Crexendo, Inc.

Greetings. Welcome to the Crescendo first quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note that this conference is being recorded. I will now turn the conference over to your host, Jeff Korn. You may begin.

Thank you, Mike. Good afternoon, everyone, and welcome to the Crescendo Q1 2023 conference call. On the call with me today are Doug Gaylor, our president and COO, Ron Vincent, our CFO, John Britton, our CRO, and Anand Bush, our CSO. Also joining us today is Steve Mihailo, our chairman of the board. And I don't know how the hell you got in here, Steve, because I changed the locks. But seriously, I thank Steve. He very kindly wanted to give me a key. Now I know who I should start hiring. I mean, no. I'm only kidding. Obviously, I'm very grateful that Steve came here to show his support for me and the team on our first call going solo. So, what I'm going to do is ask Luke to go ahead and read the Safe Harbor statement. After that, I'll give some brief comments. Ron will provide more detail on the numbers, and Doug will provide a business update after that. And then I'll open up the call for questions. So, Luke, would you please read the Safe Harbor?

Thanks, Jeff. Before we begin, we would like to remind everyone that our prepared remarks contain forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements. The words believe, expect, anticipate, estimate, will, and other similar statements of expectation identify forward-looking statements. Specific forward-looking statements in this conference call include information about Crescendo, Believing the top line performance in the first quarter was the result of continued execution from our legacy business, as well as recent acquisitions. Remaining concentrated on successfully integrating the acquired companies and leading new initiatives designed to drive great organic growth and bottom line results for our combined organization. Continuing to make great strides in improving the operational efficiency of the business and building a lean infrastructure that is capable of supporting growth. increasing both the quality and quantity of offerings, supporting expanded sales efforts to drive additional revenues through new sales to new customers and add-on sales to existing customers, prioritizing the profitability of the business and cutting expenses where necessary to maintain a strong financial footing, and looking forward to building on the momentum and further cementing its position as a leading provider in the UCAS industry. For a more detailed discussion of risk factors that may affect Crescendo's operations and results, please refer to the company's form 10-K for the year ended December 31st, 2022, and quarterly form 10-Qs as filed with the SEC. These forward-looking statements speak only as of the date on which such statements are made, and the company undertakes no obligation to update such forward-looking statements except as required by law. I will now turn the call back over to our CEO, Jeff Korn. Jeff?

Thank you, Luke. Overall, we are very pleased with our results for the quarter, particularly the top line. But we recognize that we need to increase our profitability and be more intentional with where we are allocating capital. I will speak more about this shortly. I tend to be a straight shooter, so I will discuss bluntly what we need to do better and what changes we're going to make. Our non-GAAP net income of $625,000 or two cents per basic and diluted common share, as well as our 53 percent increase in total revenue year over year, show that we are poised for substantial growth. But we are spending too much cash on items that do not directly drive increases in our top and bottom line. With this in mind, I've imposed a hiring freeze, with the exception for necessary replacements, and have implemented widespread restrictions on discretionary spending for all departments. Thankfully, we grew the legacy business correctly and are not limited by mounting debt, obligations, and overstaffing. We, unlike many in our sectors, grew strategically and carefully. In this position, we have flexibility with our long-term strategy, and we are able to run a lean and effective organization. Throughout the year, our primary focus has been and will continue to be on driving organic growth and integrating our acquisitions fully into the company. and we will continue to strategically expand while optimizing our operations in future quarters. Regarding profitability, we are still working through some of the lower margin business that was inherited from the acquisition of Allegiant. This is natural as an MSP has more resold services and thus varying margins. We also believe that we can expand the MSP to get more telecom business, which is an initiative that we'll be rolling out in carefully and meticulous manner. Allegiant has enjoyed a smooth integration into our business, and the team members have assimilated well. While there are some residual processes and logistical matters that we are still ironing out, we have been exceptionally impressed by the performance and ease with which they have come on board. We are focused on integrating the acquisition into both our corporate and direct operations and expect to see significant financial and operational efficiencies over the next three quarters. We also are working on targeted cost realignment and reporting structure realignment to fully recognize the synergies in Allegiant and all the acquisitions and across the board of all the divisions. These initiatives are with the intent to ensure that we are maximizing efficiency and operations of the business, which will ultimately result in a smaller cost basis. In terms of personnel, we now have a hybrid workforce. which has proven to be more productive in our digital-based line of work. Because of the decreased need for physical space, we are in the process of listing and selling our corporate office in Tempe, after which we will lease the space back for a year. We are, as a part of that, and as a process, moving all of the classes' customers to VIP. This will provide substantial cost savings, as there will no longer be the need to maintain two exceptional operating systems, and allow us to continue to make sure that Conscendo powered by Netsacean systems remains the absolute best operating system on the market. All these actions are intended to make us a better company, increase efficiencies, and result in substantial cost savings. Organically, we are starting the process of integrating artificial intelligence into our work streams. The engineering team is already using AI to supplement and debug code. and we are working on additional AI systems into customer service and other functions. This will result in additional cost savings and improve customer experience. AI is also helpful in crafting marketing messages and expanding sales funds, which will increase lead generation and free up more time for our team to sell. To wrap up my portion, I am very encouraged by our top line results. but I remain focused on the material changes to the business that need to happen in order to improve our bottom line. We have set ourselves up for success. We are the right team with the right initiatives in place. I expect substantial long-term profitability. Our primary goal for the remainder of the year is to drive improvements in revenue, cash, and profitability. And I believe that we have built the proper foundation to do that. I am extremely excited about our future, and remind the team every day that our obligation is to drive shareholder value. Thank you for your support and interest in Crescendo. And with that, I'll turn the call over to Ron for more details on the financials.

Ron? Thank you, Jeff. All right, financial highlights for the quarter. Total revenue for the first quarter of 2023 increased 53% to $12.5 million compared to $8.2 million for the first quarter of the prior year. The Allegiant acquisition contributed $3.1 million of the increase in total revenue and organic revenue of $1.2 million increase was 15% for the period over period comparison. Service revenue for the first quarter of 2023 increased 63% to $7.2 million compared to $4.4 million for the first quarter of the prior year. Allegiant acquisition contributed $2.6 million of the increase in service revenue, organic revenue Service revenue increase of 4% or $184,000 for the period. Software solutions revenue for the first quarter increased 26% to $4.1 million compared to $3.3 million for the first quarter of the prior year. And product revenue for the first quarter increased 149% or $1.2 million compared to $492,000 for the first quarter of the prior year. Allegiant contributed $526,000 of the increase in product revenue. while organic growth contributed 42 percent. First quarter gross margins, telecom service margin of 57 percent, excluding Allegiant Q1 gross margin was 69 percent compared to 67 percent for the first quarter of the prior year. Software solutions gross margin 71 percent, product gross margin 32 percent, and overall gross margin 59 percent. Operating expenses for the first quarter of 2023 increased 47% to $14.1 million compared to $9.6 million for the first quarter of the prior year. The Allegiant acquisition contributed $3.4 million of those additional operating expenses. The company reported a net loss of $1.6 million for the first quarter or $0.06 loss per basic and diluted common share. That's compared to a net loss of $1.2 million or five cent loss per basic and diluted common share for the first quarter of the prior year. Non-GAAP net income was $625,000 for the quarter or two cents per basic and diluted common share. That's compared to non-GAAP net income of $405,000 or two cents per basic and diluted common share for the first quarter of the prior year. EBITDA for the first quarter was a loss of $666,000 compared to a loss of $774,000 in the first quarter of the prior year. But our adjusted EBITDA for the first quarter increased to $749,000 compared to $302,000 for the first quarter of the prior year. Our cash, cash equivalents at March 31st was $3.7 million compared to $5.5 million at December 31st, 2022. Cash used for operating activities for the three-month period of $1.6 million compared to $1.7 million used for the same period of the prior year. Cash used for investing activities for the three-month period of $9,000 compared to $34,000 used for the same period of the prior year. And cash used for financing activities for the three-month period of $203,000 compared to cash provided by investing activities of $3,000 for the same period of the prior year. That concludes the highlights. With that, I'll turn it over to Doug Gaylor, our President and COO, for additional comments on sales and operations.

Thanks, Ron. As shown by the results, we have started the year with impressive momentum, highlighted by significant organic growth in our core business. Our 53% year-over-year revenue increase was highlighted by our 26% organic growth in the software solution segment, combined with greater than expected revenue contributions from our Allegiant acquisition, which saw 17% organic growth from their Q1 2022 revenue numbers. The $12.5 million in revenue for the quarter combined with our 11% increase in our backlog, which does not include Allegiant's backlog, gave us a solid foundation to build on for the remainder of the year. As a reminder, our backlog is the sum of the remaining contract values for our telecom services and software solutions customers that will be recognized on a sliding scale over the next 36 to 60 months. We anticipate that the Allegiant backlog will be included in our Q2 report and will add significantly to our existing numbers. As Jeff mentioned, our revenue numbers were solid, but we remain focused on further optimizing synergies from our acquisitions as well as managing costs to continue to grow the business. We have identified substantial cost savings that we can recognize over the next three quarters and are executing on these initiatives as we speak. Against the backdrop of broader macroeconomic uncertainty, we continue to see strong demand and growth in the UCAS industry. I believe that recessionary times actually benefit our industry as businesses look for ways to cut costs and improve efficiency and productivity, and that is exactly what our solutions offer. The widespread migration to the cloud for small, midsize, and enterprise-level businesses helped us eclipse 3 million users on our platform in the first quarter and has put us on target to double the 1.7 million end users we had in June of 2021 by the end of Q2. This growth has been facilitated in part due to the strong sales bookings we continue to see from Crescendo licensees and agents. As our licensees grow, they also need additional services from Crescendo, which in turn drives organic software solutions and cross-selling opportunities. We added five new licensees for the quarter, which is on track with our internal expectations, and we anticipate a significant number of additional licensees to come on board throughout the remainder of the year. Our telecom services segment also posted impressive results for the quarter, resulting in a record number of quarterly new customer installations driven by increased cloud adoption by end users. Our traditional Crescendo agent program continues to grow meaningfully as well. Our two large master agent partnerships with Tolaris and OTG Consulting had strong performances for the quarter, and we also added Jenny Distributors as our newest master agent during the quarter. We continue to build our roster of partners, and we look forward to working with a growing number of companies as the program continues to scale. As Ron mentioned, our telecom services margins and product margins declined to 57% and 32% respectively for the quarter, which was driven by lower margins from Allegiant's service revenue contributions. Allegiant offers additional managed and network services along with their UCAST offering. Some of these services are lower margin, but ultimately help in pulling in a much higher customer spend through a complete bundle of service offerings. Our telecom services margins without allegiance numbers increased from 68% to 69%. And we expect the telecom services margins to quickly return to the 70% range as we continue to integrate the company and improve profitability on certain offerings. Our software solutions margins increased nicely to 71% for the quarter, fueled by a 26% organic growth rate. Because our technology stack is proprietary, we do not have the typical growth costs associated with increased usage, and therefore expect to see these margins continue to improve as we add new logos and licensees. Our award-winning technology continues to be recognized as a leader in the space, being recognized in Q1 by G2, which is the premier business software and services review site, as the leader in the 2023 spring VoIP Voice over IP report, along with rewarding us multiple awards, including the Easiest to Do Business With, Best Usability, and Best Support awards. During Q1, we released our Insight Management application for the Software Solutions platform, and have had great reception from our licensees in terms of order numbers and performance reviews. Also on the technology front, we installed multiple instances of our newly released Contact Centers of Service, or CCaaS, offering during the quarter. Our CX offering, which stands for customer experience, provides omnichannel customer engagement for call centers, including text, email, chat bots, and automations for larger call center applications. Our strong revenue growth combined with the execution of our game plan and strategy has helped set us apart and set us up for what we anticipate being a banner year for the company. We are committed to improving our margins and will continue managing the fundamentals of the business. We believe we have the best UCAS offering in the industry, and that will continue to attract new customers and partners and allowing us to deliver strong returns for our shareholders. With our combination of the fastest growing platform solution in the country, along with our growing licensee network and direct end user offerings, we are positioned extremely well and will keep executing against our strategic roadmap in the quarters to come. I will now turn it back over to Jeff for any further comments.

Thank you, Doug, and thank you, Ron, for your comments and the additional information. At this point, I'm just ready to open the call up for questions.

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. And our first question comes to us from Eric Martinuzzi from Lake Street.

Good afternoon, Eric. I found those strong numbers there for Q1. It's good to see that outperformance in a tough market. I wanted to dive into the software solutions, that 26% growth. It sounds like the five new licensees probably had something to do with that, but just wondering, what sort of the form factor that the new licensees are coming aboard? Is that perpetual license? Is that a subscription? How are people taking it? I'll let John answer that if that's okay. John?

Yeah, so we continue to get a mix of perpetual license, licensees, and subscription. Both offers are very attractive. We also continue to get a mix of new licensees that choose to have us host the solution. us actually delivering the product in our data centers or data centers that we control to them. So there isn't, you know, if you look at the trend over time, it continues to be a blend of the two. And, you know, we're just excited because we are having from, part of your question was where did they come from? From different, you know, one truth about Crescendo and our software solutions division is generally no one starts their UCAS journey with us. So almost all of them are coming from competitive platforms, both at the higher end and the lower end of the market. And we're very blessed to continue to have a good mix of new licensees joining us.

And, Eric, to add to that, Eric, we also see a lot of upgrades coming from our existing licensees as well. So if you think about the fact we've got 220-plus licensees now using our platform, as they continue to see growth in their organic business, They need to add more licenses with our platform, which in turn increases our revenue through the software solution segment.

Okay. I know you're not giving formal guidance, but just as we think about that business, historically I would expect that to be up from Q1 to Q2. Is there anything that would break that trend as far as the software solutions business?

Yeah, we do see some changes. ups and downs when it comes to migrations and upgrades. So when we think about our existing 220 licensees, we had some nice upgrades in Q1. So that's not a consistent cadence. So depending on how we see upgrades in Q2, we'll determine if that number continues to have that same percentage increase. But we're extremely, extremely positive that we'll continue to see strong increases in the software solution segment. But you may see a little choppiness just due to the fact that As we discussed earlier, some of it may be subscriptions, some may be perpetual, and there's no guarantees when we will see upgrades happening with our existing licensees.

Okay. And then the Allegiant business, that was strong. I think, you know, you said, what was it, 15%, 20%? 17% increase over what they did in Q1 of 2022. Yeah, so 17% growth.

Was that in line with your expectations? It was. They had some nice large opportunities that were in their funnel that came through to fruition during the quarter. So we're extremely excited about the pipeline of opportunities and the amount of opportunities that exist on the horizon for Allegiant. So a really strong right out of the gates first quarter with us is always a positive sign.

Okay. And then I know we're talking about keeping an eye on costs here, hiring freeze.

restrictions on discretionary spending is that you know at what point did we come to that conclusion and are there any you know is other headcount reductions involved as well Josh I came to that conclusion looking at economic headwinds and my concern that there may be a deep recession we're monitoring carefully receivables and how particularly our smaller customers are doing we've not seen a huge concern in Thus far, but we have to manage in the event that there is a downturn We we have almost everything we need. So I've taken wish lists out of the budget and put in a Freeze on expenses and we really have sufficient staff, especially when we complete the reorganization We will have everybody in the right position and I don't think there's a need for substantial hiring we will replace essential positions, so it's not a complete hiring freeze and But we're just watching our dollars very, very carefully until our organic growth is improved and we have some clarity on the economic front.

Okay, and last question for me. The cash was, you finished out the quarter at $3.7 million. What's the assumption on the cash we'll be able to get from the headquarters sale lease back? And then can you give us any thoughts on where you expect to finish out the year cash-wise?

Yeah, so the building sale, we're hoping to have that consummated. We've got a signed letter of intent going to contract this week. We anticipate that that should add upwards of about $2 million cash to the balance sheet.

Ron, do you want to comment on where we think the... Let me be more clear. It is a letter of intent. We're hoping it goes to contract. Obviously, there's no assurance of that. Now, Ron, if you want to answer.

Yeah, so as far as the guidance on cash... I don't think that we're burning cash. If you look at our cash flow from operating activities for the quarter, it looks a little negative, but we paid down $1.1 million in payables during the quarter, as well as had a slight increase of about $500,000, $600,000 in our accounts receivable, which attribute to the majority of that change, and just timing of payrolls. We had three payrolls in March, so just fluctuations in cash, but we're not concerned about continued cash burn.

So we're expecting positive cash from ops in 2023. For the full year. Yeah, okay. Thanks for taking my questions and congrats on the quarter.

Thanks, Eric. Next we have Josh Nichols from B. Reilly Security.

Hi there, this is Kat Canope.

Hey, Josh. Hi, Kat.

Yeah, this is Kat Canope on for Josh Nichols. So my first question for you guys is, What are you seeing in terms of the acquisition integration, and what are you seeing in terms of opportunities for gross margin expansion?

I'll take the acquisition, and I'll let Ron or Doug discuss the second part of it. As I discussed during the call, we really have much of the NetSapiens acquisition completed. We are moving some people around because of Allegiant, because there are people who really can work across all of the divisions of the company. And it's going quite well. Everybody is rolling up their sleeves and working. As I said in my prepared remarks, we're working on a realignment plan. I'm not ready to discuss too much of that, but it should help us reduce our costs and make the company far more efficient. And I'm very, very encouraged by what we're working with and what I think the results will be.

Yeah, and there's some strong synergies there, Kat, that we haven't recognized yet that, you know, as contracts come up and as we can renegotiate existing agreements, we're doing that. So we anticipate some significant cost savings over the next few quarters. And as far as gross margins go, I mean, obviously, the gross margins came down. That was expected through the first quarter as we integrate Allegiant into the organization. But we anticipate getting those margins right back on track, as I discussed in my prepared remarks. that if you look at the software solutions segment, those margins have increased nicely and will continue to increase because we own that technology stack. And then on the telecom services, if you look at the margin increase from 68 to 69% without the inclusion of the acquisition, you know, that's heading in the right direction. You know, we've been consistently at that 68 to 70% gross margin range on telecom services prior to the acquisition. And again, with the synergies with the acquisition, we're confident that those margins will come up very rapidly.

Let me just add a little. The Allegiant margins will never be what the software solution margins are or the pure telecom margins are simply because they involve a fair amount of resold services. But that is not a big concern to me because every time we act as an MSP, it is a stickier customer. It is taking lower margin business to gain much higher margin business. And it makes it much more difficult for that customer to leave. So I'm not too concerned if margins go down slightly because we're making a customer that essentially is married to us. And that will be something that affects it, which is why Ron and Doug broke out the margins separately of Allegiant and the others so you can see the difference. But there will always be a slightly lower margin based upon the fact that they sell a lot of resold services.

Okay, great. And then one other from me. Can you just talk a little bit more about what you're seeing in terms of adoption in foreign markets, maybe Australia in particular?

Yeah, let me just give a quick highlight, and then I'm going to turn it over to Anand Boots to give you a little bit more. So when we look at the international markets, we've talked in the past and in our investor presentations about the adoption of cloud communications in the states and outside of the states. And so if you look at the United States, the adoption numbers, you know, are about 45 to 55%, depending on the reports that you look at. So there's still the majority of customers in the U.S. that haven't migrated over to the cloud. And that's actually probably some of the highest in the world today. So if you look at the European market and the Australian market, much, much lower percentage adoption to cloud communications, which means that there's even more opportunity in those two markets. And we're extremely pleased with the results that we saw out of our international efforts in Q1. And so to add to that, I'll have Anand give you a little bit more detail.

Yeah, thanks, Doug. Yeah, just to, I mean, I think echo what, you know, what Doug was saying is that I think that theater as a whole, you know, I think we're up to probably around 20-odd service providers kind of internationally across the board, and we continue to see that. As you dig through the numbers, you'll also see that the growth actually increases. came quite significantly from that area with a very small and highly efficient team. And so we continue to see kind of inputs there. Also, I think we've mentioned this before as a kind of migration off of some of the legacy platforms that exist in the space. There are a number of partners out there that are both in the ecosystem today and our partners today and then are looking that are moving off of and competing with the likes of Cisco and Microsoft. So we continue to see, you know, a lot of improvement in that area. And, you know, we're being very kind of tactical and surgical about doing it, given the size of our team, but the opportunities that we have relative to the bigger players out there are very encouraging.

Okay, great. Thank you.

Our next questioner is Chris Sakai from Singular Research.

Hi. Good afternoon. Can you talk about, I guess, if you guys are going through a hiring freeze and are not restricting your spending, how will this affect your growth and your ability to handle new growth?

If I thought it affected our growth, Chris, we wouldn't be doing it. We have sufficient staff and we have sufficient technology to expand. I mean, this is not perpetual. As you look at most of the people To look at most of the people in our sector, they're cutting back. As I mentioned during my prepared remarks, we didn't have to do that because we didn't go on a tear and hire too many people during COVID. We're at the right size that we need to be for where we are and for substantial growth. We will reevaluate this decision next year, but I am highly confident in this year, highly confident in the staff and the technology we have, and I'm quite confident we'll do great.

And if you look at some of the revenue driving positions, you know, we've hired some additional salespeople at the end of last year that have already contributed, you know, significant increases for us. So, you know, when we look at, as Jeff said, you know, replacing somebody is always an option. But, you know, right now we're extremely, extremely well staffed to continue the growth that we currently see.

Chris, this is John. Let me give you a little more color, too, just with the same existing staff from a revenue growth perspective. We're targeting larger opportunities. Doug talked about in his prepared remarks are the awards that we won with G2.com, which is the largest third-party software review site. And we're getting larger opportunities coming to us organically through sources like G2 and others. And with our service provider on the software solution side, we're getting opportunities coming to us from a couple of the areas that Anand touched on with some of the pain that are going on in the Cisco and the Microsoft channel for cloud communications providers. So not hiring more people doesn't mean we can't reach a higher level of sales effectiveness and sustain our revenue growth.

And Chris, don't forget, we still have the dealer channel, which is not a direct cost, and they are driving many of our sales. We have costs we're reducing through the rest of the year through some contractual obligations that will no longer exist. And As Doug discussed, as contracts come up, when we combine the combined force of all of the organizations together, we have much better negotiating power and we expect certain costs to go down substantially. But we are at a position where we have all the runway we have for substantial growth. And obviously, just as we re-evaluated this year and we're looking at the uncertainties in the economy and we're taking precautionary decisions, we will reevaluate next year depending upon where we are.

Okay, thanks. And then can you mention, did you mention what the backlog was for this quarter?

I think I did. So backlog increased to, let me put my notes up here.

I thought I did. Backlog increased to 47.8 million.

Let me just verify that number for you. I'm sorry. Okay.

Backlog increased to 47.86 million, which was up 11% from Q1 of last year. So, we saw a nice increase in our backlog. And again, that number did not include the Allegiant backlog. We'll have that calculated for our Q2 report. Okay.

All right. Great. And can you talk about, have you seen any more customer migration from Avaya?

We do. We see that. And actually, when we think about the Allegiant acquisition, some of their accounts and their customer base are Avaya accounts. And so we have seen a lot of changes out there. We've got a lot of interest from Avaya resellers looking at Crescendo as an alternative. And so, you know, obviously when there's challenges with some of our competitors, that's a good thing for us. So we welcome all of those Avaya customers to call us up, and we'll gladly take care of them.

Okay, great.

Thanks for the answer.

We now hear from Mike Vladmore with Northland Security. A reminder that if you have a question, to press star 1 on your phone.

Good afternoon, Mike.

How are you?

Hi, this is Logan. I'm for Mike. First off, I just want to say congrats on a great quarter. And then we got two questions for you guys today, with the first being, do you guys provide some information around your current subscriber count and what have been some key drivers for growth of subscribers?

Doug, you want to take that?

Yeah, so subscriber count, you know, right now we announced in Q1 that we eclipsed 3 million end users. So that is the number of users using our platform today. That's a combination of all of the end users through our licensees and through our direct offerings. Through our direct offerings, we're upwards of over 65,000 end users on our direct offering. And obviously, the majority of that 3 million is coming through our licensees and our platform. So when we think about those numbers, those numbers continue to increase as our licensees add more and more customers to their platforms. And those are all people that are obviously using our Crescendo platform to manage their business and run their business. So those end user numbers of 3 million plus increase. We anticipate, as I mentioned in my remarks, that we anticipate those numbers to be well in doubling of what we had when we acquired the platform in July of 2021.

Perfect. Thank you. And then are you guys expecting to be free cash flow positive this coming year?

I think Ron already answered that and we said yes.

Okay. All right. Is Broadsoft still your guys' biggest donor of subscribers to your software business?

Yeah, so if you think about our two segments, we've got competitors, different competitors in each segment. So on the telecom services side, you know, we don't see Broadsoft and Microsoft in their initial formats. We see them through resellers. And so we typically see on the telecom services side, you know, competitors being RingCentral, 8x8, Vonage, and others. On the platform side of the equation, on the software solution side, that's where we see Broadsoft and Microsoft's MetaSwitch being the number one and number two, respectively, platform providers. And we're the third largest platform provider in the U.S. So, we see that competition out there. But again, it's a big difference when you think about how we present ourselves because We have a completely different model than Microsoft and Cisco. Microsoft and Cisco typically are charging per license, and it's very expensive. And if you look at our model, our model has always been charging on sessions, not seats. And that makes us much more competitive with a product that has just as much, if not more, feature functionality for a lesser price point.

All right, perfect. Thank you, guys.

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

Well, I want to thank all of you for calling in and listening to our call this quarter, and we'll look forward to our second quarter results, and thank you very much.

Thanks, everybody.

This concludes today's conference call, and you may disconnect your lines at this time. Thank you for your participation.