Altigen Communs Inc

Good afternoon, ladies and gentlemen, and welcome to Altogen Communications' first quarter fiscal year 2022 results. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Carolyn David. Ma'am, the floor is yours.

Thank you, Operator. Hello, everyone, and welcome to Altogen Communications' earnings call for the first quarter fiscal 2022. Joining me on the call today is Jerry Fleming, President and Chief Executive Officer, and I'm Carolyn David, Vice President of Finance. Earlier this afternoon, we issued an earnings release reporting financial results for the period ended December 31, 2021. This release can be found on our IR website at www.altogen.com. Please note that we have added some supplementary tables with new revenue breakouts and matrix. We believe this will help improve transparency into our business, and we will continue to evaluate additional matrix as our new products begin to contribute to our results. We have also arranged a tape replay of this call, which may be accessed by phone. This replay will be available approximately one hour after the call's completion and remain in effect for 90 days. This call can also be accessed from the Investor Relations section of our website. As a reminder, today's call may contain forward-looking information regarding future events and future financial performance of the company. We wish to caution you that such statements are just predictions and actual results may differ materially due to certain risks and uncertainties that pertain to our business. We refer you to the financial disclosures filed periodically by the company with the OTCQB over-the-counter market, specifically the company's audited annual report for the fiscal year ended September 30th, 2021, as well as the safe harbor statement released in today's press release the company issued. These documents contain important risk factors that could cause actual results to differ materially from those contained in the company's projections or forward-looking statements. Othogen assumes no obligation to revise any forward-looking information contained in today's call. During this call, we will also be referring to certain non-GAAP financial measures. These non-GAAP measures are not superior to or a replacement for the comparable GAAP measures, but we believe these measures help investors gain a more complete understanding of results. A reconciliation of GAAP to non-GAAP measures and additional disclosures regarding these measures are included in today's press release. Now, it's my pleasure to turn the call over to Jerry Fleming, President and CEO of Altogen. for opening remarks. Jerry?

Thank you, Carolyn, and hello, everyone. Thanks for joining us for today's call on this beautiful day on Wall Street. So I'm going to begin my commentary by providing a brief summary of the numbers as they relate to our key performance indicators. Carolyn will then come back on and review the financials in detail following my commentary. For our first quarter fiscal 2022 results, we reported revenue of 2.73 million compared to 2.66 million for the same period a year ago. We were just over breakeven in the first quarter of fiscal 22 versus a 56K net income number in the same period a year ago. Our total cloud services revenue for the first fiscal quarter was 1.91 million compared to 1.84 million in our fiscal 2021 first quarter. Okay, so on the surface, most people might conclude that Altogen is treading water. That's probably a reasonable conclusion, strictly based on our recent quarterly revenue performance. However, taking into consideration our overall business strategy and the progress we've made toward delivering on that strategy, treading water is most definitely not the case. So let me go ahead and provide some color on that topic. Clearly, as our existing investors are aware, revenues have flattened out over the past several quarters. But that does not translate to standing still. The simple fact is that we did not release our new products in the timeframes we anticipated. And as we discussed in the last call, we were simply too optimistic in our release dates, given the vast number of new products we've been developing. That issue is largely behind us now. In the coming weeks, we will be announcing a series of new products that we expect will put us on a growth trajectory. The first of these will be Core Interact, which is an operator council application for Microsoft Teams, which is used by company operators, receptionists, and departmental assistants to quickly answer and transfer calls to the appropriate individual or department. Teams doesn't have any such capability. Core Attendant provides Altagym with two distinct and important advantages in the market. First, Core Attendant is the only operator council in the market able to transfer calls to departments such as sales, service, support, etc., because we use Core Interact under the hood. All other products due to limitations and teams can only transfer to individuals, not departments. Second, Core Attendant is being offered on a freemium model, which will be limited to one free version per company. The reason we're doing this is that the single biggest sales challenge we have is identifying which companies are using Teams phone system. A lot of companies use Teams, but there are no published lists of those using Teams phone system. The free version of Core Attendant, which will be downloadable from the Teams app store, will give us access to many more companies which use Teams phone system simply because those users and those people downloading the application only need the Teams Operator Council if they have Teams Phone System. So, interestingly, this will provide us a very nice beachhead into those accounts in order for us to drive more sales, not only of Core Attendant, but also for our full suite of Teams applications. Following the release of Core Attendant, we'll also very soon be releasing our new service delivery platform, which is a web portal for ordering, billing, and managing all of Altogen's applications. teams and non-teams. Our new MaxCloud UC, which is a scalable geo-redundant UCaaS platform, which replaces our legacy MaxCS PBS platform. Core Engage, which is a truly exciting end-user desktop productivity application built on Core Interact. And finally, our new Workgroup Insights, which is a real-time reporting application also built on Core Interact, which displays key workgroup and individual KPIs for departmental managers and supervisors. So the release of these phase one products, as we discussed in our last call, will officially mark the launch of what I'm calling the new Altogen. And what I mean by that is that we initially transformed Altogen from a provider of hardware-based phone systems to software-based solutions. That strategy allowed Altogen to become a hosted PBX provider and, as a result, helped us drive new monthly recurring revenues and record, along with that record, profitability. This evolutionary strategy served us well during that phase of the company's lifecycle. For the past 18 months or so, given the evolving market requirements, we've been in the process of a revolutionary transformation of the company. We're replacing our hosted PBX MaxCS solution with our next-generation geo-redundant MaxCloud UCaaS platform. We're replacing our voice-only call center product with a complete scalable omni-channel contact center solution which integrates with both MaxCloud and Microsoft Teams. And we've also introduced and are continuing to enhance the first digital customer engagement platform for Microsoft Teams, which is CornerAct. Collectively, our suite of phase one solutions represent an unprecedented number of new products, introductions for Altogen. All told, we've invested nearly 5,000 man days in the development of our new products, all of which are now on the cusp of release. I also want to point out that these solutions are being developed in support of our objective to deliver a complete suite of best-in-class integrated communication solutions leveraging Microsoft technologies. These solutions will enable Altogen to uniquely address the three major communication market opportunities, which are UCaaS, CCaaS, and customer experience as a service. So I'll break that down a little bit. For the SMB market, which includes Altogen's legacy customer base, the primary solution they're interested in is UCaaS, Unified Communications as a Service, which gives customers the ability to manage phone calls, SMSs, web chats, and conduct web conferences on either their desktop or mobile device. For the first time, we'll have that with our new MaxCloud platform. For mid-market and enterprise customers, which includes Fiserv's customer base, Integrated Contact Center, or CCAS, Contact Center as a Service, is also an important requirement. We'll have that with Front Stage. For the mid-market enterprise customers using Teams, we'll also soon be able to address their Contact Center as a Service requirements with Front Stage. In addition, since Teams is both a UCAS and collaboration platform, there's a new emerging high-growth opportunity for an integrated digital customer engagement solution. There's nothing available today. This is where Core Interact comes in, which allows companies to enable any employee to communicate with any customer using that customer's preferred communications channels. Anyone with a cell phone would know that means phone calls, SMS, web chats, emails, even video conferencing, all delivered in our customers' native Teams environment. We have that now with Core Interact. So collectively, our new solutions enable our customers to optimize their communications capabilities in order to maximize their customers' experiences, enabling us to uniquely address the overall communications market, specifically customer experience as a service. Now, as part of our company transformation, we have turned over more than a dozen people whose skill sets did not necessarily align with the new Altagen. On the other hand, we also added 19 new employees across all areas of the company. The net result is that 32% of our employees have joined the company in the past 16 months, all of whom are focused on the new Altagen, and this creates a lot of energy in the company. In addition, the personnel changes we've made up to this point, we are continuing to add to our development staff so that we can continue to innovate and answer phase one products and bring exciting new products to the market. Following up on commentary from Mark Allen on our last call, we are now engaged with a very well-respected Microsoft technology consulting firm by the name of Redapt. Mark Allen and myself are very impressed with Redapt's depth and breadth of knowledge. We're about halfway through our project with them, They've already provided us with invaluable insights and recommendations to improve our processes, delivery, and global architecture design. This will serve us well into the future. In addition, we have initiated a search for a director of development who will report to our CTO, Mark Allen, and who will be responsible for managing our development team on a day-to-day basis when Mark continues to dream up new and exciting solutions. Finally, while we've been revolutionizing the company for the past 18 months, adding new employees and developing a plethora of new products, we've done this in a fiscally responsible fashion. When I say fiscally responsible, I'm talking about cash management. Our cash position at the end of the first quarter in 2022 stood at $6.8 million, which is nearly $600,000 more than we had at the end of the same quarter a year ago. So when we look at the big picture, I think and I hope it's clear that we have not been treading water. Instead, what we have been doing is working hard to reinvent the company and positioning ourselves to take advantage of the tremendous market opportunities in front of us. And by the way, we've accomplished all this despite the setbacks, particularly in our SMB customer base caused by COVID. I'm going to change gears just a bit and discuss our business relationship with Fiserv. The first point that I want to make and I need to make is that we've had a long-time master distribution agreement in place with Fiserv, which many of you know. That agreement calls for Fiserv to license software from Altagen, which includes our IVR, or bank-by-phone application, historically our PBX, and our call center solutions, and then resell those solutions to Fiserv customers, and this is the critical piece, as Fiserv products. When Fiserv sells altigen solutions to their customers, it is sold by Fiserv and is viewed by the customer as a Fiserv product. By the way, the contractual relationship is also between Fiserv and the customer. So I'm talking about all this, bringing this up, because it's no surprise that Fiserv wants to control the narrative when announcing those customer wins. Now, to keep our shareholders informed, we've been pushing the envelope as much as we can, talking about Fiserv customer wins. But this does create some potential issues for us based on the confidentiality sections in our agreement. I just need to be very careful in how I'm communicating the Altogen wins via Fiserv. And the reason for my concern, and not that we can't talk about it, but the primary reason for my concern is that the strategic nature of Altogen's partnership with Fiserv is growing. And I don't want to create a trust issue with Fiserv by announcing their customer wins. That being said, to the extent we have Fiserv's permission, we can discuss specific customer wins. If we don't, we'll just need to more generally refer to wins under the umbrella of new financial services customers. Now, as I mentioned, our relationship with Fiserv is becoming increasingly more strategic. We're enhancing our IVR, our bank by phone application, by adding both caller validation and voice biometrics to verify the identity of callers as a fraud prevention mechanism for both banks and credit unions. I've mentioned this before, but the trust ID color validation has now been rolled out and is currently being used by a handful of Fiserv bank and credit union customers. The more exciting piece is the voice biometrics, which adds a voice print technology to color validation for maximum secure access. The first customer for the voice biometric solution will be deployed next month. Now, This happens to be, this customer happens to be the credit union arm of one of the largest, the world's largest consumer appliance companies. Very visible. And this is just the beginning. Today, Fiserv has 13 different core processing platforms. These are the platforms that run the business of the bank or credit union as a result of their historical acquisition strategy. Our solution will be integrated with all 13 platforms during the course of the year We're starting with the largest platforms and work our way down to the smallest. Now the full solution, in addition to what I just described, consists of Altogen's SIP trunk service, our IVR application, our UC or UCAS platform, and the contact center solution, all integrated with Vicer's bank and credit union core processing platforms. We're also very close to rolling out the new UC and contact center solutions which, as a reminder, will be hosted and managed by Fiserv and their data centers. As a result, we are very close to having the most complete end-to-end secure access communications solution on the market. And it's only available from Fiserv, and it's all based on Altogen solutions. So at this time, I'll hand the call back to Carolyn to review the financials in more detail. Carolyn?