XTI Aerospace, Inc. (XTIA) Q2 2015 Earnings Report, Transcript and Summary

Good afternoon and welcome to the Sysorex Global Holdings Corp. Earnings Conference Call for the Quarter ended June 30, 2015. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. To ask a questions. [Operator Instructions] Participants of this call are advised that the audio of this conference call is being broadcast live over the internet and is also being recorded for playback purposes. A replay of the call will be available approximately one hour after the end of the call through September 05, 2015. I would now like to turn the conference over to Scott Arnold, Managing Director of CorProminence, the Company’s investor relations firm. Please go ahead, sir.

Thank you Emilie. Thank you for joining today’s conference call to discuss Sysorex Global Holdings Corp.’s corporate developments and financial results for the quarter ended June 30, 2015. With us today are Nadir Ali, the Company’s CEO, and Wendy Loundermon, the Company’s Interim CFO. At 4:05 PM Eastern time today, Sysorex released financial results for the quarter ended June 30, 2015. If you have not received Sysorex’s earnings release, please visit the investor’s page at www.sysorex.com. During the course of this conference call, the Company will be making forward-looking statements. The Company, cautions you that any statement that is not a statement of historical fact is a forward-looking statement. This includes any projections of earnings, revenues, cash or other statements relating to the Company’s future financial results, any statements about plans, strategies or objectives of management for future operations, any statements concerning proposed new products, any statements regarding expectations for the success of the Company’s products in the U.S. and international markets; any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions, underlying any of the foregoing. These statements are based on expectations and assumptions as of the date of this conference call and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Some of these risks are described in the section of today’s press release titled cautionary note on forward-looking statements and in the public periodic reports the Company files with the Securities and Exchange Commission. Investors or potential investors should read these risks. Sysorex Global Holdings Corp. assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. In addition, to supplement the GAAP numbers the Company has provided non-GAAP adjusted net loss and net loss per share information in addition to Non-GAAP adjusted EBITDA information. The Company believes that these non-GAAP numbers provide meaningful supplemental information and are helpful in assessing our historical and future performance. A table reconciling the GAAP information to the non-GAAP information is included in the Company’s financial release. I will now turn the call over to Nadir Ali, Sysorex’s CEO.

Thank you Scott and good afternoon everyone. Welcome to our Second Quarter 2015 earnings call and thank you for joining us. I am here today with Wendy Loundermon, our interim CFO, who will be discussing our Second Quarter 2015 financial results after my opening remarks and I will return to conclude our prepared remarks and field your questions. The Sysorex of today is a Big Data Analytics Platform company with complimentary mobile/IoT products; enterprise infrastructure solutions; and Professional Services that is reaping the rewards of our intensive transformation efforts over the past two years. I am pleased to discuss our results for the Second Quarter 2015 and highlight the achievements our team delivered across our now fully integrated business segments. A quick thank you to our Chief Sales Officer, Bret Osborn and his team for delivering our highest recorded revenues this quarter as compared to any prior quarter. I think it is important to note that the results we announced today along with our recent customer wins reflect our successful efforts at driving growth not just across our entire enterprise, but particularly across our higher margin segments including professional services, data analytics and AirPatrol. Let me take a few minutes to expand on each of these. Our focus on our professional services segment has yielded approximately 40% growth in Q2 2015 compared to Q2 2014. I am pleased to report that we also closed our largest professional services contract ever during the second quarter of 2015 with the signing of Gilead Sciences, Inc. a Fortune 500 research-based biopharmaceutical company that discovers, develops and commercializes innovative medicines in areas of unmet medical need. The project’s scope includes designing and deploying an advanced systems architecture that will inter-connect the client’s systems across the country and help ensure that mission critical business and health care information always remains available while being safely secured in compliance with corporate security and disaster recovery standards as well as state and federal government mandates. We recently completed the first major phases of this Data Center transformation project which has an aggregate value of over $5 million. Our increased traction in big data analytic solutions and services is represented in a number of high-profile client engagements. In May, 2015 we announced that Sysorex had been chosen by Burlingame, California-based mobile game developer CrowdStar Inc. to build a real-time analytics solution that will allow CrowdStar to improve its customer sentiment analysis and player retention. Sysorex is developing a big data analytics system that allows CrowdStar to process data in real time from millions of players and then make adjustments to games “on-the-fly” in order to improve the in-game experience, which CrowdStar believes will enhance their bottom line. With the CrowdStar transaction, we have now entered into big data and analytics engagements with half a dozen leading mobile game developers over the past two years. The growing momentum and adoption of our AirPatrol offerings that I know that many of you have been waiting for is also evidenced by certain recently acquired customer relationships. On July 01, 2015 Sysorex announced a $2.5 million contract to provide real time employee location-based security, asset tracking and management, and big data analysis in newly constructed “smart” communities for workers on 2022 World Cup infrastructure projects utilizing our AirPatrol mobile device locationing and our analytics system. Work on the new community under development in the State of Qatar to house workers on the country’s infrastructure projects is about to begin. Our AirPatrol deliverables are currently planned for Q4, 2015 and Q1, 2016, since workers are expected to begin moving in by February of 2016. Approximately $1.1 million of the $2.5 million is billable at installation and the balance is distributed over eight years for maintenance and warranty. Further supporting our evolution of the integrated AirPatrol location based products with our data analytics capabilities is our recent announcement to provide Retail Analytics for a large Saudi retail shopping center. Sysorex has been chosen to provide retail analytics initially just for the common areas to approximately 35,000 sq ft and eventually to the rest of the upscale shopping, dining and entertainment center north of Riyadh, Saudi Arabia. Our technology will be used to collect detailed insights such as visitor counts, foot traffic, store performance and customer engagement, to provide unparalleled accuracy and insight into nearly every aspect of mall operations - from how many people visit and how often they return, to the optimal store placement and configuration, to ensure an outstanding customer experience and maximize engagement - to help mall management better understand its visitors and improve operations. Our technology yields new capabilities to deliver real-time and near real-time actionable insights for retailers that they were unable to produce in the past. Malls have largely relied upon disparate systems like cameras, motion detectors, etc. that have very poor accuracy and manual efforts that are not capable of gathering and analyzing the critical data points that our technology enables. Even newer technologies using Wi-Fi or beacon provide proximity rather than precision locationing and typically capture 25% to 50% of the devices. Our AirPatrol solution provides significantly better accuracy and can typically capture 99% of the devices. The mall is one of 17 owned and operated by a Saudi-based retail property company. The Saudi Arabian mall will be Sysorex’s first AirPatrol retail center installation in the Middle East. The solution is expected to be up and running by late August 2015. These two new client relationships that I have just discussed are evidence of the growing adoption of our Location-Based AirPatrol solutions combined with our Data Analytics platform offering. Our announcement in April 2015 of the acquisition substantially all of the assets of LightMiner Systems, including all intellectual property related to its high-speed database management system further strengthens our portfolio of market leading offerings. LightMiner Systems’ unique high-speed database technology could enable Sysorex to leap to the forefront of an industry-wide race to manage and analyze massive amounts of data in near-real time on premise or in the cloud. The assets acquired from LightMiner Systems include an in-memory, real-time, data analysis system designed to perform very large, highly complex and extremely difficult calculations using off-the-shelf hardware and memory. It supports both traditional SQL-based business intelligence and analytics applications as well as a host of integrated statistical, machine learning and artificial intelligence algorithms allowing it to provide supercomputer-like performance at competitive prices. Sysorex is launching a pilot program with our Lightminer analytics platform with a variety of customers. These pilots will allow us to build quick-start modules for various verticals that will allow us to scale as we roll out the product line in 2016. We believe that with LMS we can provide a very competitive product in terms of technology while offering our customers a more cost effective solution than competitors. We believe this will significantly increase our role and value proposition to customers. Before I turn the call over to Wendy to discuss our financial results for the second quarter, I also want to touch upon our most recent announcement of publishing magnate, Hearst Corp., signing a 3-year contract with our Shoom subsidiary for Sysorex’s Shoom eTearsheets, an advertising proof-of-publication and competitive analysis service for newspaper publishers. Shoom eTearsheets is a software-as-a-service big data platform that provides proof-of-publication, ad archive and competitive market analysis to more than 250,000 advertisers and 11,000 agencies. eTearsheets allows newspapers and advertisers to search more than 95 million ads across 41 categories for competitive insight and analysis on ad rates, reach and other important metrics. The 3 year renewal deal is the third such Shoom renewal by Hearst, which owns 15 daily and 34 weekly newspapers, including the Houston Chronicle, San Francisco Chronicle, San Antonio Express-News and Albany Times Union. We are thrilled to continue to provide Hearst with this market leading Big Data-as-a-Service solution, which illustrates our deep commitment to driving innovative solutions through this focused strategy. As I mentioned in our last earnings call, Big Data as-a-Service is an integral part of our growth strategy and we remain on the forefront of driving innovation throughout this value chain. With that I will now turn the call over to Wendy to discuss our financial results for the quarter ended June 30, 2015.

Thank you Nadir. Total revenues for the three months ended June 30, 2015 were $17.7 million compared to $17.1 million for the comparable period in the prior year. The $600,000 increase in revenues, or approximately 3.5%, was attributable to an increase in the Professional Services and Storage and Computing revenues offset by lower Mobile IoT & Big Data Products revenue. Total second quarter 2015 revenue included $13.4 million of Storage and Computing revenue, $987,000 of SaaS revenue, $233,000 of Mobile, IoT and Big Data Products revenue and $3.1 million of Professional Services revenue. Total gross profit for the three months ended June 30, 2015 was $5.7 million compared to $5.7 million for the comparable period in the prior year. The gross profit margin for the three months ended June 30, 2015 was approximately 32% compared to approximately 33% for the three months ended June 30, 2014. GAAP net loss attributable to common stockholders for the three months ended June 30, 2015 was $1.7 million compared to $2.4 million for the prior year period. This decrease in net loss of $700,000 was attributable to the acquisition costs of AirPatrol in the three months ended June 30, 2014 that were not in the three months ended June 30, 2015. Pro-forma non-GAAP net loss1 for the three months ended June 30, 2015 was $225,000 compared to non-GAAP net income of $265,000 for the comparable period in the prior year. Pro forma non-GAAP net loss or income per basic and diluted common share for the three months ended June 30, 2015 was a loss of $0.01 per share compared to income of $0.01 per share for the prior year period. Non-GAAP net loss or income per share is defined as net loss or income per basic and diluted share adjusted for non-cash items including stock based compensation, amortization of intangibles and one time charges including acquisition costs, severance costs, change in the fair value of shares to be issued and the costs associated with the public offering. Total Non-GAAP adjusted EBITDA for the three months ended June 30, 2015 was income of $34,000 compared to income of $455,000 for the prior year period. Non-GAAP adjusted EBITDA is defined as net income or loss before interest, provision for income taxes, and depreciation and amortization, adjusted for other income or expense items, one time charges including acquisition costs, severance costs, change in the fair value of shares to be issued, costs associated with the public offering, and non-cash stock-based compensation. On the balance sheet we ended the quarter with cash and cash equivalents of $2.2 million and total current assets of $23.4 million. This concludes my comments, and now I’d like to turn the call back over to Nadir.

Thanks, Wendy. As I mentioned previously Sysorex’s products and services today are all about the data – that’s where we feel the value lies for our customers, our partners and shareholders. As a Big Data Analytics Platform company with complimentary mobile/IoT products; enterprise infrastructure solutions; and Professional Services we are now fully leveraging the transformation efforts of the past two years and we believe our brightest days are before us as we continue to expand our high margin, high growth businesses with the requisite resources in both operations and solutions development and delivery. We are proud of the continued success we have achieved in improving the sales mix towards higher margin revenue and integrating our business segments. Our AirPatrol and LightMiner Analytics Platform offering can be configured and delivered in a myriad of incarnations, tailored to the evolving needs of a world of new clients that seek to exploit the value from their ever-growing volume of data. Our dedication to the core aspects of our professional services business remain steadfast, as evidenced by our record revenue performance this quarter. We remain highly committed to driving growth across our dynamic and unique business segments and our enthusiasm and optimism about the future growth opportunities for Sysorex in 2015 and beyond has never been stronger. Thank you for your time in joining us today and we look forward to keeping you appraised of our ongoing achievements. With that, Emilie, I think we are ready to open up the call to any questions.

[Operator Instructions] Our first question comes from Joe Maxa of Dougherty & Company. Please go ahead.

Thank you. Congratulations on a much improved quarter in Q2.

Thank you, Joe.

So I want to ask a little bit about these contracts you mentioned. So this Gilead $5 million contract is that the same contract that $1.9 million when you announced in a press release and then also how much of that was in Q2 and over what time frame is that $5 million?

That is actually separate than the $1.9 million contract. Of the $5 million I believe roughly $1 million of that was already in Q2 and the balance of it is going to be performed over the next nine months.

Okay. So pretty equally over those nine months I would imagine.

Most likely. I think that is probably pretty close. There might be a little bit of variation from quarter-to-quarter.

Okay, was that $1.9 million contract recognized in the quarter?

Not all of that was recognized in the quarter. I don't have the exact break up.

Okay. Okay and on the $2.5 million AirPatrol contract you mentioned $1.5 of that over Q4 and Q1 is that this will be the uncertainty of the timing or should we think about that as kind of split half and half over those two quarters?

It's actually $1.1 million and it's just in terms of the delivery schedule to do the installations and so forth. So between Q4 and Q1 we expect all of that to be completed.

Okay. So kind of if it's on delivery schedule it depends on when they get it done but right now do you think it is scheduled half in each quarter or it will be more weighted towards the first quarter?

I think it's going to be probably close to half and then obviously we will see if there is any impact on this delivery schedule and their availability but the intention is about half and half.

Okay. So you said 1.4 million upfront and then the balance would be I mean 1.1 million, the balance is over eight years?

That’s right because it's -- that’s the main and some warranty piece.

Got it, okay. And the other contract with the [Saudi] I mean it looks like it's 35,000 square foot initially is that more of a test to see if it works out the way they are thinking before they roll it out to the rest of the mall?

No, no. It's permanent installation. We have already done a proof of concept for them but they are starting with the mall entry and exit locations and then also common areas entry and exits into particular stores, their anchor stores et cetera and then they will add on to the rest of the mall at a later date.

I see, how should we think about that in terms of revenue, revenue recognition, timing that type of stuff, is this more of a SaaS model or upfront.

This is not on a SaaS model, it's basically Q3 revenue, and of course there is a maintenance component as it is with most of these. So, we will have that piece of it recognized over a period of time. But majority of that revenue is going to be seen up front on that.

Okay but it seems like it will be relatively small. Is there going to be a couple of dollar per square foot, is that – how should we think about just kind of big projects like this?

Right I mean I think you can use our prior metrics on the square footage for that. It's not – you are not far off with that calculation, and then we will add on to the square footage as they roll it out. And this is one of 17 malls. So they will first expand into this mall and then we will hopefully generate an opportunity to expand to the other locations.

Okay, so it sounds like they are interested in expanding if this works out the way they expect and the proof of concept showed…?

That’s right.

And same with the communities are you expecting follow on in that regard?

There is some follow on opportunities that we are pursuing and as soon as we are able to announce something we will, but yes there is follow on camps and locations that our client is looking at.

Okay, and let’s talk a little bit about the government contracts. What are your opportunities to see some tenders or maybe win some tenders from those contract announcements you had earlier in the year?

Yes, we continue to pursue opportunities on both of those contracts, the NASA SEWP contract and the NIH CIO-CS contract. We are responding to task orders. Definitely on SEWP there has been more volume coming in. On CIO-CS I think there are a little bit slower, but they are starting to come in and this is the government’s fiscal year end, this quarter Q3, so we are expecting to see more opportunities [Indiscernible] to bid on. Obviously deliver time frames can vary because the customer can place the order now but have a delivery schedule that can be different, so I can't tell you that it's going to be in a particular time frame today but we are starting to see much more activity there.

I see. So good quarter on the, I guess we call it the Lilien business but how does that look for the balance of the year do you think you can repeat these numbers, do you think you can be profitable or generate cash in the back half?

So as we are not giving guidance but I feel more confident than I ever have about our ability to continue to grow the business along all these fronts.

Yes, and I understand that debt has gone up, you need that to invest in the business but I am wondering if you will be able to start paying that down I guess is the question maybe sooner than later or is this still we should maybe think about that as the ability down the road next year?

Well I mean I think certainly as evidenced in Q2 our margins are starting to expand, sales are improving in the higher margin segments, and so I think that will certainly help the cash flow position and our abilities, but I don't think it solves the problem overnight. But I think we are definitely on track.

And lastly from me, on the margins of these AirPatrol products, are those the higher 80% type margins you talked about in the past and similarly on the Gilead contract, should we be thinking in the kind of the mid 20s, low 20s what should we think about stuff like that?

So on the AirPatrol piece, I mean I think some of the smaller projects that are proof of concepts, et cetera, the range maybe in the 60% to 70% range and then other installations are in the 80% range. So I think we have – we can expand that range of gross margins depending on the deal. I think you might have seen lower margins in Q1 but this quarter it's gotten a little bit better and I think that will continue. It depends on the size of the orders and if they are just a POC and a small size order or if there is something more substantial there. So I think the range is 60% to 80%. On the Gilead I think that’s a combination of infrastructure and services so that’s going to be blend of 20% to 30%.

Got it. Alright. Thank you very much. Nice job.

Thank you.

Our next question is from Josh Nichols of B Riley. Please go ahead.

Yes, could you just talk for a little bit in some more detail about how you got the Gilead contract and what made them choose you specifically?

Sure. So Gilead has been a customer for several years with us and we have I think moved up the food chain there with the relationships and showing them that we can take on more than just providing them third party hardware and software and that trust and relationship that our team there with Bret and our sales team and our professional services group have really proven themselves over the past few years and I think that gave us the opportunity to compete for this project and I think that really the credit goes to our team there in building the relationship, and then being able to help them design and build out a plan to do this data migration for their data center project.

Great. And then on with AirPatrol having some good wins and the professional services growth pretty strong, could you talk a little bit about any opportunities you are seeing that are coming about for cross selling between the different divisions?

Yes, absolutely and as evidenced by the Saudi mall application right, so there is the analytic side along with the AirPatrol installations there and we are starting to see more and more of that come up the analytic as I said in my closing remarks, it's about the data right. So whether we are installing AirPatrol or working on the Shoom application with Hearst, the value is really in the data and so the analytics are starting to become important parts of everything that we do and so that is naturally lending us to these cross-selling opportunities.

Great. Thank you.

Thanks Josh.

Our next question is from Mike Crawford of B.Riley & Co. Please go ahead.

Alright Nadir. Just follow up on the Gilead, so I mean that’s great. That's a large professional services contract you have lot of these big customers that seem to be the right tool to cross sell to so, what could you do for Gilead say on the LightMiner big data analytics front or on the AirPatrol front for location-based services?

Mike, I think that's a great question and we certainly have lots of customers that we have transitioned as you can see from just reselling products and now into our professional services. And we certainly are having conversations around data and their analytics side of the house. Those are natural progressions that our team is taking on. I think there are plenty of opportunities for a variety of analytics that I can't necessarily go into in this call with about that particular customer, but there are discussions around that. I will say it's not necessarily every customer will need an AirPatrol installation but every customer is looking at data and every opportunity exists or there are discussions taking place where we can help them on the data side and move them along the other offerings that Sysorex has, but having said that there are plenty of cross-selling opportunities amongst the analytic side and our AirPatrol side and the Qatar project is one, the Saudi Mall is another, and then there are other programs or other customers that we are talking to about a LightMiner solution and AirPatrol has come into those conversations. So it's definitely in our forefront. That's why we put these pieces together and I think we will continue to be able to sell this integrated offering.

Thank you, and then I wonder if you could just compare and contrast what Sysorex is able to provide with say Hortonworks down the street from you, which also just reported earnings 31 million in revenue, minus 42 million loss from operations. They got a billion dollar market cap, big data analytics I mean is there something that the company like that can do that you cannot do for a customer?

Well I mean, I think Hortonworks has a Hadoop focused technology, and I think that that's suitable for certain environment and clients and we work with Hadoop products as well, but I think our LightMiner analytics and our platform there is really well positioned for when you are talking about huge amounts of data that needs to be processed very quickly, I don't think anyone out there is – can provide the speed that we can provide, and so when in today’s world when real time is very important the way our database structure and our LightMiner analytics platform operates, I think we can take on any of those competitors in terms of speed, and I think that's the value that we provide. So we can take in huge amounts of data and this big data problem that everyone is facing and then be able to process that in real time and then if you add the AirPatrol piece to it, which allows us to bring in all of these new proprietary data sets into the mix, again that's a unique differentiator for Sysorex in the data analytic space, so when I have talked about blending the real world or the physical world with the digital world that's unique to Sysorex and I think that's another area that we can excel in, and so that's why with malls or casinos or somebody's vertical that we have talked about tying these two pieces together really separates us out there. And I think the speed of our LightMiner analytics platform is, we have talked about getting three to ten to 100 of times faster against competitors depending on the type of analytics.

Okay great. Thank you very much.

Thanks Mike.

[Operator Instructions] Our next question is from Ross Silver of Vista Partners. Please go ahead

Yes, congratulations on an excellent quarter, I mean wow. I am assuming that's the largest quarter the company has ever had in history is that correct?

That's right Ross. Thank you. Yes, this is a record breaking quarter for us.

And then as far as margins just kind of shifting to that real quickly there has been a sort of an increase here in the second quarter relative to sort of the last three quarters, kind of going forward should we anticipate margins to sort of be in the range of around where they are now or do you anticipate improvement going forward or what we should think about margins going forward?

Yes I mean absolutely our focus is to expand our higher margin revenues, and so with that the consolidated margins should continue to grow and that's certainly on our priority list, right, and we have talked about in the past where changing that sales mix is really important to us. We want to maintain and grow our legacy business, but we know that in the long run the higher margin segments have higher growth for us and as we do that that will drive the gross margins as well as the bottom line, so we continue to push along those fronts and I think we are going to see continued success there.

So just one final question for you I am just thinking of the solution now as it sits with LightMiner included here, I am sure you have gone to your existing customers and asked [Indiscernible] new customers on this comprehensive solution, what’s been the feedback and is there any way that you could sort of speak to or is the feedback positive or negative and in terms of adoption, I know I always ask this question of kind of where you are in the adoption cycle to sort of complete solution, is it – should we think of it as a complete solution or you think it's going to be, hey I want to have just certain sort of specific pieces of your sort of overall solutions or what is the way of think of things kind of going forward say for the next 12 to 18 months?

I think we will continue to progress towards a more closely integrated offering and we have started to see some progress in that with some of the examples I gave today, and I think that will continue to happen as I mentioned to Joe earlier that not necessarily every client will need the AirPatrol component in it, but we think a good number of them will and especially in the verticals that we are targeting today and so I certainly feel like more and more of our revenue will take advantage of all of our different pieces including AirPatrol, LightMiner and the analytics, and all of our professional services and then obviously providing a complete solution for customers so that they don't have to think about anything. Our storage and computing segment plays in and so we can take care of all their processor and storage needs along with it and provide them a full turnkey solution. So I think you will see more and more of that happen over the next 12 to 18 months and there will be some cases where yes they might not need all of it day one, but I think we are going to get to an integrated offering more and more as we go.

Sorry one last quick follow-up question so, you ran – you are going up against a really tough comp in Q2 2014, you gave the $17.1 million top line number, is there a seasonality element to the business or is there not – just trying to think of going forward how to sort of visualize your continued growth?

Yes, so we always have some variation quarter-to-quarter given the reselling side of the business, right, the legacy piece. So that can vary from one quarter to next but typically Q1 is lighter normally for us and I know we had an exception in ’14 and then Q2 I think last year it was our first quarter with AirPatrol. They had a good number last year in that quarter so that also added to it. I think there is a little bit of swing from quarter-to-quarter but I think we are on this growth trend and that should continue.

Okay. And congratulations, awesome quarter.

Thank you, Ross.

Our next question is from David Riedel of Riedel Research. Please go ahead.

Hi, quick question on the government spending what sort of trends are you seeing in terms of government spending just I mean you guys aside, what sort of things are you guys seeing in terms of the government opening up their pocket books?

So we – we are seeing contracts that we had bid on even as long as two years ago, 18 months ago starting to get awarded. There are still some that we have in the pipeline that are on hold but I think that's improved this past year in terms of awards and now as we are getting towards the government’s fiscal year end, we are starting to see task orders come out. So I think there has been some spending in this year's budget that doesn't guarantee what happens in the next fiscal year and Congress is going to get that taken care of but we are seeing some improvement there, and so I think we expect to get the volume increase on these task quarters that we can respond to.

Great. Thank you very much.

Thanks David.

This concludes the question-and-answer session. I would like to turn the conference back over to Nadir Ali for any closing remarks.

Thank you, Emily. I like to thank everyone for your time today. We will be presenting at the Craig-Hallum Alpha Select Conference on September 17 in New York. So look for more details to follow on that and any other events that maybe happening. We appreciate your time and interest in Sysorex. Thank you for your time today.

The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.