Digimarc Corp (DMRC) 2017 Q2 法說會逐字稿

Good afternoon, and thank you for participating in today's conference call. I will now turn the call over to Bruce Davis, Chairman and the CEO of Digimarc. Mr. Davis, please proceed.

Thank you. Good afternoon, everyone. Welcome to our conference call. Charles Beck, our CFO, is with me. On the call today, we'll review Q2 financial results, discuss significant business developments and market conditions and provide an update on execution strategy. We will archive this webcast in the Investor Relations section of our website.

Please note that during the course of this call, we will be making certain forward-looking statements, including those regarding revenue recognition matters, results of operations, investments, initiatives, perspectives on business partners, customers, prospects, industry trends and growth strategies. We also will discuss from time to time, information provided to us by channel partners and actual and potential customers about their business activities. We're providing this information as to understand it was represented to us. We do not verify nor vouch for such information.

Such forward-looking statements and statements about partners and customers are subject to many assumptions, risks, uncertainties and changes in circumstances. Any assumptions we share about future performance represent a point in time estimate. Our actual results may vary materially from those expressed or implied by such statements. We expressly disclaim any obligation to revise or update any assumptions, projections or other forward-looking statements to reflect events or circumstances that may arise after the date of this conference call. For more information about risk factors that may cause actual results to differ from expectations, please see the company's filings with the SEC, including the Form 10-Q that we expect to file shortly.

Charles will begin by commenting on our financial results. I'll then discuss significant business developments, market conditions and execution strategy. Charles?

Thanks, Bruce. Good afternoon, everyone. Revenue for the quarter was $5.6 million, up slightly from $5.5 million in the second quarter of last year. Digimarc Discover and Barcode bookings were $100,000 during the quarter, flat with Q2 last year. We continued to expect lumpiness in quarterly bookings in the early stages of market development due to timing and varying provisions affecting bookings. Gross margin was 62% in the second quarter, unchanged from Q2 last year. Operating expenses were $1.8 million or 21% higher than the second quarter of last year. The increase reflects previously noted increases in staffing for sales, marketing, engineering and operations to expand our capabilities in selling and delivering the Digimarc Barcode to retailers and brands. We hired 17 employees during the second quarter. Net loss for the second quarter was $6.9 million or $0.68 per diluted share versus a net loss of $5.3 million or $0.62 per diluted share in the same quarter last year. During the quarter, we raised $17.7 million of new capital through a registered direct offering. We sold 500,000 shares of our common stock in response to an unsolicited offer from high-quality, long-term focused investor. Terms of the sale included a 6-month restriction on sale or lending of the shares. The $35.55 share price, a 19% premium over shares sold in the August 2016 financing was calculated using an average market price for 20 days preceding the closing. There was no discount.

Total transaction costs were less than $40,000. We invested $6.1 million of working capital during Q2, including $5.2 million to fund operations and $500,000 for capital expenditures. Cash usage was higher than last quarter reflecting higher headcount costs and the timing of customer receipts. Q1 included receipt of a large recurring annual license fee payment. We ended the quarter with $67 million in cash through marketable securities. We anticipate cash usage will be between $7 million and $7.5 million in the third quarter, reflecting the impact of increased staffing and roughly $700,000 higher CapEx than Q2 versus facility build-out costs to accommodate the additional staff.

For further discussion of our financial results and risks and prospects for our business, please see our Form 10-Q that we expect to file shortly.

Bruce will now provide his comments on significant business developments, market conditions and execution of strategy.

Thanks, Charles. The retail industry is undergoing a major transformation. The market was rocked during the quarter by Amazon's announcement of the acquisition of Whole Foods. The pace and scale, redefinition of the landscape appears to be accelerating. We believe these changes are positive for Digimarc. Our platform aims to mitigate the obvious tension between offering low prices on the one hand and high engagement in convenience on the other. The goal of all retail is to provide a pleasant and efficient shopping experience at the lowest possible cost. Reliable efficient auto identification permeates these goals. Wegmans exemplifies high engagement seeking more efficiency and Aldi represents high-efficiency that would benefit from better consumer engagement. Amazon is extremely efficient and engaging, dominating online retail. Walmart dominates physical retail and desires to become more efficient and engaging. Amazon is moving into physical retail, while Walmart grows online. We believe that our platform can play an important role for all these companies. Amazon embodies many of the ideals of the redefined marketplace. They are efficient, engaging and reliable. It's easy to see how Whole Foods won't have these competitive advantages. The rest of the industry must change its posture regarding technological innovation in the face of Amazon's relentless advance, soon to become a physical retail as well as online. And as I mentioned in prior calls, we've been successful in creating broad awareness and interest in Digimarc among leading retailers and brands in the U.S. Initial interest among European prospects has been encouraging. This has led us to open a local office in Cologne, Germany in Q1 and to begin recruiting additional staff there. The Japan study group continues to expand both membership and activity levels. I traveled to Japan in late May to meet with study group members and other potential customers and suppliers. While there, I learned more details of pending pilot projects and of several new members joining the study group. And I also learned that the leaders would like to begin marketing platform later this year rather than in 2018 as had been previously planned. Please be mindful, there are many variables in play that could still affect timing of the beginning of commercial sales. Scale of activities has reached a level that justifies the hiring of the Japan Country Manager, as shown by employment listings on our website. Throughout our target markets, there is a new sense of urgency and openness to innovation. These market developments dovetail with the natural maturation of our market development activities and with the increased resource requirements from certain key accounts, in leading us to a significant shift to resources from demand generation, the scaling of key accounts and supporting delivery solutions that we and our partners have been developing. We have an abundance of interest in our platform now. It's time to shift from demand generation to account-based marketing, targeting certain early adopters and significant industry leaders with clearly defined and properly staffed onboarding and implementation teams. To do this, we have stratified accounts according to readiness of market impact. We're focusing on early adopters and certain other highly engaged developing customers and their suppliers to build case studies for successful implementation.

We learned a great deal about the design and production of packaging in the first stage of execution. We have been adding relevant expertise to our staff. We will apply the experience and expertise that we have acquired to scaling business with impactful accounts. The key to the next stage of execution of strategy is orchestration of effective global supply chain participation. Large global brands and even small private brands engage complex supplier relations to deliver their products. We have been mapping these relations and the impact of Digimarc Barcode on their business processes. The technical focus of our company now is on the tools, training and oversight that supports delivery at scale, listening carefully to the advice of customers and their suppliers. Publicly acknowledged early adopters include Wegmans, New Seasons, McCormick and Walmart. Two of these early adopters made presentations in June at the GS1 Connect Event in Las Vegas. Wegmans reported that 2,100 of their 3,000 private brand products have been enhanced and approximately 1,400 are on shelf. The Wegmans representative confirmed their ambition to enhance all private brand products. We share their ambition. We intend to get them there. As the pioneer, Wegmans provides an opportunity to demonstrate scale and the business process reengineering that recognizes Digimarc Barcode as an integral feature of package design.

McCormick who recently announced a $4 billion acquisition of French's mustard reported at Connect on their successful pilot and disclosed that they're moving forward to the next phase of implementation, planning for enhancement of a significant number of products. The presenting executives emphasized the importance of good process to integrate a platform like ours into the global supply chain.

Walmart's use of our software in mobile app for smartphones became known during the quarter through a disclosure in the terms and conditions section of their mobile app. Digimarc enhanced Walmart private brand products were also independently discovered on the shelves in Walmart super stores. It's now obvious that we are a supplier. You may also have noticed some recent job postings for Walmart account management. Although specifics remain subject to MDA, we believe that opportunities with the account warrant the addition of more local resources.

Walmart has been and continues to be a tent pole of strategy. We plan to focus a lot of resources on this account. We are engaged with another very large retailer. The proof-of-concepts has been going well. We are in the midst of a supply chain assessment to determine readiness for moving to production. Amongst CPGs we're focusing on a few global leaders in addition to McCormick to complement the retail leadership, demonstrating the benefits to CPGs in addition to the improvement of retailing. There are activities in many other retail and CPG accounts. We will continue to work to accelerate adoption in these accounts, but we'll obsessed about and maximize our investment in the accounts referred to above. The tenets of our market development strategy are well known. We hope to be in a position soon to test whether the maturing of Wegmans in conjunction with growing involvement with several of the world's largest retailers is adequate to fuel the inflection point that the strategy anticipates.

Our focus is on putting in place the processes and tools that will support scaling business with key customers. Well, you must foster success among the early adopters and work through proof-of-concept and implementation planning with the next wave. Our experience with early adopters is informing optimization of our customer acquisition and service workflows.

Now that we have our foot in the door with numerous leading retailers and CPGs, we need to build sustainable and scalable support for large scale global production. We have developed a good understanding of the significant complexities inherent in managing these enormous customers in educating, training, motivating and assuring quality in the global supply chain.

Much of my focus lately has been on enhancing our company's capabilities to address these opportunities and associated challenges. Thus, operational excellence is at the forefront of execution and strategy at this point. The company must continue to evolve and keep pace with progress in market developments. I believe we have made excellent progress in this regard. At this stage of development, we need to deliver with quality to those accounts we have, close on sales with prospects and grow our share of wallet with all these companies.

Improving supply chain support as well as our own internal business processes will foster more speed and scale in accomplishing these goals. Our work on these matters are defining the standard operating procedures for globalization of the next generation of automatic identification pioneered by the original Barcode.

Amazon was really shaking things up in retail. It appears to be inspiring the rest of the industry to wake up to the need to innovate and embrace new technologies like ours. As against with certain global leading retailers and brands appears to be firming, it looks like our momentum theory of market development is well founded. The near-term focus is on nurturing these early adopters as case studies and successful implementation, deriving best practices from our experiences with them and applying these practices to scaling industry leaders. We believe this will pave the way for a bright future for our company.

The basic building blocks are in place to make progress in and make public relationships with leading brands and retailers. We have a strong balance sheet, an effective working capital management, expanding institutional knowledge and are making progress in implementation of requisite software training and support services. We're also in progress in key performance indicators of increasing bookings and providing other revenues of growing adoption to the industry and the financial markets.

That's it for our prepared remarks. Now we'll open the floor to questions.

Our first question comes from the line of Rob Stone with Cowen and Company.

I just wanted to see if I could connect the dots on a couple of things. I know you are constrained in details of what you can provide, Bruce. But in the past, you talked about having 2 major retailers under master services agreement, would those be the same 2 major retailers you just mentioned in your prepared remarks?

Yes.

Okay. And with respect to the OpEx trend, moving ahead in Japan, Bruce or Charles, if you could provide any comments on how we should think about headcount additions and the run rate of expenses in the second half.

Well. For the time being, Rob, we are focused on getting a country manager in place and part of the responsibilities of the country manager will be building the business plan for Japan. What we have now is a significantly larger study group. So there are many companies that have now gotten involved. There are a handful of pilots underway, and the organization is being managed -- the activities is being managed by that organization, and we don't have boots on the ground as the saying goes. So we'll start with one and we'll build the plan, and then we'll see where that takes us.

So if they're going to start marketing in Japan later this year, what does that mean? Japan is attacking this in a very different way than North America in terms of doing it as a team effort. So does that suggest for rapid or faster pace of implementation?

We think so. We were -- I was surprised, it was actually during my visit in late May, when I was told that they thought, "Well, let's go in '17 instead waiting to '18", based on favorable reviews of the technology by the study group. There are various working groups looking at aspects of the platform. Very different model than the U.S. and Europe. And so they felt that they ought to get going now rather than waiting until next year and so that actually is part of what provokes the desire to have the country manager to have regular participation by us in those discussions. At this point in time, it's the leadership of the study group that believes they should move earlier instead of later. And we are not able at this point in time to provide a lot of support because we don't have local resources there. And we do have a local partner that has worked with us for a long time, who have technical resources to apply, but we'd like to have an on-site company representative in the market in order to coordinate our support.

Okay. I'll try one more question on Walmart, which as you mentioned private branded -- the app plus private branded products in the stores. Can you comment at all on the scope of the intended rollout?

No. We are respectful of their desire for confidentiality. So my summary in the prepared remarks was intended to be consistent with the spirit of their disclosure. There are people who know those things that I just mentioned, I figured that I will make them available to everyone on a mobile basis here, so they all understand what has been publicly disclosed. In the case of the mobile app by Walmart themselves and the case of private branded products on the shelves by people who have gone into the stores and found them, and based on our posting on our website of an account director for Walmart and other support position there, it's pretty obvious that we're doing business with them.

Our next question comes from Jim Ricchiuti with Needham & Company.

With respect to the 2 MSAs, I'm wondering if you can discuss at all what additional resources, either have been or will be required over the next couple of quarters. I mean, you discussed these postings, but just, in general, based on your knowledge of what these customers are doing, is there anything you can share with us in terms of how we might think about additional resources that may be required?

Yes. Yes, I can give you, I think, a pretty good solid answer to that, Jim. So going back to the last quarterly call and my comments actually even in the February call, post NRF we got the surge of interest. And then in the last quarter, of course, Amazon has been turning everything upside down in the market. And so the combination of growing awareness of us and appreciation for what the platform can do and the disruptive effect of Amazon's continuing relentless pursuit of all of retail, it seems. People are getting inspired, it appears to us. And so we've actually had more interest than we can address adequately with our current resources and so we have made a shift in internal allocation of resources that I alluded to in the prepared remarks. And it's combination of 3 things. One is a natural maturation of market development where you begin by creating awareness and generating demand, then you have to address the demand with quality performance. Second is the disruptive effect of Amazon, and the third is that we have engagement with some large accounts, and they want quite a lot of resource dedicated. And so what we've done internally is we've been executing a pivot in internal resource allocation away from demand generation and in the service provision. And so the new hires that we made during the quarter are all oriented toward providing service. That's client services and development clients of roles. So rather than add resources in order to address that account development work, we're shifting resources internally as much as possible rather than hiring to do it. And so this will be, in effect, the cyclical kind of development within the company and the market, as we successfully deliver to these early clients, we expect that to generate more demand, but the demand will require less resources to foster than it had in the first phase of market development. So we're constantly looking at our staffing plans to try to optimize the use of working capital, to not overstaff or to staff inappropriately in relation to evolution of the execution of strategy. So right now, we're hoping that we can get much of the work done without additional hiring, but by redeployment of existing resources.

Okay. Just a follow-up. First, the fact that you're shifting resources as opposed to staffing up and really ramping, does that suggest perhaps a longer lead time before you'll see revenues from these initiatives?

It's intended to have the opposite effect. It's intended to accelerate the generation of revenues. And so we've gotten to a point now where there are lots of interested targets in the marketplace, and the early development work with those accounts is inherently inefficient in early market development. So by focusing our resources on the more mature relationships, the early adopters and those who are ready to move, we hope to have a positive impact on the timing and scale of revenue growth -- bookings growth and revenue growth by making the change.

But as far as the time line for that, any sense you can give us?

No, no. We're pretty consistent in not wanting to get into projections at this phase of market development. So I don't want to start it now.

Our next question comes from Josh Nichols with B. Riley.

Just wondering a little bit -- so you have 2 MSAs in place and you mentioned on the previous call that there was a clear path to large scale production. Could you just probably talk a little bit about some of the hurdles the company has already achieved in that process and how much is there that lies ahead of you and any hurdles or opportunities that you see as far as the progression of that time line?

Well the -- if you like the needs that were satisfying relate to building tools, orchestrating the supply chain, meaning training, incentivizing and supporting in other ways, the existing suppliers of packaging for the accounts, so there's nothing really new there. What we're trying to do though is with some large accounts is to put in place a comprehensive supply chain strategy. And by doing that, we will basically inform the rest of the industry from our work, we hope. And so again, if you look at this in a sort of phased model, in the first few years of market development, we are creating awareness and doing technical demonstration proof-of-concept work. We are now at a point where we want to scale the business with the early adopter accounts and so in doing that we need to become a routine part of the design and production of packaging and that means that we need to orchestrate the supply chain. And Wegmans, as a relatively small brand, in terms of the Wegmans private brand and some of the very large companies in the market have different complexions to their supply chain, but the needs that we've come to appreciate over the first few years of market development allow us to build tools and to suggest process engineering that works across, we think, a wide spectrum of supply chain for the CPGs as well as the retailers. But in order to prove this out to the marketplace, we want to actually get some of the bigger players significantly further along. So that -- if you like the middle market between the smallest of our accounts and the largest, we'll feel comfortable that we've got the supply chain management sufficiently mastered, so that they can adopt faster. Because a lot of what happens here, Josh, in the early development, is we have to prove over and over again with each account because of the confidentiality notions that predominate the American economy. And that's why in Japan it looks like it's probably going to go faster because they are sharing within that group the kinds of information that we would generate for each account here in America.

Great. And then -- that's definitely helpful, Bruce. And then just broadly speaking, I know bookings, of course, can be lumpy, but how should we think about bookings over the next 6 to 12 months as far as like the general trend on average and any large opportunities that you see that could have a sizable impact on that number?

I think bookings will be lumpy for a while and it depends on the approach of these various accounts. We are beginning discussions with another very large account, we've made proposals to them at their requests were in the beginning stages of putting an agreement and they want to have -- and then enterprise agreement, so they don't want to go piecemeal. But I don't know until we get done exactly what that will look like economically. And so as we have seen in the last few quarters, the bookings are not consistent from quarter-to-quarter, which is what I expect and you should expect until we get more scale, and then that volatility will naturally reduce.

Our next question comes from Saliq Khan with Imperial Capital.

Guys, a few questions on our end. The first one being is, could you give us a bit more information about the office that you have in Germany? And also, the market opportunity that we could expect out of that area?

Sure. So we've opened an office in Cologne a few kilometers from GS1 Germany headquarters. We sent one of our senior technical staff to head the office there. We are hiring an assistant for the office and we're planning to bring in at least one more technical resource in the near term there. So it's a small office at this point in time. And my strong preference is to not get ahead of the curve on staffing in relation to the signing of contracts and the solidifying of the implementation plans with accounts there. So we'll have adequate staff to get the deals in place and to map out the requirements for implementation and then we'll staff based on business that we are in there.

Remember earlier in the call, you talked about Amazon and Walmart and the types of things that we're seeing out of there. Certainly, the shift within retail and the shift within those companies itself speaks volumes about what it is that we're seeing in the broader retail industry. But if we think about the realistic opportunity for you guys over the next, say, 3 years, given a longer sales cycle, how do we think about what they're doing? How that matriculates down to a impact directly into Digimarc?

Yes. So the pace of development should accelerate, as our activities mature. So if you think back to launching the platform and having no having ops department and having one sales person, and having people not knowing exactly what it was we're doing other than look like it we had a new twist on the Barcode, it's much harder to sell, then if we've got some of the world leaders in the retail and CPG moving to full production. And so I do expect the pace that you saw historically will not be the pace going forward. So it's not natural for us to have a long sales cycle. It's natural to have a long sales cycle when we're introducing a radical new technology that addresses mission-critical applications. So I'm anticipating the pace of adoption will increase once we've reached that tipping point, but is a fundamental tenet of our strategy, which is that the world leaders have adopted, the rest need to follow quickly.

And then lastly, Bruce, you talked about increasing the amount of staffing that you have across sales, marketing, engineering and operations as well. So if I think about each incremental hires you guys will be doing, how do I think about the ROI to you and your bottom line to surpass that each individual person. Obviously, it's easier to understand it when you hire more sales people. But as you're increasing the amount of types of R&D and marketing people that you're hiring, how do I think about the return potential as a result of all those hires?

That's a good question. The answer resides in the careful analysis of the proposed responsibilities for the new hires and effective management of them to yield a good return, but you're spot on and that's the kind of analysis that we're doing our best to do here. We don't -- we're not hiring willy-nilly. We're actually trying to be quite careful about what we do. And the -- most of the hiring recently has been in client services and in product development.

Our next question comes from [Kevin Hanrahan] with KMH Capital.

I had a question about GS1, but first I wanted to ask kind of an off the wall question. I wonder if it's possible to digitally watermark a bitcoin or any other coin, and if you know of any of those crypto coins that have enhanced their security by using digital watermarking?

There is a white paper, I think, linked on our website from someone in the music industry about the relationship between blockchain, which is the sort of general technology in the foundation bitcoin and digital watermarking, the technology, the foundation of Digimarc Barcode. So the actual sort of barcoding of blockchain wouldn't make sense for technical reasons that we shouldn't go into with this broaden audience, but we believe that the reliable identification of a thing that is then recorded in the blockchain is a natural and expected attribute of future commerce. It's just the way things should be. And one of our business partners, a company called Everything from the U.K. is promoting the notion of a digital twin for every object, and so this digital twins then can relate in the ether via blockchain. So I don't want to get too far down the road on technical discussions here in the investor relations call, but that's the basic way in which we -- that technology would relate.

Okay. And I wanted to ask about the conference, I think you, had in the later part of June out in Las Vegas, with GS1, your partner. Can you give us some commentary about that conference and how it went?

Yes. So I'd mentioned some of my prepared remarks, that McCormick and Wegmans presented their progress report. The -- there were some other folks there, WestRock was talking about us well. We have lots of opportunity for quality time with our colleagues at GS1 U.S. There was a fair amount of discussion at the conference about the Amazon effect and about the crushing effect of being slow to innovate with technology. Many companies, as you've seen across the financial markets, capital markets have been getting just killed for lack of innovation. And so roll back a couple of years and you were hearing the sort of lament on their unwillingness to innovate and to take some chances and to embrace new technology. I think all of that is changing pretty radically this year because of the activities of Amazon and the effects in the capital markets on large retailers and brands of failing to embrace digital technology.

Our next question comes from Jeffrey Bernstein with Cowen.

Just a couple of questions. I think, Bruce, along those lines, you would talk about the -- I don't if it was the fear, but the anticipation that once someone or someone's of importance in the industry went, then everyone else would decide that, okay now it's safe and we have to all get in the water. And if that's how things are going to progress, do you think that there is an opportunity here to bring in systems integrator type consultant -- type partners to kind of help this stuff get done more quickly? That's question #1.

Okay. Well, I think that, that would be very helpful. I've had conversations with a couple of such firms. And in my sense, although they wouldn't say what I am about to say, my sense is that they're waiting for someone to offer them a multimillion dollar check to get involved. They're not the kinds of firms that want to invest capital in new developments or the ones who respond to substantial demand for services associated with new technologies. And so I think we need to build some scale before they'll get interested, but I believe that would be an important ingredient of the development of the market a little bit down the road.

And then just to follow up on that. I think you had originally anticipated that there would be third-party developers of applications based on Digimarc Barcode and Discover to do the myriad of things that people can imagine they would want to do with the technology and that in recent days, you kind of thought that, well, we may have to do this ourselves and it may become a profit center for Digimarc, if that's right. And is that changing or evolving or how you're thinking about that now?

Yes, I think it's both, Jeff. We're -- I outlined previously the solutions that we've been developing. There are other solutions under development by third parties that we're aware of and supporting. And so in the early days here, we'll build some. In the later stages, I hope that we'll be able to focus most of our resources on the platform development, but to the extent the solutions become good profitable activities, we're happy to do them. And so that was not part of the original thesis of the development of market when we launched. We are figuring that, that would be done by others, but as it turns out, it appears best that we do some of them at least.

Okay. And that's encompassed in sort of the incremental resource discussion that we've had already here today?

Yes.

Our next question comes from Jeff Kessler with Imperial Capital.

Beyond the CPGs, can you describe where you are in terms of having an ecosystem set up and ready to go including the scanning companies and ancillary companies. In other words, you've got a number of companies that are in an early position with you on the retail side. You had -- how far along is the infrastructure that can take on the business with you when it ramps up?

Yes, that's part of the resource reallocation that I described earlier. We had been out -- if you don't mind the colloquialism, beating the bushes, as you getting demand generating, getting people interested, and there are many suppliers globally of the many companies that would be good customers of ours. And so at some point, you get to scale service requirement complexity that tends to dilute resources of the company of our size. And so I made the decision a short time ago, that we would recognize that maturation of our efforts and begin actually to not foster additional demand and focus more on key players in the global markets that we are targeting and getting them to a larger scale. And so by doing that it reduces the complexity of the supply chain support requirements for us. But the work that we do to build tools and to reengineer processes and provide training will then be generalizable to the rest of the market. So...

Is this like a pulling function, in which you have larger retailers who are ramping up with you, essentially pulling in the infrastructure around them and forcing the infrastructure to effectively build itself up without you having to do it?

Not exactly. I mean -- I think, I would characterize it a little bit differently. If you take any large retailer or brand, they may have some suppliers in common with 5 other large retailers or brands, but they'll also have some that are distinct. And so if you take on 5 of them, you'll have additional complexity over taking on one of them, in the simplest model. And so what we want to do now for the next phase of development here is to focus on some key accounts and to get their suppliers all settled with tools and process and so forth. And not try to serve too large a number of constituents because it dilutes our resources. And so we think that will have better impact. Better impact in terms of financial performance and in terms of evidence of progress in the marketplace by shifting from a broad demand generation model into the account-based marketing model of focusing large teams on key accounts. We can't do both with our existing capital structure. It wouldn't be unreasonable to do both, but we're not going to. We are going to focusing on the key accounts and deliver scale and public acknowledgment of scale, which will be informative for the product markets first and foremost, but also the financial markets.

This will conclude our question-and-answer session for today's program. I will now hand the program back over to Bruce Davis.

All right. Thank you very much, everyone. This concludes our call, and we'll look forward to keeping you well informed of continued developments with the company. Goodbye for now.

Ladies and gentlemen, this will conclude today's conference call. Thank you for joining us for our presentation. You may now disconnect.