Bridgeline Digital, Inc. (BLIN) Q3 2013 Earnings Report, Transcript and Summary

Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Bridgeline Digital Third Quarter 2013 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference may be recorded. It's now my pleasure to turn the floor over to Chief Financial Officer, Michael Prinn. Sir, the floor is yours.

Thank you, and good afternoon, everyone. I'm pleased to welcome you to our third quarter conference call. Before we begin, I'd like to remind listeners that during this conference call, comments that we make regarding Bridgeline Digital that are not historical facts are forward-looking statements and are subject to risks and uncertainties that could cause such statements to differ materially from actual future events or results. These statements are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. The internal projections and beliefs upon which we base our expectations today may change over time, and we undertake no obligation to inform you if they do. Results that we report today should not be considered as an indication of future performance. Changes in economic, business, competitive, technological, regulatory and other factors could cause Bridgeline's actual results to differ materially from those expressed or implied by the projections or forward-looking statements made today. For more detailed information about these factors and other risks that may impact our business, please review the reports and documents filed from time to time by Bridgeline Digital with the Securities and Exchange Commission. Also, please note that on the call today, we will discuss some non-GAAP financial measures in talking about the company's financial performance. We report our GAAP results as well as provide a reconciliation of these non-GAAP measures to GAAP financial measures in our earnings release. You can obtain a copy of our earnings release by visiting our website. At this time, I'd like to turn the call over to Bridgeline Digital's President and CEO, Thomas Massie.

Thank you, Mike. During the third quarter, Bridgeline continued to execute against its long-term strategic plan, to strengthen and grow its iAPPS business model. Today, I'm going to put into perspective our third quarter results and how it relates to our overall business thesis. Although we experienced volatility in our third quarter revenue, our business fundamentals remain steadfast. The revenue shortfall in Q3 was caused by a few specific events, which I will detail momentarily, but the longer-term opportunities Bridgeline and iAPPS represent have not wavered one bit. Our backlog is strong, exceeding $14 million and our qualified pipeline of iAPPS opportunities has soared to over $40 million. This is up from $22 million just 1 year ago. We continue to win 70% of the proposals we submit, and recently, customers such as Teradyne, Qualcomm, WebMD, LeSportsac and MainGate have selected iAPPS for their mission-critical websites or web stores. A year ago, our historical average of an iAPPS enterprise engagement was about $120,000. In the last few quarters, it has been consistently over $300,000. Over the long term, this is exciting for Bridgeline as our customer base continues to improve from both a quality and engagement value perspective. Mike will be discussing Q3 financial details and results in much greater detail. But in summary, Q3 revenues were only $5.6 million. The major elements of the revenue shortfall were related specifically to a 44% decline of legacy non-iAPPS related revenue and some of our larger iAPPS engagements experienced unwanted delays on the customer side. Taking a closer look at Q3, you will see increases in both recurring revenue and licensing revenue. Recurring revenue increased 10% and licensing revenue increased an impressive 33%. Our iAPPS revenue grew 4% when compared to Q3 last year, and iAPPS-related revenue of -- in the quarter was 78% of our total quarterly revenue compared to 66% in the quarter of last year. Our continued progress of growing our iAPPS-related business is what's going to drive enhanced shareholder value. In order for Bridgeline to generate positive EBITDA, our revenue needs to be approximately $6.5 million. And in Q4 2013, which is our current quarter, we anticipate to minimally meet that revenue level. However, we felt it was prudent to examine our operating expenses, and in June we took steps to reduce our quarterly operating expenses by $250,000 a quarter or $1 million annualized while increasing our national sales force by 40%. Bridgeline's national sales force now has 22 professionals touting iAPPS daily, increasing our qualified pipeline, increasing the number of proposals issued and increasing iAPPS bookings. In turn, we believe this will drive strong organic revenue growth for 2014 and beyond. Now, I'd like to update you on our eCommerce partnership with UPS Logistics. As most of you know, we do have a partnership in place with UPS Logistics, to sell our integrated, all inclusive B2C and B2B eCommerce solution for mid-market and large market organizations. UPS Logistics selected iAPPS as its partner of choice, providing enormous validation to the iAPPS Commerce value proposition. We launched our marketing efforts and began building our qualified pipeline in June of 2012. This is a little bit more than 1 year ago. Our traditional sales cycle for eCommerce opportunities with UPS is approximately 12 months. To date, we have closed and are launching multiple iAPPS-driven B2C and B2B commerce sites with UPS Logistics. These are companies like GE Healthcare, Triumph Motorcycles, Carbon Audio. In Q3, our partnership with UPS helped Bridgeline secure eCommerce engagements with companies like Qualcomm, WebMD and Lighting Science. Our multimillion-dollar qualified pipeline continued to grow and we look forward to sharing more wins with you in the coming quarters. Let's discuss our new and exciting product, iAPPS ds, or distributed subscription. iAPPS ds has been specifically developed for franchises in large unit [ph] networks who need to provide superior website engagement tools to their numerous franchises or dealers while maintaining content and brand control. iAPPS ds enables corporate franchises to provide a centralized digital marketing structure for their franchises and dealers and it's a Cloud-based, multi-tenant SaaS solution that is highly scalable. We believe that there's not another web platform solution in the franchise marketplace that can truly compete with the quality, value proposition and scale of iAPPS ds. From a financial perspective, iAPPS ds has the potential to significantly increase Bridgeline's recurring revenue and profitability. This subscription-based model would require each franchise owner or dealer to pay a monthly subscription fee of anywhere between $40 and $100 per month, depending on the total volume of franchise organizations. For this, each franchise would receive a self-service pre-templated website that includes iAPPS Content Manager, Analytics and Marketier. iAPPS Commerce is available for an additional incremental monthly fee. We've previously disclosed the UPS Store was an iAPPS ds customer with 4,300 franchise locations. And at the end of June, we have sold and deployed 2,160 iAPPS ds licenses to UPS stores. They're running on the premium website platform. We do expect to add more UPS stores over the next 12 months. The UPS Store team is ecstatic with the iAPPS ds platform. This is a major upgrade for them in terms of functionality, ease of use, quality and scale. Bridgeline's qualified pipeline of opportunities for iAPPS ds has rapidly grown to $20 million. We estimate our sales cycles for this sector to be 12 months, however, in the third quarter, we signed an agreement with a dealer network, who's a leader in outsourced sales. The network has a total of 400 locations. We expect 200 locations will transition onto the iAPPS ds platform at launch, and then the remaining 200 will transition onto iAPPS ds over the 12 months following the launch date. We expect this iAPPS ds customer will go live this fall. We look forward to sharing more iAPPS ds wins with you in the coming quarters. To accelerate Bridgeline's time-to-market in the franchise marketplace and strengthen Bridgeline's credibility and acceptance in the franchise marketplace, we acquired a company named Elements Local on August 1. ElementsLocal has developed an online marketing SaaS platform for the franchise marketplace that incorporates brand reputation, web content management, social media, eMarketing and web analytics. ElementsLocal is a respected web platform brand in the franchise market that has 35 franchisor customers and over 3,200 franchisees on their platform. Over the past 4 years, ElementsLocal has experienced a 95% retention rate. Most of ElementsLocal's customers are national franchise brands such as Sports Clips, Maaco, Glass Doctor, Pearle Vision Center, Molly Maid and Mr. Handyman. In 2013, ElementsLocal is on track of having a record revenue year of approximately $2 million, of which the majority of this revenue is recurring. The ElementsLocal platform has been renamed to iAPPS EL, and throughout 2014, Bridgeline will be migrating the ElementsLocal customers onto iAPPS ds. ElementsLocal founder and Chief Executive Officer, Jeremy LaDuque, has joined Bridgeline as its Senior Vice President of Franchise and Large Dealer Networks. Jeremy is a certified franchise expert and he's a very active member of the International Franchise Association. He's a great addition to the Bridgeline team. Our iAPPS-related business is healthy, vibrant and growing. It is Bridgeline's future and it's what's going to maximize our shareholder value. Our legacy business has declined much faster than anticipated and our deferred revenues have increased significantly. Clearly, we are a few quarters off of our overall top line goals. However, Bridgeline's management team is laser-focused at executing initiatives that's going to drive our business over the $7 million per quarter revenue level and we believe that we're going to be there in Q1 of 2014, which is our December quarter. At the $7 million per quarter level, we will begin to see positive leverage to our margins. Lastly, in May, we were very excited to release iAPPS 5.0. This release is the most comprehensive release we have made to iAPPS since the initial product launch. iAPPS 5.0 boasts a new cross-channel interface, cutting-edge mobile-friendly editing and on-the-go authoring, technology integration from industry leading partners and an overall enhanced user experience. In addition, in the anticipation to our iAPPS growth, since April, Bridgeline has made over $1 million of investment into the network infrastructure environment that houses the iAPPS-driven websites and web stores. At this time, I'd like to turn the call over to Mike Prinn, our Chief Financial Officer, who will provide you with more details on our Q3 financial results. Michael?

Thank you, Thomas, and good afternoon, everyone. I'd like to review the results of operations for the third quarter ended June 30, 2013. Third quarter revenue was $5.6 million compared to $6.4 million in Q3 of last year. The decrease in overall revenue is primarily a result of a 44% decrease in our non-iAPPS legacy revenue. Our non-iAPPS revenue decreased approximately $1 million year-over-year. We remain committed to transitioning our model and growing our iAPPS business and it's important to note that in our third quarter, 78% of our total revenue was iAPPS-related compared to 66% in the year ago quarter. Our subscription and perpetual license revenue increased 33% compared to the third quarter of last year. Our recurring revenue, which consists of SaaS licenses, annual maintenance on perpetual licenses and hosting, increased 10% in the third quarter of 2013 to $1.2 million as we continue to see an increased demand for our iAPPS product suite and the benefit of our first iAPPS ds customer. We expect to see a more significant increase in our recurring revenue number in future quarters as we integrate our second iAPPS ds customer, as well as the incremental revenue from our recent acquisition of ElementsLocal. I'd also like to highlight that our deferred revenue on the balance sheet grew 123% year-over-year to just under $2.6 million, representing a significant increase and it's indicative of our growth in iAPPS-recurring revenue and specifically, iAPPS ds. The vast majority of this deferred revenue is high-margin that will be recognized over the next 12 months. Our iAPPS-related revenue increased 4% to $4.4 million in the third quarter of 2013, compared to $4.2 million in the third quarter of 2012. This 4% is lower than the last couple of quarters and is primarily a result of a couple of our larger engagements experienced some delays on the customer side. We fully expect that in the fourth quarter, our increase in iAPPS revenue will be over 20% and as we enter fiscal '14, we expect that both our overall revenue and our iAPPS revenue will continue to show double-digit increases throughout the year. Finally, for a license update, we're pleased to report we sold 174 new enterprise iAPPS licenses through the first 9 months and approximately 2,160 iAPPS ds licenses. Our gross profit for the second quarter was 51% compared to 56% in the year-ago quarter. The year-over-year decrease can be attributed to overall lower revenue in the quarter. We believe this is a minor setback and that the gross margin improvements we saw in 2012 will return in future quarters once our revenue increases and billable resources utilization improves. In addition, as iAPPS ds revenue recognition increases our gross profit, margin will be positively impacted and that [ph] Revenues, all license revenue and [ph] at a much higher margin than our service revenue. Adjusted EBITDA in Q3 was a loss of $899,000 compared to $429,000 in Q3 of last year. Our non-GAAP adjusted net loss was $1.4 million or a loss of $0.09 per diluted share compared to net income of $8,000 or $0.00 per diluted share in the third quarter of last year. Our GAAP net loss was $1.6 million in the third quarter compared to a loss of $276,000 in Q3 of last year. I wanted to take a minute to point out some changes that we made that Thomas highlighted as well to our business to address our financial performance in the third quarter. We implemented both cost savings initiatives, as well as a headcount rebalancing to better align with our focus on driving a higher top line and more aggressive growth in our iAPPS business. These changes enable us to reduce certain non-billable operating expenses, which then enabled us to increase our national sales team by approximately 40% while still reducing our overall operating expenses by approximately $250,000 per quarter or $1 million annually. We believe that we now have the appropriate sized team that at full capacity can drive $9 million per quarter in bookings. We're committed to executing this plan, but need to remain fiscally responsible as we grow so we made the appropriate changes and adjustments. Turning quickly to the balance sheet. At June 30, the company had total assets of $34 million, with cash of $1.7 million and receivables of $3.4 million. Q3, our DSO was 55 days. This is 2 weeks better than industry average and is a testament to the health of our blue-chip customer base. Company had approximately $3.9 million outstanding under our credit line at June 30. Our fiscal 2013 outlook. So turning to our guidance, in the fourth quarter of fiscal 2013, revenue is expected to be approximately $6.5 million and the company expects to generate positive EBITDA. Total revenue in fiscal 2013 is expected to be approximately $24.5 million and we expect fiscal 2013 iAPPS-related revenue to be approximately $19 million, and this is up from $16.5 million in fiscal 2012. This revenue projection also includes a projected reduction of non-iAPPS related legacy revenue of approximately $4.5 million. At this time, we'd like to open up the call to Q&A.

[Operator Instructions] Our first question will come from Howard Halpern with Taglich Brothers.

First question regarding the cost savings and the realignment. Does that include the 15 employees that were picked up in the acquisition?

No, it does not.

Okay. And what kind of bump up from those 15 employees do you expect? Would it be an offset to that 250 number per quarter?

Approximately.

Yes, Howard. It's -- it will offset it, but it's a little less than 250 per quarter.

Okay, okay. And you talked about, in the opening remarks, how many enterprise customers have sort of, I guess, placed you on -- you're ready to go, but they're on hold. Do you have a number on how many there are that you're ready to go, but they're not quite ready to go?

We have about a half a dozen of them.

Okay, okay. So that would be significant revenue once they give you the green light to go.

Howard, it's a combination of -- like you said, waiting to go, so we signed the engagement. Out of those 6, there's probably a couple of those that they have delays on their side [indiscernible] will sort of stop midstream.

Okay, okay. Yes, that's what I sort of meant that they are the ones that are -- but also in terms of the UPS relationship, how many customers have been brought in, and how many do you think have been brought in to the pipeline based on your UPS relationship?

We have -- we've already -- we've announced 6 engagements since we've announced our relationship. So in the last year we've announced 6 engagements that have been closed because of the partnership with UPS. And the pipeline, as I said earlier, it's multimillion, but we're not going to give much more specifics around that. We anticipate to continue to close and launch multiple engagements per quarter, per year with the relationship that we have with UPS.

Okay. And in terms of, I guess, the -- the ds, I guess I have a couple of questions there. It seems like the -- just based on the number, that 2,160 number is primarily the UPS Stores, correct?

Correct.

And any sort of guidance on when you might be able to deploy, in other words [ph], at least another 1,000 or 2,000 of that potential?

Well, the other customer that we just -- that we closed in Q3, they have 400 locations. So those will be deployed over the next 12 months and that's a multi-year agreement. And our pipeline is large, it's grown from a couple million dollars to $20 million in the last 9 months. And we have partnerships in there that range anywheres from -- the potential opportunities that range anywheres from somebody with 200 or 300 locations to as many as 10,000 locations. So I think that we're very confident that there'll be another few thousand locations -- another few thousand licenses added over the next 12 months. And I also believe that once we migrate beyond the ElementsLocal customers as well, which is our goal to have that completed by the end of 2014, by December 2014, that'll add another 3,200 of customers to our platform.

Okay. And I was going to ask if, I mean, I don't know whether you have this number available. But as you talk about that it will be -- they'll be migrated as contracts expire. Is there a quarter in which a large majority of their customers expire? Or is it just sort of pretty even through the different quarters?

Unlike Bridgeline's approach where we sign multi-year agreements with our customers, most of -- the vast majority of ElementsLocal customers were on month-to-month agreements with no long-term contractual commitments. However, they're wedded to the platform, that's why the retention has been 95% over the last 4 years because that's our -- the model is a very sticky model. So we're in a really good position to approach the customer base, show them the value proposition. iAPPS ds is a far superior product and a far superior platform, and the customers we've already -- some of the bigger ones that we've already shared with the customers are very excited about what ds can do for their business.

[Operator Instructions] Our next question will come from Mark Stafford with [indiscernible] Investment.

I'm looking at your cash as of June 30, and then you subtract what you paid for the acquisition in this quarter, so are you sitting at just a little over $1 million or under $1 million in cash?

Well, we don't report interim...

No, I know that. But I'm just saying is that you did make this acquisition and I'm looking at...

Mark, the acquisition only used 400K cash, right?

Right. But -- and I'm saying that minus where you're at with operating expenses and stuff. I just don't want to see you have to raise cash again this quarter because last quarter or last conference call, you said you really would need to go out and raise, do a dilution and you did. And I'm just -- I don't want to see this happening quarter after quarter.

The $2 million placement that was completed last quarter, the capital that -- a lot of that -- the capital that we raised provided the operating capital that we needed because of the loss in the quarter, as well as the $1 million of CapEx investments that we've made into the knock [ph]. So that cash that you're looking at, the cash burn has already been -- it was covered by the $2 million that was already raised.

[Operator Instructions] Our next question in queue comes from Jason Revland with Blueprint Capital.

I have a question about the ds pipeline, you said it was about $20 million. That's a pretty substantial uptick in recent quarters and you alluded to some elephants in there as well. Is it safe to say that more than half of that pipeline relates to one big elephant or maybe 2 big elephants? Or is it pretty diverse? I'm trying to get a sense of the diversity of the ds pipeline.

Three [ph] make up 6. Right?

Yes, I would say probably 3 opportunities make up maybe 1/3 and the remainder is -- it's diversified. Like Tom said, anywhere from a 100 couple units to a couple thousand.

That's great. And as far as time it would take to figure out whether those are a green light or no, is that a 3-month, 6-month sort of outlook?

Well, it's a 12-month selling cycle, but we've been at it with ds since October. And as we built the pipeline as well since October. So some of those are approaching that 12-month point, right? So like we just closed the large -- the 400 units for the sales assistant organization now -- that beat our 12-month selling cycle. But we do have some that we believe are about to close that -- anywhere from -- to some that have 200, 300 units and there's also some that have -- there's one that has as many as 4,000 units, that is very close in our opinion. And I think while we're talking about the model, too, on ds, I think it's important that -- we believe once we get ElementsLocal customers migrated, the average price that ElementsLocal was charging is far lower than -- is lower than what Bridgeline charges. So we believe that we will see an increase in revenue and margin just by migrating those customers onto our platform.

Didn't you just quote, Tom, how many they were there? I might have missed that, the ElementsLocal?

Yes. They have 3,200 franchises on their platform.

They have 3,200?

3,200, yes.

Okay. So the goal is to become...

So within 1 year from now or even within 6 months from now, between the, say you have -- I'll say, 2,500 to 2,600 UPS Stores are already on the platform. And by the end of 2014, we have all 3,000 ElementsLocal customers on the platform, that takes us up closer to -- maybe closer to 6,000 full units plus new business that we're closing. We realistically could be looking at over 10,000 units on the platform by December 2014.

10,000 ds licenses, active?

10,000 ds licenses. That's correct.

That's the key growth driver in our opinion, so I will look forward to that.

Well, you're absolutely correct. To Mike's point -- to Michael's point, for every iAPPS ds dollar of revenue, it generates about 40% operating income, so it does have tremendous leverage.

[Operator Instructions] Our next questioner in queue comes from George Melas with MKH Management.

I have a question on the recurring revenue. It is up year-over-year, but it's down sequentially. Can you sort of parse it into its different components and tell us sort of what went up and what went down?

Yes. I think, I mean, at a very high level, the iAPPS business is up. I think some of the decrease is in -- we talked about our non-iAPPS legacy customers, we've been shedding some low-dollar, high-volume hosting customers, and that pretty much accounts for the sequential decrease.

Okay. So if we look at the numbers, if we look at the recurring revenue, the hosting revenue, which was 400 -- roughly $400,000 this quarter, that's included in the recurring revenue?

Correct.

Okay. But it is a declining element of the business?

Correct. But it's non-iAPPS so I think it's the...

So non-iAPPS?

Yes. And, I mean, similar message to what we say about just the iAPPS, non-iAPPS in general, that we'll probably have just a little bit more of the hosting stuff that we may shed over the next couple of quarters but you'll see that hosting line grow as we continue to sell iAPPS engagements with a hosting component.

Okay, great. And then, I understand there were some delays on the iAPPS sort of the enterprise licenses, but the number of licenses that closed this quarter seems exceptionally low. Is there some explanation beyond sort of just a few delays?

Timing. Our pipeline, as I mentioned, that's why I highlighted the pipeline that it's growing exponentially, but it was timing. You'll see our fourth quarter -- you will see the numbers will be higher because of the timing of when they closed at quarter end.

And have you already closed some of that business or is that business to be closed between now and September?

No, we have closed it. We have closed a lot at that business.

Okay. And then just one final question for me. So you've significantly increased your national sales force. Can you tell us a little bit more about it? I mean, you increased it 40%, I imagine that's year-over-year, to 22 people. Are they assigned to different verticals? How does it work? How does it operate?

Well, we have 2 areas -- we have 3 areas of sales that we focus on. One is the iAPPS enterprise business, and that's the sale force that's focusing on selling iAPPS in commission-critical websites and web stores. Those are the larger $200,000, $300,000, $400,000 engagements that have iAPPS in the middle of these websites or these web stores. And then, we have the iAPPS ds team, which is focused exclusively on franchises and large dealer networks, and then we have the Channel Partner team, which focuses on building our Channel Partner Program which sells -- which has web development companies and eCommerce development companies developing websites for their customers but using iAPPS. So reselling iAPPS and then we give them a 30% margin discount because they're integrating iAPPS into their customer solutions. So, 3 different categories: enterprise sales team, iAPPS ds sales team and the Channel Partner team.

Okay. And then the growth in the sales force has been primarily in what -- which one of those 3 categories?

We made additional investments in all 3 categories in June. We added several people, so we had like 4 people in ds, we have 3 people in channel and then the balance is in enterprise.

The 4 and the 3, those are not additions. That's the people that you have? So you have 4 in ds, 3 in channel, so you have 15 in enterprise?

15 in enterprise, that's correct. And now that's before the ElementsLocal acquisition, we just added 3 more to ds, with the ElementsLocal acquisition. So we have now a total of 7 in ds.

Okay. And now on the ElementsLocal -- sorry, one more question. Are there some technical features of their solution that you keep? Or is it a wholesale migration to ds and then you just shut down their platform?

The latter.

Okay. So it's a really customer acquisition. You didn't acquire new technology, you just acquired customers and an organization?

That's correct. We acquired some super-smart people that really know this landscape and franchise space and we acquired 35 great customers and 3,200 franchises.

And did you say how much you paid for it?

We paid $2.5 million for the company, of which $1.3 million of that is paid in an earn-out over a 12-quarter period based on financial goals [indiscernible]

Okay. And the other $1.2 million is -- how is that distributed?

Well, approximately $400,000 in cash, $200,000 in debt assumption and the balance of $600,000 in Bridgeline stock issued to the three principals, but it's 144 stock and it's locked up to 1 year.

[Operator Instructions] Next questioner in queue is from the line of Peter Abramson [ph] who is a private investor.

Guys, I was wondering if I could get an update on what the breakeven kind of revenue run rate is? I think it used to be $7 million to $7.5 million a quarter is where would be kind of cash flow breakeven.

Yes, Peter, I think we've said between $7.5 million and $8 million. I think we said $7.5 million, maybe from like an operating income perspective and GAAP profitability, probably the midpoint between $7.5 million and $8 million.

Okay. That's still the range we're kind of targeting?

Yes, that continues to remain the same. Maybe as we get to that $7.5 million and $8 million mark, the more license revenue that's in there, obviously, the more gross profit and we could get there a little quicker.

Okay. And then in terms of the legacy revenue, do you expect that to stabilize or do you think that it will completely burn off in the next year or 2?

No, it's going to burn off. Our bookings for legacy business was down. I want to say quarter-over-quarter it was down almost 80%. Right? Yes, so I think like Q3 of last year, we booked almost $2 million of non-iAPPS business. In Q3 of this year, that we just ended Q3, we only booked $500,000.

Okay, so it will be done within the next year?

[indiscernible]

And then the key transition is to the iAPPS, obviously?

Well, we're excited, Peter. 2014 is -- we're going to be -- we're excited, we'll be at a position where we'll be almost all iAPPS business, and we won't have the legacy overhang and we should be reporting revenue growth -- top line revenue growth year-over-year on all iAPPS. We won't have this issue anymore of trying to manage -- expecting like $2.5 million of legacy fall off and end up being $4.5 million.

Yes. No, I hear you. Did you have any estimate on when you think you will get to kind of that $7.5 million, $8 million revenue? Is that Q4 or Q1, Q2 next year?

We're going to give guidance at the end of Q4, which is our September to September, when we announce the September year-end. But on today's call I said we're excited that we'll be north of $7 million in Q1, which is our December quarter. Kind of gives you a feel of the trajectory.

[Operator Instructions] Presenters, I'm showing no additional phone line questions at this time. I'd like to turn the program over to Chief Executive Officer, Thomas Massie.

Thank you, everybody. We really appreciate the support and the patience of all of our valued shareholders. It is our goal that we're going to continue building a scalable business model, which in turn will build shareholder value. Thank you for joining us today.

Thank you, presenters, and thank you, participants. This does conclude today's call. You may now all disconnect, and have a wonderful day.