Oblong Inc.

Good day, and welcome to the Oblong, Inc. First Quarter 2021 Earnings Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brett Moss, Hayden Investor Relations. Please go ahead, sir.

Thank you, Operator. I would like to welcome everybody to the call. Hosting the call today are Oblong's Chairman and CEO, Peter Holst, and CFO, David Clark. Please be aware that some of the comments made during our call may contain forward-looking statements within the meaning of federal securities laws. Statements about our beliefs and expectations containing words such as may, could, would, will, should, believe, expect, anticipate, and similar expressions constitute forward-looking statements. These statements involve risks and uncertainties regarding our operations and our future results that could cause actual results to differ materially from management's current expectations. In addition, today's call includes non-GAAP financial measures. A reconciliation of such measures to GAAP measures is contained in the press release issued today. We encourage you to review the safe harbor statement. and risk factors containing the company's earnings release and filings with the SEC, including, without limitation, our most recent annual report on Form 10-K and other periodic reports that identify specific risk factors and may also cause actual results or events to differ materially from those described in the following statement. Copies of the company's most recent reports on Form 10-K and 10-Q may be obtained on the company's website, oblong.com, or the SEC website, sec.gov. The company does not undertake... publicly update or revise any forward-looking statements after the call or date of this call. I would also like to remind everyone that this call will be available for replay through May 27th. A link to the website replay of the call is also provided in the earnings release and available on the company's website, oblong.com. I will now turn the call over to CEO of Oblong, Peter Hulse. Pete, the floor is yours.

Thanks, Brett. Good afternoon. Thank you, everyone, for joining us today. We achieved a number of notable accomplishments during and subsequent to the first quarter and are increasingly optimistic about the long-term positioning and market opportunity for our solutions. As I'm sure you're aware, more and more companies are announcing plans for reopening their offices and returning employees to the workplace. There are strong indications we are gaining the upper hand on the pandemic with the rate of infection decelerating and more and more people being vaccinated every day. There are countless reasons to be hopeful. More and more large-scale enterprises are preparing for a return to work that includes reconfiguring workspaces with innovative technology solutions that can bring people together in the most engaging manner possible. While we believe the market will be fundamentally open in 2022, the pace and timing of office reopenings will vary significantly from region to region. Leaders are now reimagining how their businesses need to operate and how they can reinvigorate employees and recapture direct engagement that was lost with the abrupt dislocation of employees to remote work environments. We continue to see a strong pull for more advanced tools and intelligent technologies to improve productivity and the work experience. Across the spectrum, this includes new and innovative ways to collaborate across a distributed workforce including the engagement employees that may remain remote indefinitely. Most telling of this demand is the size and quality of our pipeline. Today, our pipeline is approximately $25 million in total deal value, more than double where it was a year ago, with a median deal size of approximately $40,000, also about twice the size of where we were last year. In particular, and as we prepare for a shift to annual recurring revenue pricing models, We believe many of our current and prospective customers have user bases and real estate footprints that have addressable revenue well over $100,000 in annual recurring revenue. Based on substantial feedback in recent months from our customers, we believe many of them will welcome a shift to how they consume and purchase our services. By and large, most decision makers we speak with are optimistic about the future. although many remain cautious about technology investments as they await the actual return to office environments to better gauge employee traffic and how conference room resources will be utilized. As a result, our sales cycles have elongated, and we will remain in lockstep with IT leaders and facilities planners across our target market as their process continues to evolve. Messaging from customers and distributors in our core market and through our primary channel partner, Cisco, indicates that as the return to office accelerates, so will sales velocity. As we discussed during our last call, one indicator we use to gauge demand is the number of demonstrations we are conducting. We continue to see both initial and follow-on growth in demonstration inquiries for both our in-room and our early-stage cloud services. During the first quarter, we shipped approximately 2 million of mezzanine products to our distribution and system integration partners, including an order of nearly 1.6 million. It is important to note that we did not recognize the $1.6 million order as revenue or in our financials in the first quarter as there were implementation delays beyond our control, primarily due to coronavirus, that were not anticipated when the orders were placed. This particular order included more than 150 systems to a distributor for a potential deployment in a national healthcare system over the next 12 to 18 months. Importantly, we believe this is just the first of several tranches that could culminate in systems being deployed across that entire footprint in nearly 400 rooms. In the event the customer accepts these orders and we meet revenue recognition criteria in accordance with GAAP, we would expect to recognize revenue related to this customer deployment in future periods. While the macro environment remains fluid, there are some clear examples of how even when businesses are in the process of reopening, it can sometimes be two steps forward and one step back. But directionally, our momentum is both very positive and forward. Subsequent to the end of the quarter and as planned, we released an MVP version of our cloud offering to a select group of existing and prospective customers. We are now in the process of collecting key data and feedback that we will coalesce and circle back to our development professionals. We are keeping this initial pilot effort concentrated around specific users and verticals and will continue iterating based on feedback. Investment in solutions that can be consumed as a service remain a priority as the shift to a cloud-first world continues and demand for more advanced and engaging cloud-based cloud-based technologies continues to grow. We estimate that the addressable market for our solutions could be millions of users with immense growth potential. More importantly, sales of cloud-based solutions will provide a recurring base of revenue at higher margins that does not have to be resold quarter to quarter as is the case with our current product mix. As we discussed last quarter, we pre-sold our first annual recurring revenue cloud deal. based solely on an early prototype of our service, generating 75,000 in annual recurring revenue in 2021, and believe many of our existing and future customers will migrate to this style of consumption. Over the course of 2021, we expect to expand our investments in both engineering and sales distribution as we look to shift our product mix from one time to recurring. We have made several key hires in the last five months on the product design and development team, to help us accelerate development of our cloud offering. We've also recently added more resources and sales to promote and expand awareness of our product offerings through new channels. I will now turn the call over to David to review the financial results.