Innodata Inc.

Greetings. Welcome to Ando data's fourth quarter and fiscal year 2023 earnings 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 this conference is being recorded. I will now turn the conference over to your host Amy. You may begin.

Thank you, John. Good afternoon, everyone. Thank you for joining us today. Our speakers today are Jack Abelhoff CEO of InnoData and Mariz Espinelli interim CFO. We'll hear from Jack first who will provide perspective about the business and then Mariz will follow with a review of our results for the fourth quarter and the 12 months ended December 31 2023. We'll then take your questions before we get started. I'd like to remind everyone that during this call, we will be making forward looking statements. Which are predictions projections or other statements about future events. These statements are based on current expectations assumptions and estimates. And are subject to risks and uncertainties actual results could differ materially from those contemplated by the forward looking statements. Factors that could cause these results to differ materially are set forth in today's earnings press release in the risk factor section of our form 10 K form 10 Q. And other reports and filings with the securities and exchange Commission, we undertake no obligation to update forward looking information. In addition, during this call, we may discuss certain non gap financial measures and our SEC filings, which are hosted on our website will find additional disclosures regarding These non gap financial measures, including reconciliation of these measures with comparable gap measures. Thank you. I'll now turn the call over to Jack.

Good afternoon, everybody. We're very excited to be here with you today as we have a lot of good news to share. We are pleased to announce fourth quarter 2023 revenues of 26.1 million representing 35% year over year growth and 18% sequential growth. We exceeded our guidance of 24.5 million by .5% as a result of strong customer demand for generative AI services. And our ability to ramp up quickly to meet customer demand in 2023 overall grew revenues 10% Now it's worth noting that our Q4 2023 year over year revenue growth was 39% versus 35% and our year over year revenue growth was 23% versus 10% If we back out revenue from the large social media company that went through a highly publicized take private in 2022 In conjunction with which it terminated our services as well as services from many of its other vendors and laid off 80% of its staff. This customer contributed 8.5 million in revenue in 2022 and 0.5 million in revenue in Q4 of 2022 Beginning in Q1 2024 revenue from this customer will no longer provide a drag on year over year comparisons. We're also very pleased to announce fourth quarter adjusted EBITDA of 4.3 million exceeding our guidance of 3.7 million by 16% Growth in Q4 was driven primarily by ramp up of generative AI development work for one of the big five tech companies we signed mid 2023 And also benefited by the start of generative AI development program with another of the big tech customers we announced late last summer. In late Q4 the first customer I mentioned signed a three year deal with us for our current initial program with an approximate value of 23 million per year for each of 2024 2025 and 2026 for 69 million for the three years based on the not to exceed value of the statement of work. We're very proud of this achievement. It came with customer kudos for the work that we've done and expressions of interest in expanding the partnership further. That said, and as a cautionary note, investors should understand that there are a number of ways under the SOW that the customer could terminate early or reduce spend if it chose to. We believe the quality of our services will always be the key to enduring customer relationships, not the stated value or term of a contract. We're off to a strong start in 2024. We entered the year with master service agreements in place with five of the so called magnificent seven technology companies with two of these companies. We're now solidly underway. A third also contributed to Q4 growth with a more significant ramp up from this customer starting this month. We're optimistic we will grow revenues with all three of these customers in 2024. With the remaining two of the five MAG7 customers we've barely gotten out of the gate, but we're optimistic about making significant inroads this year. We're also in conversations with several additional companies, including some of the most prominent leaders in generative AI today. We believe we have the strategy, business momentum and customer relationships to deliver significant revenue growth in 2024. We will stick to our annual growth target of 20% in 2024 with the intention of overachieving this. In 2024, we will target two broad markets. The first is big tech companies that are building generative AI foundation models and we believe are likely to spend significantly on generative AI development. For these big tech companies, we provide a range of services they require to support their GenA by programs. One of these services is the creation of instruction data sets. You can think of instruction data sets as the programming used to fine tune large language models. Fine tuning with instruction data sets is what enables the models to understand prompts, to accept instruction, to converse, to apparently reason, and to perform the myriad of incredible feats that many of us have now experienced. We will also be providing reinforcement learning and reward modeling services which are critical to provide the guardrails against toxic bias and harmful responses. In addition, we're also involved in model assessment and benchmarking, helping ensure that models meet performance, risk and emerging regulatory requirements. Based on my conversations with several of these companies, as well as public remarks they have made, we believe they are likely to spend hundreds of millions of dollars each year on these services. This spend is separate from and in addition to their spend on data science and compute the other essential ingredients of high performing large language models. Our second target market is enterprises across a wide range of verticals that seek to integrate and fine tune generative AI models. These are still early days in terms of enterprise adoption of generative AI. We believe that a decade from now virtually all businesses will have adopted generative AI technologies into their products and operations. For enterprises, our offerings include business process management in which we re-engineer workflows with AI and LLMs and perform the work on an ongoing managed service basis. We also offer strategic technology consulting, where we work with customers to define roadmaps for AI and LLM integration into both operations and products and build prototypes and proofs of concept. We also fine tune models, both in isolation and as part of larger systems that incorporate other technologies. For enterprises, we are capable of going soup to nuts. Everything from initial consulting to model selection to fine tuning, deployment and integration, as well as testing and evaluations to ensure that the LLMs are helpful, honest and harmless. Also for enterprises, we offer subscription based platforms and industry solutions that encapsulate AI, both our own models and leading third party models. Much the way data is at the heart of programming like work we do for big tech, data is similarly critical to enterprise deployments. Enterprise use cases tend to be highly specific and targeted, requiring models that are trained with industry specific or domain specific data or that require significant prompt engineering efforts and in context learning, utilizing carefully curated and organized company data. The bottom line here is that data engineering is important for the big tech companies building generative AI foundation models and the enterprises adopting these technologies. Data engineering has been our focus for the past two decades and we believe we are quite good at it. I'm going to take a few minutes now to respond to some questions I've been asked by investors recently. Number one, Several investors have asked whether we currently anticipate needing to raise additional equity. The answer is no, we do not currently anticipate needing to raise additional equity. We ended Q4 with $13.8 million in cash and short term investments, slightly down from $14.8 million last quarter, but that was largely due to timing. As we had $2.4 million in cash receipts from major customers collected right after the new year and we generated over $4 million of adjusted EBITDA in Q4 alone. Nonetheless, to support our growth and future work and capital requirements, we have a revolving line of credit with Wells Fargo that provides up to $10 million of financing, 100% of which was available under our borrowing base as of the end of Q4. We have not yet drawn down on the Wells Fargo line. We anticipate generating enough cash from operations in 2024 to fund our capital needs without having to draw down on the Wells Fargo facility. Number two, several investors have asked why we have no chief financial officer. Well, in a sense, we actually have four chief financial, excuse me, chief technology officers, or at least their equivalents, each of which manages specific technology area. We have a PhD in computer science and AI who heads our AI labs research team and data science teams. We have an SVP of engineering overseeing products and platform engineering. We have another VP focused on software development, product evolution for our agility product and we have a chief information security officer who heads security and infrastructure. Under these leaders, we have close to 300 developers, architects, infrastructure managers, and data scientists. We have found that this structure best supports the breadth and scale of our business. Investors have asked us to share our recent spending on software and product development and I've asked why we do not separately disclose it to comment on whether we have a significant spend on cloud infrastructure. So there are three separate questions there and I'll address each. In terms of our spending across software and product development over the last five years, we spent about $26 million. This peaked in 2022 at $8.9 million and came down to $6.4 million in 2023. However, since roughly 80% of our business has managed services, we do not view the aggregate spending across these areas as a focal point for investors. In terms of cloud, we spent a couple of million dollars per year, mostly for software infrastructure and data hosting. It is our big tech customers, not us, that spend massively on GPUs for training foundation models. Other investors have asked us how they should think about our comps. Specifically, they asked whether our comps are companies like OpenAI, Google, and Meta, whether they should compare our R&D spend and cloud compute spend to these companies. These companies are absolutely not our comps. Rather, these companies constitute part of our target market. We are not in their business and to state the obvious, we are not of similar scale. Layers in this market are building foundation models and we are providing services to this market that help them on that journey. Therefore, we do not believe that comparing our R&D spend and cloud compute spend to theirs is especially useful. We view our competition as companies focused on AI data engineering services to this market, like ScaleAI and others, and companies more broadly focused on technology services, but also focused on AI data engineering, like Accenture and Cognizant. Another question I've gotten is how do we manage to pivot to AI without having to raise substantial capital? There are essentially three reasons we were able to pivot to AI without having to raise capital. The first reason, which we believe is by far the most important, is that the massive spend we read about being required to build foundation models is incurred by our large tech customers, not by us. Our customers are deploying extensive amounts of capital for cloud compute, for data science, and for data engineering. Three crucial ingredients to an LLM, if you will. We provide the kinds of data engineering services they need and providing data engineering does not require that we separately incur compute costs. The second reason we were able to transition to AI data engineering without incurring massive upfront costs is that we have been a data engineering company for over 20 years. We were able to repurpose a lot of what we already had in place, including management, resources, facilities, and technologies to serve the AI use cases. The third reason is that when we began exploring AI back in 2016 and developing our Golden Gate infrastructure, we incurred manageable investment. From a data perspective, because we were already employing large teams of resources doing customer work, we did not have to incur incremental additional costs for humans in the loop. We simply had to re-architect our operator workbenches and to create the right data lakes. The objectives we initially set for the models we built were to enable us to reduce costs associated with maintaining rules-based data processing technologies. We were not seeking to automate the work of humans, but to augment it. Over the years, Golden Gate, as one of our proprietary platforms, became, we believe, state of the art at things like entity extraction, data categorization, and document zoning, all important aspects of what we do. The technology is deployed in customer deployment and within our own platforms and yields great results. That said, Golden Gate is not chat CPT. You can't converse with it or ask it to write poetry. Golden Gate has 50 million parameters while chat CPT is reputed to have 1.7 trillion parameters. Nevertheless, Golden Gate demonstrates that AI can be trained to perform specific tasks very well without incurring massive spending. That AI deployments leveraging open source algorithms and models can be within reach for many enterprises for industry specific data sets and that for business implementations especially data engineering is more important than sheer model size as a predictor of performance. The question I got recently is how does revenue per employee compare in your different lines of business? The answer is that revenue per employee is lowest in our managed services business, while it is a multiple times higher in our AI data engineering scaled services. Regardless, we target an adjusted gross margin of 35 to 37% across these two business lines and we believe gross margin is the better metric to track. In our software business, our target gross margin is anticipated to be about 73% this year and we intend to target a consolidated adjusted gross margin of between 40 and 43%. The final question I've gotten several times recently and that I want to respond to on today's call is, is agility now profitable? The answer is yes. In this quarter, agility posted adjusted EBITDA of $1.2 million. This was a 69% sequential increase over Q3. We think we executed the agility business very well in 2023, growing at 15% in a difficult macro environment. It had a strong adjusted gross margin of 69% over 2023 as a whole and 74% in Q4. We also love what we've done with the product. We believe we've taken leadership position as the first end to end public relations and media intelligence platform to integrate generative AI. I'll now turn the call over to Mariz to go through the numbers and then we'll open the line for some questions.

Thank you, Jack. Good afternoon, everyone. Allow me to recap our fourth quarter and fiscal year 2023 results. Revenue for the quarter ended December 31, 2023 was $26.1 million, up 35% from revenue of $19.4 million in the same period last year. The comparative period included $0.5 million in revenue from the large social media company that underwent a significant management change in the second half of last year. As a result of which it dramatically pulled back spending across the board. There was no revenue from this company in the three months ended December 31, 2023. Net income for the quarter ended December 31, 2023 was $1.7 million or $0.06 per basic share and $0.05 per diluted share compared to a net loss of $2 million or $0.07 per basic and diluted share in the same period last year. Total revenue for the year ended December 31, 2023 was $86.8 million, up 10% from revenue of $79 million in 2022. Comparative period included $8.5 million in revenue from the large social media company reference above. There was no revenue from this company in 2023. Net loss for the year ended December 31, 2023 was $0.9 million or $0.03 per basic and diluted share compared to a net loss of $12 million or $0.44 per basic and diluted share in 2022. Adjusted EBITDA was $4.3 million in the port quarter of 2023 compared to adjusted EBITDA of $0.2 million in the same period last year. Adjusted EBITDA was $9.9 million for the year ended December 31, 2023 compared to adjusted EBITDA loss of $3.3 million in 2022. Our cash and cash equivalent in short-term investment were $13.8 million at December 31, 2023 and $10.3 million at December 31, 2022. Now, before I turn to questions like Jack, I also have gotten some questions from investors recently that I promised to respond to on today's call. The first question was about why we keep cash overseas. The reason we keep cash overseas is to cover operating expenses in this location. We do not plan to repatriate this fund nor do we foresee the need to. Further, another question was about cost plus transfer pricing agreement with our offshore subsidiaries. Companies that have revenue in say North America or Europe but have offshore delivery center in countries like India and the Philippines put in place what's called transfer pricing arrangement. This is to satisfy the arms line transaction principle. Under transfer pricing arrangement, a percentage of revenue is allocated to the delivery center. The percentage allocated is often determined by statute or regulation in the foreign country. We understand that the reason the foreign country does this is to make sure that there are profits at local level for it to tax. However, when consolidated enterprises losing money and would not otherwise have to pay taxes, it unfortunately ends up having to pay taxes offshore. Obviously, paying taxes when you're losing money is not a good thing and is referred to as tax leakage. But even in this situation, the tax we pay is insignificant versus the money we save by operating offshore. This business model is very common across many industry and not unique to InnoData. The last question that I've gotten is whether is there any structural reason that InnoData would be expected to lose more money as it generates more revenue. The answer to this is absolutely not. As InnoData revenue increases, we expect that it's adjusted EBITDA will increase at even higher percentage. This is because there is some operating leverage in our direct cost for things like production facilities and other fixed expenses and significant operating leverage in our general and administrative operating costs. We saw clear evidence of this in both Q3 and in Q4. Like in Q3, revenue grew sequentially by $2.5 million and adjusted EBITDA grew sequentially by $1.6 million. Similarly, in Q4, revenue grew sequentially by $3.9 million and adjusted EBITDA grew sequentially by $1.1 million. There will, however, be quarterly fluctuation on how much revenue falls to the EBITDA line based on how we flex our operating expenses, particularly our sales and marketing efforts based on market dynamics. Well, I hope I was able to address some of our investor query. Again, thanks everyone and I will now turn this over to John. John, we are now ready for questions.

Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd 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. Once again, please press star one if you have a question

or comment. The first question comes from Tim Clarkson

with

Van

Clemens. Please proceed.

Hey Jack, how are you doing?

Hey Tim, doing great.

Good, good. Well, I thought the quarter was outstanding. So just as a question, I'm going to have you answer it, but you're going to answer it in a more sophisticated way than I'm going to say it. But I mean, when I originally learned about Indedata being involved in AI, Raul told me, and this is one that he told me when the stock was at a buck, he said, listen, the reason Indedata is going to be successful is they're the most accurate. And at IBM, the reason we had so much trouble on 80% of our deals was inaccuracy. And, you know, so far, you've gotten a number of smaller contracts and now you've gotten the big contracts, it's coming true. So to me, you know, that's maybe a real simple insight for some people who are intimidated by all the complexity of AI. But why don't you explain in the simplest terms, you know, how Indedata fits into AI?

Sure. Well, in a number of different ways. I think to, you know, I don't think your question is particularly unsophisticated. I think that exactly what you said is correct. The key to programming large language models is essentially the data engineering that goes into it and the principle of garbage in, garbage out, you know, holds very much true. What I see that we're doing a great job at is creating very high quality data sets that our customers are able to use and incorporate in the large language models to get the performance from the models that they're seeking. You know, instruction data sets, you know, that are key to, you know, helping the models understand prompts to accept instruction, to converse, to reason, all of these things. And that's how they're competing. They're competing on the quality of the experience that their customers will have with the models that they're building. So to the extent that the data engineering that we provide to them is helping them achieve that, well, you know, that obviously is a very, very good thing. Now, on top of data accuracy and data engineering, the thing that we've been focused on for so long now, I think we create the appropriate customer experience that they're looking for. You know, they're figuring things out. They need a company that's highly dynamic and that's agile and that can stay with their engineering team, that can be responsive to the changing requirements that the engineering team has. And again, that's something that's firmly built into our culture. So we're very proud of the results that we're showing. We're very proud of the quality of the partnerships that we're achieving. I think, you know, we announced that for one of the large deployments, this quarter we signed a three-year ongoing contract with a hopeful value of $69 million. It's a huge achievement. And what that came with was a lot of wonderful things that the customer had to say about us, about the value of the data exactly like you just said and about the quality of the experience that they have with us. So we think we're doing good. We're very well poised for an exciting year next year. We're very excited about that.

Right. Now, looking at your projections, I mean, you said last time you expect some 30 million quarters. It looks like based on what you did in the fourth quarter and in your growth rates, you're approaching that sometime this year, right?

Well, I think we're going to stick with the guidance that we're providing. You know, our intention is to surprise and delight our investors. We think we have the opportunity to do that.

Right.

So the guidance that we've put out there is, you know, 20% growth, but with the intention of besting that. I think we have a very good chance of being able to do that.

Right. Right. Now, when I look at the P&L, I know you like to look at EBITDA. I like to look at Net After Tax. It seems to me that somewhere as you approach, say, 35 million, at 30 million, you start to net 10 to 15% after tax. And at 35 million, you start to approach, you know, more like 15 to 20% after taxes. Is that about right?

You know, we're not going to, there are a lot of things that go into the model. I think that we're going to resist the temptation of kind of digging in and creating more of a model than we are. You know, the guidance is, you know, what we're saying. I think we intend to do better than that. And perhaps significantly, and I think, you know, the business is not that difficult to model. I'd encourage you to do it. I think we can create a lot of shareholder value this year.

Right. And obviously, as sales go up, historically, within a debt, profitability has always gone up on balance, not every quarter, but typically it goes up much faster than the revenues.

That's correct. And I think you see that operating leverage working very strongly in both Q3 and Q4. And that operating leverage and the disproportionate increases that we see in profitability to revenue growth will work for us, will continue to work for us, I believe, and will give us the ability to further invest in the company and stay aligned with our market and ahead of our competitors. We think we're managing the company appropriately from that perspective. We're very happy, as we just said, to confirm that we don't plan on needing to raise equity. We think that that's a very strong statement for a company that has been able to keep pace with others of our competitors who are more significantly funded than we are. And to compete aggressively with them and win deals against them. So we think we're managing the opportunity appropriately and we think there's a lot of good things ahead for us.

Right. A little softer question. Can you explain, not the big guys, but say a smaller application. You mentioned a drug store where they might want to use AI as their customer service. Can you just kind of explain what that would look like or a retail shop where they're using AI rather than necessarily people to get business done?

Sure. Well, you know, I'll give you a fresh example, not even from the work that we're doing today, but from the work that I'm hopeful that we'll be doing at some point in the near future. We're in conversations with a kind of a home furnishings manufacturer who wants to create the ability for someone to upload pictures to their website and to utilizing those pictures to discover which of their furnishing products would fit best within that environment and maybe even display what that might look like. So I think as you go from enterprise to enterprise, you know, firstly, I think it's almost inconceivable that there will be enterprises who won't be affected and likely benefited from these technologies if they seize them correctly. And the fact that, you know, as we do the work that we're doing with the foundation model builders, we're also continuing to plant seeds in enterprise and to work soup to nuts, you know, with enterprises to figure out how do they take advantage of these technologies and seize these opportunities is, I think, planting very strong seeds for the future.

Right. OK, I'm done. Thanks.

The next question comes from Dana Buska with Salpo.

Please

proceed.

Hi, Jack.

Hey, Dana.

Congratulations on an excellent quarter.

Well, thank you so much. We're very happy with the quarter. We're happy with how we're kicking off 2024.

Oh, wonderful. My first question I have is that I just want to ask a question about your Golden Gate platform. It is my understanding that that's built on the transformer architecture. And is that like the same architecture that OpenAI uses? And I was just wondering what does that mean for your offerings?

Sure. So

I believe

that it is the same architecture. And when we see that it is, what we mean to use that as a proof point for it is that we're making good, solid, future-proofed engineering decisions within our engineering department. And I think that's important because it's not trivial to make those decisions and it's not obvious when you're making them, whether you're making the right ones. Now, you know, that having been said, we are not by any measure saying that we can use the Golden Gate as a substitute for ChatGPT. That's far from the case. Golden Gate is 50 million parameters. We believe ChatGPT is 1.7 billion parameters. Golden Gate does very specific things that are good for us and good for our customers in our business. We use it in many, many of our deployments. But you can't ask it to write a poem about butterflies and iambic pentameter. It just doesn't work for that. The fact is, though, that we picked the right technology. We're using it very effectively in much of what we're doing. It was very, very useful in the work that we were doing for big tech companies in classic AI. It has less utility in large language models, but continues to have lots of utility in our business.

Okay, wonderful. With the kind of fast moving marketplace and fine tuning and reinforcement learning, do you have any estimates about how large that market is right now? You know, I think there are a lot of different estimates.

The one that we've shared in the past, I don't have the data in front of me, but the one that we shared in the past was Bloomberg estimate looking at, you know, AI and large language model related services and showing that there would be a significant expansion in that market. I'd probably point you to that and be happy to send you a reference for that after the call.

Okay, okay, great. That's excellent. In the last couple of couple of calls, you talked about your white label agreement, and I was just wondering how is that going? Are you seeing any inroads with that?

Yeah, we're seeing inroads. We still think it's early days. Again, it's early days for enterprise applications as a whole. We had a very good quarter with that customer in Q4. I think we're going to see pick up from the white label partnership beginning in Q1 and probably through the year. But again, I view that very much as a seed that we've planted for the enterprise side of the business. Right now, the growth that you're seeing is primarily on the work that we do, the data engineering work that we're doing for the internal builds that the hyperscalers and large tech companies are working on.

Okay, and what strategies are you employing to differentiate yourselves from your competitors?

I think it depends on the line of business. If you think about the services side of the business, which is the bulk of the business, it's 80% of the business, what we need to do is no different than any other services company would need to do. We have to do a very good job at what we're hired to do. Just like the question Tim asked, he said, well, is the data quality really important? And I think the answer to that is, as I said, it clearly is critical. It's what we're being hired to do. Beyond that, you care about the level of service that you're obtaining. You care about the qualities that the vendor is bringing to the relationship. You're caring about how tightly aligned they are with your engineering team. When they zig, you can zag, and whether you can follow their lead and be responsive to their changing requirements. We're bringing that to the table.

Okay, excellent. Do you have any new products or services that you're excited to be introducing this year?

Yeah, so I think there's a lot that's going on. When you look at the field as a whole, what you see and what we're starting to see is the spread of activities around languages, around domains, around what we call text to X, the different modalities that large language models are going to be requiring to support. And again, I focus on that because it's within the growth area of our services that is most important. So we're doing a lot of work on those areas. We're also doing a lot of work in terms of trust and safety and aligning our capabilities to their emerging requirements in terms of helping ensure that the models perform as expected. That's going to be an important area. In other areas of the business, we're releasing new product capabilities. We've got some things coming out in medical data extraction that we're excited about. We've got an AI roadmap that is very compelling and being received now well kind of in beta by customers in the agility segment. So we're excited about that as well.

Do you have any plans to do images with Agility?

I'm sorry, doing images?

Images, yeah.

So I think that the primary use case of Agility is the media intelligence platform and it's an -to-end workflow for PR professionals that require the ability to both target audiences with messages, to craft those messages, to find out who to target best, to send those messages to, and then to analyze pickup and to monitor news and social media globally. So there's not really a huge requirement for images within that product other than what we've already integrated. So for example, we've already integrated AI that can be used to monitor news and imagery within the news. So if your logo, for example, is contained in a piece of news, we can inform our customers that that has been observed.

Okay, great. That does it for me. Thanks for answering my questions.

Thank you.

Once again, if you have a question or comment, please indicate so by pressing star 1. Up next is Bill Thompson with Carow Capital. Please proceed. Hey, good

afternoon.

Hi Bill, good afternoon.

Congrats on the quarter. I was pleasantly surprised to see that the company made a profit based on the recent performance. That's definitely a nice change. I had a question about the Agility business. So you stated multiple times that the Agility business is actually profitable as it stands now. Is that on a GAP basis or is that by Adjusted EBITDA?

It

is both GAP and Adjusted EBITDA, but we do use Adjusted EBITDA as a core metric because we think that it's useful. When we're looking at Adjusted EBITDA, we're carving out, as you may be aware, we're carving out DNA, stock option expense, obviously income tax, and then one-time severance costs that are not recurring. But it was also profitable on a GAP basis.

Okay, and you're sure about that?

Yes. I'm

looking through the announcement and it's unclear. It's not usually broken out. I have another question. We'd be happy

to separately take you through that and answer any detailed questions you have.

Okay, that'd be excellent. I have another question. You had a very experienced CFO two years ago. The person resigned, I believe it was two days before the report was signed and submitted to SEC. So it was pretty abrupt. Then the company put in place an interim CFO. It's been two years. The company claimed that they were, you at the time, you claimed that you were in the process of looking for a full-time CFO. However, it's been two years and there's still an interim CFO. Can you give us an update on that process of looking for a full-time CFO?

So in, I think it was March of 2021, we hired a SVP of Finance and Corporate Development. And his function and his mandate was to put in place a stronger strategic finance function than we had at the time. We saw that that was an important need that we had. And what that function does is it looks at how we're managing cash. It looks at the return that we're getting on investments that we're making. It looks at and takes ownership of our budgeting and all of those functions. So it's kind of strategic day forward, looking forward, providing leadership around how we're managing the business and the investments that we're making. We already had very strong talent in terms of the controllership function. What we found with hiring this person and the talent that we have in place is that we've got strong talent kind of end to end right now in the finance function. I think arguably the piece that we may be lacking and the piece that we need to think through more carefully as it becomes more important is the investor relations component, the public company component. Are we spending enough time doing outreach with investors?

I hate to interrupt, but I know you like to editorialize a lot. Are you saying that you currently don't need a full-time CFO and that the interim is going to continue?

What I'm saying is that as we think about the need for a CFO, we're doing a lot of thinking about the investor relations function and the role of someone who would be working with our analysts who may be thinking about covering our company from a perspective of capabilities for what we need today, I think we're very well covered and we've got very strong talent in place.

I'm looking at the numbers from the press release. It looks like Agility had a $1.3 million gap loss. Can you verify that?

I don't have the numbers in front of me right now, but we had a gap profit. Again, I'd be very happy to put you in touch with any one of the companies. You guys

just finished the quarter, you should know the gap profitability of your business segments. Do you guys have a straight answer for that?

I'm not sure exactly what you're trying to get me to say. I'm

investing in the company, I would like to know how much money the company is making.

It's pretty straightforward. We had $440,000 of gap profit in Agility in the quarter.

I'm seeing a net loss of $1.35. Again,

very helpful. I'm very happy to have a call with you to drill down to that and look at what you're looking at and have that difference from what we're reporting. I don't know how I can help you beyond

that. All right, I appreciate it.

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

Thank you.

In 2023, the world witnessed a seismic shift with the arrival of OpenAI's chat CPT. It sealed the spotlight. It wasn't just another software release, it was a phenomenon. It captivated the world with its abilities to do what seemed like superhuman feats. This sparked a wave of development with companies vying to push the boundaries of language generation and its applications. We saw that there were tech giants locked in a heated race to dominate the realm of generative AI models. This arm race resulted in billions of dollars of ongoing investment being made by these companies with ripple effects potentially reshaping every industry we know. It's essential to underscore, and I think a couple of these questions were useful in that regard, that in the realm of training large language models, the age-old adage of garbage in, garbage out holds particularly true. This is where our distinct advantage comes to play, as we've been consistently delivering high quality data at scale for 30 years. One of our competitive advantages lies in providing unparalleled data quality, which serves as the foundation for successful AI implementations. Moreover, our success is bolstered by the entrepreneurial and collaborative culture that we've cultivated over the decades, engaging with large corporations across diverse industries. This empowering culture has enabled us to compete with other businesses at a remarkably high success rate, driving our continued growth in our achievements. We saw our business pick up momentum through the year as we began to seize the generative AI opportunity and we met or exceeded expectations on all fronts, revenue growth, adjusted EBITDA growth, and key customer acquisition. In Q4, same thing. We beat both top and bottom line guidance, and we into three-year, 23 million per year deal with a key big tech customer for the program we kicked off mid last year, attesting it clearly to how highly they valued our collaboration. We're off to an exciting start to 2024. As you know now, we're now engaged with five of the MAG7 for generative AI development, and we're seeing the benefits of this engagement in our results. In 2024, we will be working to drive expansion in all these accounts and to land others. We're guiding to a 20% growth in 2024, but our ambition is to exceed that. My team and I are energized by what we've accomplished in 2023, and we're excited about what we will accomplish in 2024. So thank you all for joining the call today. We look forward to our next call. This concludes today's conference,

and you may disconnect your lines at this time. Thank you for your participation.