.6 million, and $30.6 million in stockholders' equity. At September 30, 2023, BoxLight had 9.6 million common shares issued in outstanding, and 3.1 million preferred shares issued in outstanding. At September 30, 2023, the company was not in compliance with the senior leverage ratio under its credit agreement. The company's noncompliance was cured by the company paying 4 million principal in November, which would have resulted in the company being in compliance with the senior leverage ratio at September 30, 2023. The company is actively seeking to refinance its debt with new lenders that the company believes will be on terms more favorable to the company. Following the $4 million principal repayment, the company's debt balance is approximately $44 million. Including the $4 million paid in November, since Q3 2022, the company has repaid principal on its credit facility of approximately $15 million. We continue to strategically review our capital structure and use of free cash, including but not limited to paying down debt, executing on our share repurchase program, and finding more attractive financing arrangements to replace our current facilities. We believe that cash flow from operations will continue to support our ongoing operations without the need for additional equity or debt financing. With that, we'll open up the call for questions.

Certainly. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Your first question for today is coming from Brian Kinslinger with Alliance Global Partners.

Great. Thanks for taking my questions. Can you help reconcile the stronger orders you were seeing in July through the first few weeks of August and even for the quarter? and you talked about that at the end of the second quarter, sorry, in the second quarter conference call. Can you reconcile that with the lower than expected revenue? I think we were looking for a lot more than was delivered. Did you see order cancellations that may have made orders stronger? Did some of the demand disappear? Just trying to understand what changed so quickly versus what was said, I think it was mid-August.

Yeah, hi, Brian. Look, I think, you know, basically it was soft demand. We didn't have any cancelled orders. We expected, and I think the industry was expecting much stronger demand in Q3. We started to see that, but it just didn't really take off. And the second half of Q3 was a lot slower than we expected. So, you know, the bottom line is it was just softer demand across the board, both in the U.S. and EMEA during Q3. And so you're at a time...

Go ahead. Yeah, we just had, you know, we ended the quarter with an increase in customer orders up 11%, just, you know, which we expected, you know, we expected greater than that. But we did see a nice increase, but not nearly to the extent we thought. And then, you know, leading into Q4, I'll just mention, you probably heard that we're guiding really revenue to be flat, adjusted to be flat with last year. And that's really as a result of Q3 being a little bit slower than we expected rolling into Q4. But we are still quite optimistic for next year. Looking at our pipeline and other indicators, we do believe we'll start to see growth again next year.

I guess with the industry and even BoxLight expecting stronger demand, what are customers saying? You're at a conference now. You're seeing customers. Is it a lack of budgets? Have they already adopted enough new technology? They're trying to digest in the classroom. What do you think has changed in terms of the market dynamic? Or what are you hearing that's changed?

I think generally, Brian, it's just, you know, it's a, you know, customers are just like not maybe as urgent as they were. I mean, definitely after the pandemic and, you know, the stresses on the global supply chains, there was a lot of urgency and a huge amount of orders being placed. And, you know, maybe, you know, some end users, you know, spent a lot of budgets. And now... We're looking at big projects, which, oh, we're expecting Q3. No, no, it's just delayed a few months. It's now happening in Q4. Oh, that's been pushed into the new year. That's kind of what we're seeing. There's not one big thing. It's just a general, you know, people are not as urgent to place large orders and kind of just slowing down slightly.

Now, assuming revenue is flat year over year, I get that G&A cuts take some time. but you have much better shipping rates. You've talked about much higher gross margin. If revenue was flattish, why wouldn't EBITDA be higher? Even marginally. No, I'm just talking about the fourth quarter because the rates recovered at the beginning of the year. I'm just looking at year over year in the fourth quarter. I get the next year is a different story.

I mean, gross profit in Q4 last year I think was just under 34%, and I think we were running a bit higher than that in Q3. So it's going to start to get marginal. You did start to see gross profits increase at the end of last year. So I think it would be marginal differences. Okay.

And then from the competitive landscape – Hey, Brian, just a real quick comment on that. I think that's really been, you know, for this year, for 2023, we started the year with a bit lower gross profit margin in Q kind of early in the year, and it kind of ramped. Or actually, that was, I guess, really, I guess, beginning of last year, we had Q1 especially was tough. But we also ramped a little bit kind of this year, and we have kind of higher gross profit margin. We've guided, last quarter we mentioned, we didn't know that we could sustain, you know, 37%, 38% type margins, that that may come down some. So I think an event to be conservative, Q4 going into next year, I don't know that you have to expect the 36%, 37%, 38% gross profit margin, but we ought to be maybe closer to 35% or so, something like that. And so if that's the case, then we're not going to be real far off from Q4 last year. Two more questions.

The first one is... Sorry, Brian, I was going to... Okay, go ahead. Sorry.

The margin. or the margin for Q4 last year, just a reminder was, you know, close to 34%. So as Michael was saying, it was actually ticking upward toward the end of last year. And so while that's held and actually increased, you know, for a good portion of the 2023 year, you know, we'll probably see that start to decline just a little bit. So the pickup from the margin increase, you know, when we're looking at Q4 won't necessarily be as drastic as prior.

Yep. And then, On the gaining market share, you've been gaining market share for several quarters. Has anything changed from a competitive perspective, number one? And then in Germany, you're talking about the biggest opportunity to gain share. What do you think makes that market right for market share gains? And then I have one last question.

Maybe I'll say a couple things, Mark, and you can jump in kind of more specifically. So if you look at this year, year to date, you know, we have not gained kind of across the board in our major markets, U.S. and EMEA. If you look at those blended, as Mark shared in his portion of the talk track, we didn't really gain much market share. So that was a little bit disappointing that that didn't happen. You know, this year, we were relatively flat with the market. Now, we did in certain geographies, we did have upticks. In other ones, we were down a little bit. But we're pretty optimistic that that can turn next year and that we will start to gain market share. Now, when we talk about market share data, too, we're only really talking about interactive flat panel displays because that's the market share data that we subscribe to and we receive. We don't see a lot of market data around our other solution suite. But speaking to growth into next year, I'll talk a little bit more broadly. And then, Mark, you can talk maybe specifically to Germany and other markets. But talking more broadly, looking at next year, the reason that we think we can see some growth is because we've invested in the enterprise vertical. We know we're going to bring in some new business and enterprise, so that's one. Secondly, we invested in certain geographies. You mentioned Germany, which Mark will talk more about, but that's an example of a geography where we're going to see some growth geographically based on people investments we've made in those areas. And the third is growth in our product suite because we've launched a lot of new products. If you look over the last 12 months, we launched our new line of non-interactive displays. Those are new in the U.S. We didn't have those before. Our new LED video walls, newly launched this year. Our new media hubs, newly launched this year. Our EDLA interactive flat panel displays, new this year. A lot of new integrations between our audio solution and our interactive flat panels, including our tension solution newly launched this year, large investments in our software and Lynx Whiteboard and Mimeo Connect and CleverLive and other software solutions. And so a lot of these product investments, that's that 30 area where we expect to see growth. So even if the interactive flat panel display market is relatively flat next year, which we expect it to be in U.S. and EMEA, we are going to see some growth because of those investments in those various areas. And we think that because of that, we'll take a little bit of market share as well. with an IPD space.

So just a quick one on Germany, Brian, because you're asking about Germany. So it's now the biggest market for IPDs in Europe. It wasn't until that's changed in the last 18 months. It's the biggest market. And across Europe, in many countries, we actually have really high market share. And Germany is the one that stands out as being significantly lower. Last year, we were at 4.5% in Germany. We're now up to 5.2%. But we hired and significantly, like we doubled the size of our German sales team from like 5% to 10%. And that's only really, you know, that happened over the last 12 months. Those guys are now starting to kick in in terms of really winning some big deals. The other thing is we've just, next week we actually fly out to Germany and we're opening our first showroom in Germany. So, again, it kind of gives us more presence in Germany. And that will be a key, key market for us to grow. And we think we've got the right team there to grow market share.

Great. My last question on the debt covenants. Sounds like you're back in compliance after paying $4 million, if I have that right. What is the required covenant for the net leverage ratio or whatever covenant you missed so we can gauge where you are or going to be in the future?

Sure. So for Q4, it will be two and a half times, and that's in accordance with the original debt agreement that we entered into. uh you know i absolutely as we've said you know we're we're actively looking to you know seek uh seek refinancing on our credit facility and you know we're optimistic that you know we'll be able to you know find a find a solution that you know will give us more favorable terms in the in the not too distant future so we're you know we're optimistic about that uh i would say that you know in terms of just overall leverage ratio you know even despite the even despite the four quarter, you know, downturn, you know, the, the industry's experienced, uh, you know, again, which we've started to, you know, see some early signs, you know, of turnaround, you know, that even with the last four quarters being downturn, our leverage ratio has been maintained under, under three times, which, you know, I think is, you know, speaks to the, you know, positive value we've been able to generate, you know, through our improved margins. So, uh, you know, it went down to two and a half, but, um, you have to get to two and a half or that's where you're going to be. Two and a half is our requirement for Q4.

Got it. Okay. Thank you. Thanks, Brian.

Your next question is coming from Jack Vanardy at Maxim Group.

Okay, great. Thanks for the update, guys. Many of my questions have been asked, but maybe I'll just circle back to kind of the guidance. So last quarter, The overall tone and just kind of verbal body language felt like you're pretty confident in the third quarter outlook. And obviously, you had a slower back half than expected. But just looking at the fourth quarter guidance in relative to kind of the tone and body language from last quarter, how confident are you in hitting those targets for the fourth quarter?

Yeah. Hi, Jack. It's Mark Stark here. Listen, look, we're pretty confident. I think we try to be more conservative on the Q4 call. We basically said, look, flat with 2022. Q3 was disappointing, right? The second half, especially, right? You know, when we did our call three months ago, we did you know, we could see we were going to definitely grow in order intake. We actually thought the growth in order intake would be higher than what it ended up with. We ended up with 11. We thought it could be potentially north of 20%. So it was definitely slower on the second half of Q3. We have been more conservative in our guidance for Q4, as far as I can say.

Okay. No, that makes sense. That's helpful.

And then maybe just, Michael, you opened up with comments about Asia and everyone's different geographical positions. Can you just talk a little bit more about your expansion opportunity plans in Asia? And, you know, it sounds like you're somewhat early in maybe devaluation phases, but when might you see some tangible results from, you know, any new potential Asia market opportunities?

Yeah, so right now, clearly the biggest opportunities for growth for us are in the U.S., and then I would say Western Europe, particularly Germany. We're also seeing a lot more opportunity in Eastern Europe. We also have an employee now in the Middle East and are seeing more opportunities in the Middle East. So I think, you know, again, the U.S. and MIA region are by far the largest growth opportunities for us over the next 12 months. But we're just starting to, and we sell some in the APAC region, and particularly Australia do quite well. And we have sold in other countries throughout Southeast Asia, not large quantities. But I would say we're optimistic we can start to see some meaningful growth, even over the next 12 months in that region. But I would say if you're looking at, you know, again, over the next 12 months in particular, it's substantial growth. It's really going to come from kind of our existing territories over the next, you know, next two quarters. Okay.

And then maybe just in terms of some of the orders that were slow, you know, and the slowdown kind of happened in the back half of the quarter. Can you talk about maybe, was there any nuanced trends, a bigger slowdown in corporate enterprise versus your K-12 education markets? Was there any sort of distinct trends there, or was it pretty much just, was it really indeed general overall softness?

Well, if you look at overall business, enterprise is less than 10% of our total business. I mean, we are largely, really largely K-12 business. education company today. Now we're looking to grow that enterprise vertical, and that's happening. Actually, we saw growth in enterprise, and we think we're going to see substantial growth in enterprise next year. And so it wasn't enterprise vertical. It was purely education vertical that was slower than expected.

Okay. Understood. I think that's it for me, guys. I appreciate the update, and good luck going forward. Thank you.

Thanks, Jack.

We have reached the end of the question and answer session and I will now turn the call over to Michael for closing remarks.

Thank you everybody for joining the call today and we appreciate your support.

We look forward to speaking again in March when we report our 2023 full year results.

This concludes today's conference and you may disconnect your lines at this time.

Thank you for your participation.