Crexendo Inc (CXDO) 2020 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Crexendo Fourth Quarter and Year-End 2020 Earnings Call. (Operator Instructions)

It is now my pleasure to turn the floor over to your host, Steven G. Mihaylo. Sir, the floor is yours.

Mihaylo, that's close enough. Good afternoon, everyone. I'm Steve Mihaylo, Chairman and CEO of Crexendo. I want to welcome all of you to Crexendo's Fourth Quarter and Year-End 2020 Conference Call. On the call with me today are Doug Gaylor, our President and COO; Ron Vincent, our CFO; and for the first time, Jon Brinton, our CRO; and Jeff Korn, our General Counsel.

I'm going to ask Jeff to read our safe harbor agreement, a statement, rather. After that, I will give some brief comments. Ron will provide more details on the numbers. Doug will provide a business and sales update, and then we will call up for questions.

Jeff, could you please read the safe harbor agreement.

Statement, Steve.

I keep saying agreement -- statement.

We're not going to make everybody sign it. So I'll just read it. I want to take this opportunity to remind listeners that this call will contain forward-looking statements within the meaning of the Securities Act of 1933 and the Securities Exchange Act of 1934. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for such forward-looking statements.

All statements made in this conference call other than statements of historical fact are forward-looking statements. Forward-looking statements include, but are not limited to words like believe, expect, anticipate, estimate, will and other similar statements of expectation identifying forward-looking statements.

Investors should be aware that any forward-looking statements are based on assumptions and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed here today. These risk factors are explained in detail in the company's filings with the Securities and Exchange Commission, including the Form 10-K for the fiscal year ended December 31, 2020, the SEC Form 8-K relating to the NetSapiens merger and the upcoming proxy filed by Crexendo relating to the NetSapiens merger and Form 10-Qs as filed.

Crexendo does not undertake any obligation to publicly update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

I'd now like to turn the call back to Steve. Steve?

Thank you, Jeff. This has been a very, very big week for us. Yesterday, we announced a major merger agreement. And today, we announced what I believe are exceptional results. I too have to be limited in what I can say about the merger agreement with NetSapiens. As you understand, the merger agreement is subject to approval by both Crexendo and NetSapiens' shareholders.

As part of that process, we plan to file a proxy statement on Schedule 14A with information, which should include audited results of NetSapiens. We will properly -- promptly after that mail the definitive proxy statement to each shareholder entitled to vote at the shareholder meeting relating to the transaction and solicit votes of the merger. Since that has not yet been filed nor has it been approved by the SEC, I'm limited in what I can say which could be construed as soliciting votes without proxy material.

I will say I'm very excited about the merger. I'm very encouraged that we are able to bring to our shareholders a merger that I'm convinced will be accretive and include multiple synergies. I am further convinced that it will be a big benefit to both companies and to our shareholders, especially.

NetSapiens has revenue of between $11 million and $12 million last year. We are excited about the revenue stream. In addition to the revenue stream, we are enabled to become a dominant supplier in a rapidly growing global platform supporting over 1.4 million users. Crexendo will be able to increase its offering and size using the NetSapiens technology and further benefit from a wealth of additional engineering, sales and marketing talent.

The NetSapiens team will benefit from the Crexendo resources, a Nasdaq company to continue their growth and enhance their offering portfolio. This is a big win for both companies. It's a major step for us and one I could not be more pleased with. Doug, Ron and Jeff have been working closely with the NetSapiens' management team and have developed an excellent working relationship, which I am confident will extend to the entire organization.

And I would add that both teams have been working tirelessly to make this a reality. I believe the combined companies will show substantial growth, provide excellence to Crexendo's customers, the net service provider community and provide exceptional value to our shareholders.

I am very encouraged by what we accomplished in 2020. We did what we said we would do. We continued our streak of both GAAP and non-GAAP profitability. We organically uplisted to the Nasdaq. We completed our equity offering in September 2020. And we topped that off with yesterday's announcement of negotiating a substantial accretive acquisition with NetSapiens.

We continue to generate positive income from operations, while at the same time, investing and growing our business. We are working on improving across the board. We have invested in our sales process.

Recruitment of Jon Brinton was a big step for us. Jon is going to be expanding our sales team and our dealer/partner program. So you see we're also working on accretive organic revenue. I'm expecting these improvements will accelerate our growth.

Speaking of management, we are excited to bring on Anand Buch and his management team to work with Crexendo's team. We are glad to be adding David Wang, who will add strength to our exceptional engineering team. I'm expecting very, very big things to come from this combination.

Our results were very good. I'm pleased with our organic growth. UCaaS service revenue for the year 2020 increased 16% to the year ended December 31, 2019. That shows that we are continuing to do the right things.

We are also in the right space. We provide customer-centric, award-winning products and services. We are making the right moves, and we will continue to grow the business, both organically and through accretive acquisitions. I am tremendously excited by what we achieved, about what we are doing and even more excited about our future.

With that, I'll turn the meeting over to Ron. Ron, would you go through some more granularity, please?

Thank you, Steve. Financial highlights for the fourth quarter. We're pleased to -- with our consolidated revenue for the fourth quarter of $4.3 million, an increase of 16% compared to $3.7 million for the fourth quarter of the prior year. Service revenue for the fourth quarter of 2020 increased 14% to $3.8 million as compared to $3.3 million reported for the fourth quarter of the prior year.

Cloud Telecommunications segment service revenue for the quarter increased 16% or $499,000 to $3.7 million compared to $3.2 million reported for the fourth quarter of the prior year.

Our Web Service segment service revenue for the quarter decreased 21% or $33,000 to $121,000. Product revenue for the fourth quarter of 2020 increased 32% to $526,000 as compared to $397,000 for the fourth quarter of the prior year. Consolidated operating expenses for the fourth quarter increased 20% to $4.2 million compared to $3.5 million for the fourth quarter of the prior year.

Net income for the fourth quarter of $7.2 million or $0.40 per basic common share and $0.37 per diluted common share. That's compared to $228,000 or $0.02 per basic common share and $0.01 per diluted common share for the fourth quarter of the prior year. The significant increase in net income during the quarter resulted from recording an income tax benefit of $6 million related to the release of our valuation allowance on deferred tax assets and $1 million other income related to the extinguishment of debt.

Non-GAAP net income for the fourth quarter of $7.4 million or $0.42 per basic common share and $0.39 per diluted common share compared to $347,000 or $0.02 per basic and diluted common share for the same period of the prior year.

EBITDA for the fourth quarter was $185,000. That's compared to $243,000 for the same period of the prior year. Adjusted EBITDA for the fourth quarter was $431,000 compared to $349,000 for the same period of the prior year. Consolidated revenue for the year of $16.4 million, an increase of 14% compared to $14.4 million reported for the prior year.

We continue to see tremendous growth in our Telecommunications segment. The Cloud Telecommunications segment generated revenue of $15.8 million for the year, an increase of 15% compared to $13.8 million reported for the prior year. Service revenue for the year increased 14%. to $14.5 million compared to $12.7 million for the prior year.

Our Cloud Telecommunications segment service revenue for the year increased 16% or $1.9 million to $14 million compared to $12 million -- $12.1 million reported for the prior year. Product revenue increased 9% to $1.8 million compared to $1.7 million reported for the prior year.

Our Telecommunications segment backlog, which is anticipated to be recognized within the next 36 to 60 months, increased 9% to $28.6 million at December 31 as compared to $26.1 million at the end of the prior year.

Consolidated operating expenses for the year increased 16% to $15.4 million compared to $13.3 million reported for the prior year. Net income for the year of $7.9 million. That's $0.50 per basic common share and $0.46 per diluted common share as compared to $1.1 million or $0.08 per basic common share and $0.07 per diluted common share for the prior year. Again, a significant increase in net income during the year resulting from recording an income tax benefit of $6 million related to the release of a valuation allowance on deferred tax assets, $1 million in other income related to the extinguishment of debt.

Non-GAAP net income for the year of $8.7 million or $0.55 per basic common share and $0.50 per diluted common share as compared to non-GAAP net income of $1.6 million or $0.11 per basic common share and $0.10 per diluted common share in the prior year.

EBITDA for the year of $1.25 million compared to $1.23 million for the prior year. Adjusted EBITDA for the year of $1.9 million compared to $1.6 million for the prior year. Our cash, cash equivalents and restricted cash at the end of the year was $17.7 million. That's compared to $4.3 million at the end of 2019. Operating activities provided $647,000. Investing activities utilized $921,000 for the purchase of property and equipment and asset acquisition of customer relationships. Financing activities provided $13.7 million. $10.8 million in proceeds from the issuance of common stock in September and $2 million from proceeds from stock option exercises and an additional $1 million in proceeds from those payable.

With that, I'll turn it over to Doug Gaylor, our President and CEO, for additional comments on operations.

Thanks, Ron. We continued our profitable revenue growth for Q4 to finish the year with solid growth in earnings numbers despite the headwinds and uncertainty brought about by the pandemic. Aside from the 16% year-over-year revenue growth to $16.4 million, we had a very busy year with our organic uplift from the OTC to the Nasdaq in July, followed by our successful equity offering in September, that allowed us to be in a position to negotiate the definitive agreement with NetSapiens that I will discuss in more detail shortly.

We've been very consistent in accurately accomplishing our goals for the last 3 years, and I am very pleased with the results that we continue to deliver, and I'm very excited about the year ahead.

Q4 was a strong quarter for us as we not only posted strong numbers for the quarter, but we added industry veteran, Jon Brinton, to our team as Chief Revenue Officer. Jon's previous executive management roles at Inter-Tel, Mitel and Avaya and his tremendous knowledge of the industry and the channel made him a perfect addition to our team. And I am very excited about the initiatives he is implementing to further increase our sales and our revenue.

Our partner channel continues to grow and had a nice increase year-over-year as we continue to see more success from our new and existing partners. Partner sales, along with direct sales, helped increase our revenues for the quarter to $4.3 million and helped grow our backlog to $28.6 million, which was an increase of 10% from our December 31, 2019 backlog.

Our UCaaS service gross margin remained strong at 73%, and that helped contribute to our strong GAAP results. Our GAAP earnings, combined with the proceeds from our equity offering helped increase our cash position to $17.7 million at the end of the year compared to $4.3 million at the end of 2019 and compared to $15.3 million at the end of Q3 2020.

2020 really highlighted the need for cloud communications in a way that nobody could have predicted. The industry was already growing rapidly and the onset of the pandemic and the requirement to work from home highlighted the benefit of our very flexible and our user-friendly platform. People are now seeing the advantage of having the tools for telecommuting, collaboration and mobility and all the capabilities at the Crexendo solution fits perfectly.

Since industry statistics show that still approximately 60% of the businesses have not migrated to the cloud for their communication needs that leaves a tremendous opportunity still for many years to come.

The Crexendo solution continues to be recognized for its abilities to meet those needs, winning 2 coveted awards in 2020, recognizing our collaboration and mobility solutions as Communications Solutions Product of the Year and Internet Telephony Product of the Year.

The amount of opportunities still remaining in the sector is one of the primary reasons behind our major announcement yesterday of our agreement to acquire NetSapiens. This accretive acquisition is a perfect fit for Crexendo and will put us in a great position to accelerate our growth. The NetSapiens platform, which currently host over 1.7 million end users is an extremely robust platform with tremendous capabilities that we will be able to leverage immediately on both sides of the equation.

Not only do they have a rapidly increasing revenue stream, but the in-house developed technology is award-winning and will allow Crexendo to benefit from a terrific collaboration tool similar to Zoom, a robust API library with over 240 integrations to many commonly used applications, including Microsoft Teams, and a brandable UCaaS solution that can be customized for just about any environment.

The opportunity to continue to develop and expand the combined offerings for both organizations with the tremendously talented engineering teams from both Crexendo and NetSapiens is truly very exciting.

I'm very excited about working with the NetSapiens' executive management team and field the synergies and relationships that we have already created put us in a very strong position going forward.

The market for unified communications as a service has never been greater, and Crexendo has positioned itself remarkably well to help businesses make their transition to the cloud. Our consistent profitable growth, strong management team and focus on return for our shareholders, combined with our announcement of the agreement to acquire NetSapiens, will position us well to be the dominant player in the industry.

As we look forward to 2021 and beyond, I could not be more pleased with our future outlook and our ability to meet and exceed our goals.

I will now turn it back over to Steve for any additional comments.

Thank you, Doug. I have no additional comments except to say that we're very pleased with joining with NetSapiens, and I want to welcome all of the NetSapiens people to the team.

Having said that, I'll turn it over to John to questions.

(Operator Instructions) And we do have a question from Josh Nichols from B. Riley.

This is actually Aman jumping in for Josh. But congratulations on the acquisition. I did want to ask, can you comment on the growth, profitability trajectory and margin profile of NetSapiens? Would you -- how does it stack up to Crexendo's business?

Well, what was your name again?

It is Aman.

Oh, Aman. First of all, we're just about in the process of releasing a proxy statement, which will have a lot of the details you're asking about in the proxy statement in the 14A. You have to understand that I cannot answer this question until there's been a vote and until NetSapiens is part of the company, and that will be in approximately 40 to 50 days. So you're just going to have to wait. And in the meantime, I'm going to turn this over to Jeff Korn, our Chief Legal Officer and let him talk to.

Just to be a little more clear, the NetSapiens has not completed their audit yet. So the numbers Steve gave were unaudited numbers and our best estimate. Much of the detail you're looking for will be in the NetSapiens audit, which will be included in the proxy when we file it. But we are hamstrung as Steve said, from commenting outside of the information we've already given until such time as the proxy is out because we can't solicit any votes without that information having been approved by the SEC and being publicly available.

So I hope you understand, Aman.

Yes, I totally understand. Are you able to maybe talk about maybe like integration, like the time line on that, how long that might take? And potential cost synergies that you could realize?

Well, first of all, we're going to rationalize our data centers, which should bring the cost down substantially. We're going to rationalize accounting, which, again, will bring the cost down. Beyond that, our people are going to be busy transitioning onto the NetSapiens platform, which we think offers a few more features than we do. And it's using software that was developed in-house by them and doesn't require the cost of a session borders controller. And it doesn't require the cost of a database, which we're using Oracle right now. So both of those things are going to bring the cost down.

I'm going to let Doug talk about additional synergies?

Yes. Obviously, as Steve said, it's an accretive acquisition. And so we're extremely excited about that. So when we look at the efficiencies, both organizations run very efficiently today. And so combined, we'll have lots of opportunity to be able to grow consistently with combining teams. So I couldn't be more excited about the engineering talent on both sides of the equation that will help us get product out faster. As I mentioned, there's already 240 plus integration API integrations on the -- on NetSapiens platform. We'll continue to expand and develop on that.

So from an integration perspective, we anticipate hitting the streets running. We've already got management meetings queued up and are working together to make sure that we can maximize the benefits on both sides of the equation.

And then maybe can you -- maybe walk through like the pricing model and the economics for Crexendo's, given that they do not charge per seat.

Well...

Well, yes, it's a different model. I mean if you think about how we are set up today, we sell primarily to end users on a per seat model. NetSapiens is a different model because they're selling platform applications to end-user resellers that are selling that as their UCaaS platform to end users. So it is a different model, but it's truly an amazing model. The fact that they've got 1.7 million users on their platform today is a testament to the technology that they've built and the applications that they've got out there.

And so we are extremely excited about taking that number and growing it even further. As I said, 60% of the market is still untapped out there. So when we think about the opportunity to grow both sides of the equation, tremendous opportunity out there. And with 1.7 million end users on the NetSapiens side and a much, much smaller number, less than 60,000 on the Crexendo side, there's still tremendous opportunity for growth there.

And Aman, I'd like to add a couple of things here. NetSapiens is selling their product on a license subscription basis. We sell ours on an end user basis, as Doug pointed out. NetSapiens just announced that they're going to be selling a white label product and furthermore, they have a product that competes very well with Zoom. So there's 4 different revenue streams here versus one currently.

We think there's tremendous opportunity involved.

Okay. And can you maybe talk about like the composition of the 1.7 million users? What type of customers are the -- is the user base made above? Or are they large enterprise customers? Any color on that would be helpful.

Yes. I think the user base is very similar in demographics to Crexendo users out there, small, midsize and small enterprise businesses. So they run the gamut. But again, they're selling primarily through their community of partners, which is a tremendous asset to the organization. And so that community of partners in different markets might have different demographics that they're going after, but tremendous success in all of the markets that they're in right now.

And there is one other thing I'd like to offer here. They have currently about 5 or 6 international partners. Obviously, we intend to expand as the time goes by on that platform as well and that customer base.

Your next question is coming from Andrew King from Colliers Securities.

Congrats on the good quarter. So first question is, Ron, across 2020, we've seen a slight decline in your gross margins. Can you talk about what factors are impacting that? And how you see that trending across 2021?

Yes. So yes, 2020 was a rough year. And so as we went through the year and stay at home orders, we had some challenges with sales like everyone else. And so while we look to help out our customer base. So as we -- we've not gotten new customers, and we're helping people migrate to the cloud. We offered very good promos up to -- at times up to 6 months free. And so as we allocate those discounts across the service period, it results in a lower per seat revenue on a go-forward basis when you amortize over those 3 months.

And so that was the impact you saw in our gross margin during the year. Now that was -- those discounts were because of the situation we were in, in 2020. And so I don't think those are going to continue into 2021.

Great. And then just, Jon, in your first few months there, I'd love to get an idea of what you've seen in your position coming as a newcomer to Crexendo? And where your focus is? And what initiatives you're really spending your time on?

Great. Thanks for the question. And it is great to be here. It's great to be here with Steve, Doug, Ron, Jeff and the team and kind of help to grow. And what I've observed is it's a great foundation of people that are extremely committed to serving customers and serving our channel and delivering solutions that help our customers meet their needs as they deal with things like the pandemic and other challenges in their business.

What I've taken as initiatives is just helping the organization to build a much more, I would say, brand forward sales and marketing campaign so that we can drive to expand our channel and expand our sales to businesses.

I'm excited about the opportunities that the acquisition of NetSapiens also brings from a sales and marketing perspective, and we're just looking to get a solid platform to grow revenue here at Crexendo.

The next question is coming from [Arham Jahan from Eden Capital].

Excellent results again. Thanks for your work and your continued work over the years. Everything that you've ever said, you've come to fruition, especially on the acquisition, which you've guided.

I wanted to just ask one question about that acquisition. More generally speaking, you wanted to do more than one, I believe. Does this NetSapiens acquisition constitute the correct kind of size for you? Or is this significantly the large landing spot in acquisition and then the rest will be smaller bolt-on? Or is this the bolt-on that you want to continue to follow through with?

Just so you understand, this took a lot of time. We've been working on this deal with the NetSapiens folks. And when I say we, it's really Ron, Jeff and Doug. Doug was heading up the team. Just the acquisition agreement alone is 158 pages. We had lawyers, accountants working on this. This will be probably the thing we were looking at. It's great to get the revenue, but it's also great to get the talent. And they provided both, and they provided technology.

As I mentioned earlier, our technology is very, very good. But it requires session border controllers that requires Oracle's database software. This does not. This will be accretive to Crexendo. Secondly, you asked if this is about the rightsized acquisition. I can tell you that we're going to be getting larger and larger and larger acquisitions. This will wind up being a small acquisition when the time comes that we're down the road another year or 2. So that's all I have to say. And Doug, do you want to add something to that?

Yes. Obviously, [Arham], we've talked a lot. And as you know, we continue to have lots of discussions out there. It takes a lot of discussions to get, I use the old analogy, you got to kiss a lot of frogs to find your prince or princess. And we definitely found a tremendous opportunity here with NetSapiens. And once we get this integrated, then it's off to the next one. And so will the next one be as large or smaller? Or it just depends on what we encounter out there. I can tell you that the excitement that we've seen with this announcement has been tremendous, not only from our partners and from the NetSapiens community, but from our employees and from the NetSapiens employees.

And just from the general industry as a whole, I think we're getting just tremendous, tremendous kudos for it. And I think it's going to resonate in the industry. And as you well know, once you get on the scoreboard a few times, then we don't have to try as hard to find opportunities, opportunities will find us.

We've got one remaining question from [William Lapp].

Congratulations on the acquisition, and it's kind of interesting to note, although you can't share the profitability. But the $11 million represents about 40% of your projected revenue, if you took this year and $11 million would be 40%, you do about $28 million, am I right?

We'll let you do the math, Will.

Okay. Well, it seems like that, which is good. Okay. Well, I'm not as dumb as I look. But any way, the -- could somebody explain the account -- could explain the income tax benefit provision of the $6.041 million. I know part of that may be the forgiveness of the [PPP] loan, if you got it. But what's the other tax benefit? Could you explain how that generated another $6 million of revenue -- of net income?

Sure. So as you know, we've turned profitable in 2019 and again in 2020. So as a result of our 3-year look back on our taxable income, we look -- we assess our valuation needs on our deferred tax assets. And so we've had about $20.5 million in NOLs that have accumulated over the last 9 years as a result of growing this business.

And so as we were -- turn profitable, we have to reassess that in the reporting period to determine if there's a need for that valuation allowance on a go-forward basis. And so in the fourth quarter, we made the determination that based on our look back and profitable cumulative look back period as well as other additional positive evidence of future income, taxable income forecast and the timing differences on return of temporary differences. We determined that valuation allowance was no longer required for $6 million worth of our deferred tax assets.

Okay. So explain to me, so on your return, are you using your -- how much of your carryback of the $20 million are you using for your 12/31 [state] taxability? You're not using the whole $20 million carryback, right?

So we're doing the tax effect on the $20 million plus the any temporary differences. And so at the -- at federal rate of the 21% times the $20 million is how you get $4 million of it for your NOLs and then you have the temporary differences that equate for the remaining differences.

Okay. That makes sense. Okay. I appreciate it. And we'll be interested in reading that proxy and see how the margins are and what it brings to the bottom line when we put it together. Do you expect much problem in converting some of your customers to their system? Aren't you moving some of them over, Steve, to use the new company's platform. Is that going to be a problem?

No, I think we're going to have both platforms running concurrently. So that's not going to be something that you're going to see an immediate jump on.

All I was going to add is, why wouldn't a customer want to get a few more features, a little bit more bulletproof platform and one that has 1.7 million customers.

Okay. But they don't have to do anything. I mean, automatically, you just provide -- I mean, there's not -- it's seamless to them. It's seamless to them.

Yes.

Okay. They don't have to convert or do anything, they just get it.

Your next question is coming from Michael Kaufman from MK Investments.

Steve and Doug, it sounds like a very strategic fit. I'm excited for you. And I'm also excited that you pulled off a great quarter in trying times. From an integration standpoint, I'm just wondering how many employees do they have versus you have? And where are you physically located? Is this going to be something that is complicating? Or does it seem like it's pretty straightforward?

Pretty straightforward, and that's one of the beauties of the synergies between the 2 organizations. They're very similar in size with employees, roughly about 60 employees based out of [La Jolla], California, right outside of San Diego. And they've got remote workers as well. So they've got remote workers across the country as Crexendo does. And so again, with the technology that we have nowadays, you don't have to have all of your people in one spot. So although the majority of their employees are in the La Jolla area, they've got employees across the U.S., some in Canada and some international.

Well, it sounds like it's a perfect fit, at least from the cosmic review that you gave...

We think it's a good fit. Yes.

And the exciting part is, is that, again, from a 1.7 million user perspective, the majority of that is here in the states. There's some international, but that's a huge growth area for them. And it's an area that we've been asked on numerous years in a row on our conference calls. And we don't have any international presence today. And so it's really a growing area for us. And when you think about the penetration of 60% still left in the states to move to the cloud, that percentage of adoption to the cloud is much, much lower in many international countries. And so there's tremendous opportunity there, and they've already got a great head start in that international arena.

Well, it sounds like it's -- you've moved into the bigger leagues and we're going to follow you and wish you the best of success and luck. And I look forward to hearing from you on the next call.

Great. Well, maybe you've been following us since we were in the AA, and now we're officially well into the majors with our uplift and looking forward to winning the world series here.

I keep buying more stocks.

And Michael, let me remind everyone that we've done exactly what we said we would do.

Absolutely.

We went from the pink sheets onto the Nasdaq organically. We did a public offering last year. We've done a very, very difficult acquisition that all that's left is shareholder approval. We're well underway as far as talking to everyone at NetSapiens. And this is just the beginning. Put on your safety belt and your buckle up and...

And the other thing is you stayed profitable and cash flow positive when a lot of the competitors is...

I appreciate that as well. There's one thing that you have to understand is we do more and more acquisitions, there's going to be more amortization.

No, I understand that.

Of the intangibles and so on. So it may affect our GAAP income, but our EBITDA and our non-GAAP income will still be there.

All right. Well, I know you guys can make it happen. So I'm rooting for you.

Your next question is coming from (inaudible).

Great news, guys. Congratulations. I'll just echo what was just said that these conference calls through the years have been very realistic assessments of your view of the future, and they've been very crusty and, so I appreciate them.

The question I had is around the product, you had said that why wouldn't someone want to stay -- migrate for more features? So I'm curious, what would some of these features be for someone as a layman as I am as it relates to the telephone industry, and the 2-part question. One is, are you filling holes that your customers were asking you for or prospects were asking you for and you couldn't fill because you didn't have them? And are there things that you bring to NetSapiens that they didn't have that you'd be able to fill there to make the offering obviously more robust? But I'm trying to understand what are those handful of things that you would think are the high level, exciting? We never -- we didn't have this, but now we do.

Yes. Let me -- I'm going to turn this over to Doug to comment on it. But they bring a very robust product, which includes a Zoom like product. It's as good, almost as good and it will be as good as Zoom as time goes by, that's one thing. The other thing is, in this room, there must be over 200 years of experience in running a telecom company. Doug and I, for instance have been together for 32 years. We know what we're doing. And I'm going to turn it over to Doug to elaborate on all of that.

Yes, great question, Ken. And you, obviously, when you look at technologies today, and we've highlighted this in the past is that we make all of our technology with the exception of a few applications, one of them being our collaboration tool. Our collaboration tool is what we use to share screens and do video conferencing and do some of the applications that we need in today's environment.

And that white label offering that we have is a good offering when we look at the NetSapiens SNAP HD, it's a tremendous offering. And so that's definitely an upgrade that we will add into the portfolio. I mentioned the 240 plus integrations that they've got with their API library that they've got and that's a tremendous opportunity for us when we look at needing integrations with things like Microsoft teams and other applications out there. Those applications are robust and already ready to go. So for the right opportunities, we're going to be able to pick and choose what's the best fit and where that positioning is.

So it really gives us the best of both worlds to be able to go out there, analyze the customers' needs and make the right presentation for them.

Congratulations.

Thank you.

Appreciate it.

We have no remaining questions in queue.

All right. Well, I want to thank everyone for joining us on this conference call. We've got a lot of good things we'll be able to report when we report first quarter. And by then, hopefully, we'll have the NetSapiens thing completely finished. And we look forward to being with you next time around. Good afternoon, everyone.

Okay. Thanks, everybody.

Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.