Data Storage Corp (DTST) 2023 Q3 法說會逐字稿

Greetings, and welcome to the Data Storage Corporation 2023 fiscal third-quarter business update conference call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加 Data Storage Corporation 2023 財年第三季業務更新電話會議。（操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, Alexandra Schilt. Thank you. You may begin.

現在我很高興向大家介紹你們的主持人亞歷珊卓·希爾特。謝謝。你可以開始了。

Thank you. Good morning, everyone, and welcome to Data Storage Corporation's third-quarter business update conference call. On the call with us this morning are Chuck Piluso, Chairman and Chief Executive Officer; and Chris Panagiotakos, Chief Financial Officer.

謝謝。大家早上好，歡迎參加資料儲存公司第三季業務更新電話會議。今天早上與我們通話的是董事長兼執行長 Chuck Piluso；克里斯‧帕納吉奧塔科斯 (Chris Panagiotakos)，財務長。

The company issued a press release this morning containing its third-quarter 2023 financial results, which is also posted on the company's website. If you have any questions after the call or would like any additional information about the company, please contact Crescendo Communications at 212-671-1020.

該公司今天上午發布了一份新聞稿，其中包含 2023 年第三季的財務業績，該業績也發佈在該公司的網站上。如果您在通話後有任何疑問或想了解有關該公司的任何其他信息，請致電 212-671-1020 聯繫 Crescendo Communications。

Before we begin, I'd like to remind listeners that this conference call contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, that are intended to be covered by the Safe Harbor created thereby. Forward-looking statements are subject to risks and uncertainties that could cause actual results, performance, or achievements to differ materially from any future results, performance, or achievements expressed or implied by such forward-looking statements.

在我們開始之前，我想提醒聽眾，本次電話會議包含 1995 年《私人證券訴訟改革法案》及其修訂案含義內的前瞻性陳述，這些陳述旨在納入由此創建的安全港範圍內。前瞻性陳述存在風險和不確定性，可能導致實際結果、績效或成就與此類前瞻性陳述明示或暗示的任何未來結果、績效或成就有重大差異。

Statements preceded by, followed by, or that otherwise include the words believes, expects, anticipates, intends, projects, estimates, plans, and similar expressions or future or conditional verbs such as will, should, would, may, and could are generally forward looking in nature and not historical facts, although not all forward-looking statements include the foregoing. Although the company believes that the expectations reflected in such forward-looking statements are reasonable, it can provide no assurance that such expectations will prove to have been correct.

前面、後面或以其他方式包含相信、期望、預期、打算、項目、估計、計劃和類似表達或未來或條件動詞（例如 will、should、would、may 和 might）的陳述通常是向前的儘管並非所有前瞻性陳述都包含上述內容，但著眼於本質而非歷史事實。儘管該公司認為此類前瞻性聲明中反映的預期是合理的，但不能保證此類預期將被證明是正確的。

Important factors that could cause actual results to differ materially from the company's expectations include, but are not limited to, the company's ability to leverage the scalability and performance of Flagship Solutions, the company's ability to benefit from the IBM cloud migration underway, the company's ability to position itself for future profitability, and the company's ability to maintain its Nasdaq listing. These risks should not be construed as exhaustive and should be read together with other cautionary statements included in the company's quarterly report on Form 10-Q for the quarter ended September 30, 2023, annual reports on Form 10-K, and current reports on Form 8-K filed with the Securities and Exchange Commission.

可能導致實際結果與公司預期存在重大差異的重要因素包括但不限於公司利用旗艦解決方案的可擴展性和性能的能力、公司從正在進行的 IBM 雲遷移中受益的能力、公司的能力為未來的獲利能力以及公司維持納斯達克上市的能力做好定位。這些風險不應被視為詳盡無遺，應與公司截至2023 年9 月30 日的季度10-Q 表格季度報告、10-K 表格年度報告以及10-K 表格當前報告中包含的其他警示性聲明一起閱讀。8-K 已向美國證券交易委員會提交。

Any forward-looking statements speaks only as of the date on which it was initially made. Except as required by law, the company assumes no obligation to update or revise any forward-looking statement, whether as a result of new information, future events, changed circumstances, or otherwise.

任何前瞻性陳述僅代表最初發表之日的情況。除法律要求外，本公司不承擔更新或修改任何前瞻性聲明的義務，無論是由於新資訊、未來事件、情況變化或其他原因。

I'd now like to turn the call over to Chuck Piluso. Please go ahead, Chuck.

我現在想把電話轉給 Chuck Piluso。請繼續，查克。

Thanks, Alexandra. Good morning, everyone.

謝謝，亞歷珊卓。大家，早安。

I'm proud to report we generated a 35% increase in revenue to approximately $6 million for the third quarter of 2023. Importantly, we achieved another quarter of profitability, with approximately $158,000 in net income for the third quarter. We believe this is a direct result of our ongoing business growth initiatives, which we have implemented to assist in accelerating our revenue growth and increase profitability.

我很自豪地報告，2023 年第三季我們的營收成長了 35%，達到約 600 萬美元。重要的是，我們又實現了一個季度的盈利，第三季淨利潤約為 158,000 美元。我們相信這是我們持續的業務成長計劃的直接結果，我們實施這些計劃是為了幫助加速我們的收入成長並提高獲利能力。

Notably, CloudFirst as a standalone business achieved $3.7 million in revenue for the third quarter, with a net income of over $800,000 and $1.1 million in EBITDA. In addition, on the equipment and software side, we generated approximately $2 million of revenue in the third quarter, compared to approximately $1 million for the third quarter of 2022, an increase of nearly 100%.

值得注意的是，CloudFirst 作為獨立業務，第三季營收 370 萬美元，淨利超過 80 萬美元，EBITDA 為 110 萬美元。此外，在設備和軟體方面，我們第三季產生了約200萬美元的收入，而2022年第三季約為100萬美元，成長了近100%。

While the increase in equipment sales had a slight impact on our overall gross profit margin, we continue to work to assimilate Flagship business unit and have actively implemented strategies to enhance our gross profit margin by increasing subscription revenues within Flagship and move closer to the 50% margin that we generate at CloudFirst.

雖然設備銷售的成長對我們的整體毛利率有輕微影響，但我們繼續努力同化旗艦業務部門，並積極實施策略，透過增加旗艦業務部門的訂閱收入來提高毛利率，並向50%靠攏我們在CloudFirst產生的利潤。

We have begun the process of bringing together these two excellent companies and their team members to leverage the talent, client basis, assets, and management. Across the organization, with the continued execution and further implementation of our growth initiatives, including ongoing expansion of our distribution channels, increased utilization of our digital and direct marketing programs, optimizing our lead generation program, hosting additional revenue-driven sales events, and exploring strategic M&A opportunities, we can continue to increase revenue while maximizing long-term profitability.

我們已經開始將這兩家優秀的公司及其團隊成員聚集在一起，以充分利用人才、客戶基礎、資產和管理。在整個組織中，隨著我們的成長計劃的持續執行和進一步實施，包括不斷擴大我們的分銷管道、提高我們的數位和直接行銷計劃的利用率、優化我們的潛在客戶開發計劃、舉辦更多以收入為導向的銷售活動以及探索策略併購機會，我們可以持續增加收入，同時最大化長期獲利能力。

Furthermore, we plan to expand internationally as there is a significant need for our innovative solutions around the world, and we intend to penetrate these large underserved markets. Today, a program is underway to reach out to over 1,000 managed service providers in the UK to build partnerships and create a distribution channel. We'll provide updates on our progress as developments unfold.

此外，我們計劃進行國際擴張，因為世界各地對我們的創新解決方案有巨大的需求，並且我們打算滲透這些服務不足的大型市場。如今，一項旨在與英國 1,000 多家託管服務提供商建立合作夥伴關係並創建分銷管道的計劃正在進行中。隨著事態的發展，我們將提供最新進展。

Validating the demand for our solutions, we have continued to witness an increase in visitors to our website. We also have our nurture list, which I have spoken about in the last quarter, that contains over 25,000 organizations who are interested in the potential implementation of our services. We intend to take advantage of these avenues to secure new contracts and increase exposure within the market.

驗證了對我們解決方案的需求，我們不斷看到我們網站的訪客不斷增加。我們還有我們的培養名單，我在上個季度談到過，其中包含超過 25,000 個對我們服務的潛在實施感興趣的組織。我們打算利用這些途徑來獲得新合約並增加市場曝光度。

In addition, we recently launched a strategic sales and marketing initiative, designed to capitalize on the growing demand for our products and services. We're already witnessing the benefits of these initiatives. This includes onboarding new sales representatives, who are dedicated to driving and securing new customers, which supports and works hand in hand with our ongoing lead generation programs. Our new sales representatives are responsible for attending to our nurture list, with the goal of progressing discussions to contract.

此外，我們最近啟動了一項策略性銷售和行銷計劃，旨在利用對我們產品和服務不斷增長的需求。我們已經見證了這些措施的好處。這包括聘請新的銷售代表，他們致力於推動和爭取新客戶，這支持並與我們正在進行的潛在客戶開發計劃攜手合作。我們的新銷售代表負責關注我們的培育清單，目標是推進合約討論。

Concurrently, we launched a new major accounts program. This program is solely focused on increasing our penetration with an existing enterprise and middle market accounts to take advantage of upselling and cross-selling opportunities.

同時，我們推出了新的大客戶計畫。該計劃僅專注於提高我們對現有企業和中間市場客戶的滲透率，以利用追加銷售和交叉銷售機會。

Today, DSC receives a small segment of the ITC spend for these enterprise-level clients. In fact, our ongoing strategy has been to land new customers and expand our relationships over time as their needs grow. Land to expand enables endless cross-selling opportunities. However, with a dedicated team ensuring these opportunities aren't overlooked, we can truly capitalize on significant opportunities within the market.

如今，DSC 收到了 ITC 為這些企業級客戶支出的一小部分。事實上，我們持續的策略是隨著他們的需求成長而吸引新客戶並擴大我們的關係。土地的擴張帶來了無盡的交叉銷售機會。然而，有了專門的團隊確保這些機會不被忽視，我們就可以真正利用市場中的重大機會。

Demonstrating this effective strategy is our recent contract announcement with one of the nation's leading sports and entertainment companies. We have been working with this customer for a number of years and continue to expand our relationship. We are working to implement our cybersecurity solutions into their security systems to assist with protecting their large infrastructure, as well as aid in response times to certain threats. We believe this expanded contract validates how we grow with our clients and continually address their needs.

我們最近與美國領先的體育和娛樂公司之一宣布的合約證明了這一有效的策略。我們已經與該客戶合作多年，並不斷擴大我們的關係。我們正在努力將我們的網路安全解決方案實施到他們的安全系統中，以幫助保護他們的大型基礎設施，並縮短對某些威脅的回應時間。我們相信，這份擴大的合約驗證了我們如何與客戶一起成長並不斷滿足他們的需求。

I'd also like to highlight that this contract follows previously announced contracts as discussed in our last conference call, including a subscription-based contract with the leading promotional company where we're providing fully monitored and managed cloud solutions today.

我還想強調的是，這份合約遵循我們上次電話會議中討論的先前宣布的合同，包括與領先的促銷公司簽訂的基於訂閱的合同，我們今天在該公司提供完全監控和管理的雲端解決方案。

Unfortunately, an unexpected natural disaster happened, and following this, they realized they were unable to recover and resume operations. That was within their required timeframe. And as a result, we have implemented cloud-based disaster recovery and cloud-based infrastructure, allowing the client to run its critical applications on our fully managed, highly secure enterprise cloud, 24/7 dedicated support, ensuring seamless rapid recovery of data during unexpected downtimes.

不幸的是，一場意想不到的自然災害發生了，隨後他們意識到自己無法恢復和恢復營運。那是在他們要求的時間內。因此，我們實施了基於雲端的災難復原和基於雲端的基礎設施，允許客戶在我們完全託管、高度安全的企業雲端上運行其關鍵應用程序，24/7的專屬支持，確保資料在災難復原期間無縫快速恢復。意外停機。

We also announced a multimillion-dollar project with the same sports and entertainment organization we touched on. This previous contract was for a custom solution to provide response time to files, file recovery, and increased storage capacity to support their critical aspects of the security infrastructure. And we secured a subscription-based contract with one of the largest food distributors in the US where we're providing managed disaster recovery solutions to reduce the recovery time of critical data.

我們還宣布了與我們提到的同一體育和娛樂組織的一個數百萬美元的項目。先前的合約涉及客製化解決方案，以提供文件回應時間、文件恢復和增加的儲存容量，以支援安全基礎設施的關鍵方面。我們與美國最大的食品分銷商之一簽訂了基於訂閱的合同，我們為該分銷商提供託管災難恢復解決方案，以縮短關鍵數據的恢復時間。

As you can see, we are witnessing strong contract momentum, and they continue to maintain a 94% renewal rate, with an average term of 24 months, demonstrating our ability to support clients while meeting or exceeding their needs. We currently serve over 450 companies and intend to continue to grow this impressive list.

正如您所看到的，我們見證了強勁的合約勢頭，他們繼續保持 94% 的續約率，平均期限為 24 個月，這表明我們有能力支持客戶，同時滿足或超越他們的需求。目前，我們為超過 450 家公司提供服務，並打算繼續擴大這個令人印象深刻的名單。

Today, data center companies that provide infrastructure on Windows-based type platforms come to Data Storage Corporation for their client -- for our IBM platforms. These infrastructure partners are a great way to expand our distribution with our expertise, excellent staff, while leveraging our assets deployed. Overall, we are executing on a strategic growth plan, which has resulted in profitability for the third quarter of 2023, as well as new and expanded contracts, while increasing our penetration within the market.

如今，在基於 Windows 的類型平台上提供基礎架構的資料中心公司紛紛向 Data Storage Corporation 尋求他們的客戶—我們的 IBM 平台。這些基礎設施合作夥伴是利用我們的專業知識、優秀員工以及利用我們部署的資產來擴大我們的分銷範圍的好方法。總體而言，我們正在執行一項策略性成長計劃，該計劃已在 2023 年第三季實現盈利，並簽訂了新合約和擴大合同，同時提高了我們在市場中的滲透率。

We are also actively exploring potential strategic acquisitions that would assist and support our growth and, more importantly, complement and improve our current operations. As a result, I believe we're at a pivotal point in the company, where we are extremely well positioned to enter large international markets, upsell and cross-sell our products and services, and secure additional meaningful subscription-based contracts, all leading to sustainable profitability and revenue growth.

我們也正在積極探索潛在的策略性收購，這將有助於和支持我們的成長，更重要的是，補充和改善我們目前的業務。因此，我相信我們正處於公司的關鍵時刻，我們處於非常有利的位置，可以進入大型國際市場，追加銷售和交叉銷售我們的產品和服務，並獲得更多有意義的基於訂閱的合同，所有這些都是領先的可持續的獲利能力和收入成長。

At the same time, we have carefully managed expenses and have preserved a strong balance sheet, with over $11.5 million in cash and marketable securities, enabling us to deploy capital efficiently and effectively to support our long-term growth and drive value to our shareholders.

同時，我們精心管理開支並保持強勁的資產負債表，擁有超過 1,150 萬美元的現金和有價證券，使我們能夠高效、有效地部署資本，以支持我們的長期成長並為股東創造價值。

With that, I'd like to turn the call over to Chris Panagiotakos, our CFO, to discuss the third-quarter financials. Please go ahead, Chris.

說到這裡，我想將電話轉給我們的財務長 Chris Panagiotakos，討論第三季的財務狀況。請繼續，克里斯。

Thank you, Chuck. Total revenue for the three months ended September 30, 2023, was $6 million, an increase of $1.6 million or 35%, compared to $4.4 million for the three months ended September 30, 2022. The increase is attributed to an increase in all of our revenue streams during the current period.

謝謝你，查克。截至2023年9月30日止三個月的總收入為600萬美元，較截至2022年9月30日止三個月的440萬美元增加160萬美元或35%。這一增長歸因於本期我們所有收入來源的增加。

Cost of sales for the three months ended September 30, 2023, was $3.7 million, an increase of $1.1 million or 42%, compared to $2.6 million for the three months ended September 30, 2022. The increase was mostly related to an increase -- to the increase in sales.

截至2023年9月30日止三個月的銷售成本為370萬美元，較截至2022年9月30日止三個月的260萬美元增加110萬美元或42%。這一增長主要與銷售額的成長有關。

Selling, general, and administrative expenses for the three months ended September 30, 2023, were $2.3 million, an increase of $240,000 or 12%, as compared to $2.1 million for the three months ended September 30, 2022. The increase was primarily due to an increase in salary expenses as a result of an increase in other employee benefits and an increase in professional fees, offset by a reduction in advertising expenses.

截至2023年9月30日止三個月的銷售、一般及管理費用為230萬美元，較截至2022年9月30日止三個月的210萬美元增加24萬美元或12%。這一增長主要是由於其他員工福利增加和專業費用增加導致工資費用增加，但被廣告費用減少所抵消。

Adjusted EBITDA for the three months ended September 30, 2023, was $487,000, compared to adjusted EBITDA of $162,000 for the same period last year.

截至 2023 年 9 月 30 日的三個月調整後 EBITDA 為 487,000 美元，而去年同期調整後 EBITDA 為 162,000 美元。

Net income attributable to common shareholders for the three months ended September 30, 2023, was $179,000, compared to a net loss of $246,000 for the three months ended September 30, 2022.

截至2023年9月30日止三個月的普通股股東淨利為179,000美元，而截至2022年9月30日止三個月淨虧損為246,000美元。

We ended the quarter with cash and marketable securities of approximately $11.5 million, compared to $11.3 million at December 31, 2022.

截至本季末，我們的現金和有價證券約為 1,150 萬美元，而 2022 年 12 月 31 日為 1,130 萬美元。

Thank you. I will now turn the call back to Chuck.

謝謝。我現在將電話轉回給查克。

Thanks, Chris. Probably a good time to open it up for questions.

謝謝，克里斯。也許是開放提問的好時機。

(Operator Instructions) Adam Waldo, Lismore Partners.

（操作說明）Adam Waldo，Lismore Partners。

Good day, Chuck and Chris. I hope you can hear me okay. Congratulations on a strong quarter.

美好的一天，查克和克里斯。我希望你能聽到我的聲音。恭喜季度表現強勁。

Thanks, Adam.

謝謝，亞當。

Chuck, I want to see if we can drill down a little bit on some of the new business pipeline and backlog metrics and also talk a little bit about what you think the medium-term margin structure and organic growth profile of Flagship might look like now that you've had it in the tent for a while and are making some strong progress with its growth.

查克，我想看看我們是否可以深入了解一些新的業務管道和積壓指標，並談談您認為旗艦的中期利潤結構和有機增長狀況現在可能是什麼樣子你已經把它放在帳篷裡一​​一段時間了，並且隨著它的成長正在取得一些重大進展。

So on the new business pipeline and backlog side, at the end of the first quarter, you reported year-to-date inbound inquiries of about 6,000, at the end of the second quarter, about 19,000, which was very strong progress. And obviously, that's now translating into the revenue growth profile acceleration. What did that metric look like at the end of the third quarter in terms of year-to-date inbound inquiries in 2023?

因此，在新業務管道和積壓方面，第一季末，您報告的年初至今入站查詢約為 6,000 個，第二季末約為 19,000 個，這是非常強勁的進展。顯然，這現在正在轉化為收入成長的加速。就 2023 年年初至今的入站查詢而言，該指標在第三季末是什麼樣子？

I'm going to back it up just a little bit because you talked about Flagship. So right now -- that's okay because you mentioned Flagship and all, so I just want to cover that. And I've mentioned it in the earnings call, we're pretty much finished with the full assimilation of Flagship, and we're bringing both Flagship and CloudFirst together as one company.

我會稍微支持一下，因為你談到了旗艦。所以現在 - 沒關係，因為你提到了旗艦等等，所以我只想介紹一下。我在財報電話會議中提到過，我們已經基本完成了 Flagship 的完全同化，並且我們正在將 Flagship 和 CloudFirst 合併為一家公司。

So we feel that we know the company well enough. We know the talent that's there, the client base. And so we're bringing that together as one company that will be an unbelievable team that will be underneath CloudFirst. And Flagship will be a brand, as well as CloudFirst is a brand today, and so is Flagship, that there'll be more branded items on that.

所以我們覺得我們對這家公司夠了解。我們了解那裡的人才和客戶群。因此，我們將其整合為一家公司，這將成為 CloudFirst 下一個令人難以置信的團隊。Flagship 將成為一個品牌，CloudFirst 今天也是一個品牌，Flagship 也是一個品牌，上面會有更多的品牌產品。

As to the pipeline itself, and we talk about inquiries coming into our site, I think at the end of August, I don't have an update right now, there were over 60,000 visitors coming into our site and they're visiting. And based on the number of pages they might go into on our site, it will generate and classify a lead class.

至於管道本身，我們談論進入我們網站的查詢，我想在八月底，我現在沒有更新，有超過 60,000 名訪客進入我們的網站，他們正在訪問。根據他們可能進入我們網站的頁面數量，它將產生並分類潛在客戶類別。

I happen to have Hal Schwartz here with me right now, who is the President of CloudFirst. So Hal, maybe you can answer that question on the pipeline.

我碰巧現在有哈爾·施瓦茨 (Hal Schwartz) 和我在一起，他是 CloudFirst 的總裁。哈爾，也許你可以回答這個問題。

Yeah, we have seen steady growth in the number of visitors to our website from -- most recently, we're in the 7,000-plus a month range. So if you want to do a quarterly estimate on that, you're above 20,000. And our pipeline continues to grow. We have well above $10 million in total contract value in our pipeline at the moment.

是的，我們看到我們網站的訪客數量一直在穩步增長，最近一個月已達到 7,000 多人。因此，如果您想對此進行季度估計，那麼您的數量就超過了 20,000。我們的管道還在持續成長。目前我們的合約總價值遠遠超過 1000 萬美元。

CloudFirst.

雲第一。

CloudFirst.

雲第一。

So I don't know if that helped, Adam, on that piece.

所以我不知道這對亞當是否有幫助。

That's very helpful. Thanks, Chuck and Hal. And so that's just on the CloudFirst side.

這非常有幫助。謝謝查克和哈爾。這只是 CloudFirst 方面的情況。

Now, if we think about the enterprise and the company overall, obviously, now, with the integration of Flagship pretty far along, what do you think is a reasonable mid-term gross margin for the services? I know the equipment sales are very lumpy. But for the pure services revenue stream, what do we think is a reasonable target gross margin range? And then what is the dollar value of our backlog at the end of the third quarter? And that will end my questions. Thank you.

現在，如果我們從整體上考慮企業和公司，顯然，現在，隨著旗艦店的整合已經進行得很遠，您認為服務的合理中期毛利率是多少？我知道設備銷售非常不穩定。但對於純服務收入流，我們認為合理的目標毛利率範圍是多少？那麼第三季末我們的積壓訂單價值是多少呢？我的問題就到此結束了。謝謝。

Sure. The first piece is that Tom Kempster that heads up Flagship, we hope that we're very, very successful on selling equipment in software and cybersecurity software, support and maintenance on the IBM systems. And when we do that, those margins are somewhere between 10% and 16% on the Flagship side. And so when we talk about equipment, there's been some pretty good margins that have improved. Typically, in the past, we saw margins in the area of 15% to 20%. Those margins seems to be moving up.

當然。第一個部分是領導 Flagship 的 Tom Kempster，我們希望我們在銷售軟體設備和網路安全軟體、IBM 系統的支援和維護方面非常非常成功。當我們這樣做時，旗艦產品的利潤率在 10% 到 16% 之間。因此，當我們談論設備時，有一些相當不錯的利潤率有所提高。通常，過去我們的利潤率在 15% 到 20% 之間。這些利潤似乎正在上升。

And when we look at the Flagship, the annual recurring revenue typically -- and nothing is guaranteed on anything -- but on the annual recurring revenue, it's around $7 million. And that $7 million includes managed services, which is somewhere between a 25% and a 28% margin, and then you have software renewals, hardware maintenance and all of that, that could be somewhere between 10% and 14%. But we've been seeing proposals going out, and almost in some cases, at a 40% margin. So it's pretty hard to determine because, as you mentioned, it's lumpy.

當我們查看旗艦產品時，通常會發現其年度經常性收入（並且沒有任何保證），但年度經常性收入約為 700 萬美元。這 700 萬美元包括託管服務，利潤率在 25% 到 28% 之間，然後還有軟體更新、硬體維護等等，利潤率可能在 10% 到 14% 之間。但我們已經看到提案的通過率幾乎在某些情況下達到了 40%。所以很難確定，因為正如你所提到的，它是塊狀的。

When we look at our service revenue, and I'm talking about subscription-based, it's -- I'm going to say 52%, an estimated 52% on that. And keep in mind that when we look at the margins on that, I believe, Chris, we put around $1 million we spent on equipment, on CapEx, on CloudFirst. And when you take a look at that, we're not using all of that, but we are getting hit with depreciation on that.

當我們查看我們的服務收入時，我談論的是基於訂閱的收入，我會說 52%，估計為 52%。請記住，當我們考慮利潤時，克里斯，我相信我們在設備、資本支出和 CloudFirst 上投入了大約 100 萬美元。當你看一下時，我們並沒有使用所有這些，但我們卻受到了貶值的打擊。

So typically, if we were allowed to carry an inventory on it for unused -- we'll call it storage and anything else -- you'd probably be north of 52%. But let's use 50% to 52% as a margin on subscription-based services. I would say 25% to 28% on managed services. And when we take a look at what we might be entering 2024 with, I would estimate it that -- I give you the estimate to get the fourth quarter, I'll tell you January 2024, I would say an estimate $18 million as a baseline right now.

因此，通常情況下，如果我們被允許保留未使用的庫存（我們稱之為儲存或其他任何名稱），那麼您的利用率可能會超過 52%。但我們使用 50% 到 52% 作為訂閱制的服務的利潤。我想說 25% 到 28% 是託管服務。當我們看看我們可能進入 2024 年時，我會估計——我給你一個第四季度的估計，我會告訴你 2024 年 1 月，我會說估計為 1800 萬美元現在的基線。

ARR on the service side, Chuck.

ARR 在服務端，查克。

Yes. ARR on the service side, on managed services, and software and hardware renewal programs.

是的。ARR 涉及服務端、託管服務以及軟體和硬體更新計劃。

Okay, great. And then the dollar value or new business backlog at the end of the third quarter was, what, I think were $5.8 million at the end of the second quarter.

好的，太好了。然後，第三季末的美元價值或新業務積壓是，我認為第二季末是 580 萬美元。

Yeah. Okay. On those numbers, I was told that around $3.7 million of that is estimated. It's been installed, with another $2 million more to go, plus any new contracts that are in. But just to back into that number, it said -- well, Hal --

是的。好的。據我所知，根據這些數字，預計其中約 370 萬美元。它已經安裝完畢，還有 200 萬美元的資金需要支付，加上所有新合約。但回到這個數字，它說——好吧，哈爾--

$2.8 million more to go.

還需要 280 萬美元。

$2.8 million more to go. Hal just stated.

還需要 280 萬美元。哈爾剛才說。

Okay. Thanks so much. Continued wishes for an ongoing strong progress. Thanks.

好的。非常感謝。繼續希望取得持續的強勁進展。謝謝。

Thank you. Thanks, Adam.

謝謝。謝謝，亞當。

(Operator Instructions) Nick Pinkus, Forest Capital.

（操作員說明）Nick Pinkus，森林之都。

Hey, congratulations on another strong quarter. First question I've got is, you touched on this in the last question, but could you elaborate some more on the potential synergies of bringing Flagship and CloudFirst together?

嘿，祝賀又一個強勁的季度。我的第一個問題是，您在上一個問題中談到了這一點，但是您能否詳細說明一下將 Flagship 和 CloudFirst 結合在一起的潛在協同效應？

Sure. The first piece is that Flagship has 25 very large accounts. And approximately three or four months ago, Chuck Paolillo, our CTO, has been managing all of the service delivery and operations and engineering of both CloudFirst and Flagship. So that was the first stages of that. So one of the benefits is leveraging all of the technical folks that we have in the company, which is a huge benefit.

當然。第一條是Flagship有25個非常大的帳戶。大約三、四個月前，我們的 CTO Chuck Paolillo 一直在管理 CloudFirst 和 Flagship 的所有服務交付、營運和工程。這就是第一階段。因此，好處之一就是利用我們公司所有的技術人員，這是一個巨大的優勢。

On top of that, we have a Director of Sales, and we have a major account team and folks concentrating on distribution on the data center side for those companies that do not have an IBM platform, which is pretty much all of them. So we're with three or four other major competitors. So what ends up happening is by bringing it together, where we have some very good major account type business development, very experienced sales folks, combined with our overall team, we think that placing that together under one leader will be a good advantage to us.

最重要的是，我們有一位銷售總監，我們有一個主要的客戶團隊和人員，專注於為那些沒有 IBM 平台的公司（幾乎所有這些公司）進行資料中心方面的分銷。所以我們還有其他三、四個主要競爭對手。因此，最終發生的事情是將它們整合在一起，我們有一些非常好的主要客戶類型業務開發，非常有經驗的銷售人員，與我們的整體團隊相結合，我們認為將它們放在一個領導者的領導下將對我們來說是一個很好的優勢。

So we'll have -- we had a problem in the beginning with Flagship, frankly, on the cross-selling of the subscription-based services. And that has taken too long, probably 18 months to 2 years. And when Tom Kempster got involved over there, education started happening more and more, how salespeople can make more money by selling subscription-based services.

因此，坦白說，我們一開始在旗艦專案上遇到了基於訂閱服務的交叉銷售的問題。這花費了太長的時間，可能需要 18 個月到 2 年。當湯姆·肯普斯特參與其中時，教育開始越來越多地發生，銷售人員如何透過銷售基於訂閱的服務賺更多的錢。

The clients are also moving over from equipment to cloud-based. So there's some great synergies there to take those 25 very large accounts, in addition to the other accounts, and moving those higher-margin services that are our product that we create out of our six data centers. So we think that the operations is there now. Now, we're bringing together the sales in -- bringing together the sales piece of it.

客戶也從設備轉向基於雲端的。因此，除了其他帳戶之外，還有一些巨大的協同效應，可以利用這 25 個非常大的帳戶，並將那些利潤率較高的服務轉移到我們的六個資料中心創建的產品中。所以我們認為現在已經有行動了。現在，我們正在將銷售情況匯總起來——將其中的銷售部分匯總起來。

On the accounting side, we always have it set up with the controllers who reported solid line to the CFO, to Chris, in dotted line to the presidents and to management. So it's really the next step for us on the sales side to improve cross-selling and bringing it together.

在會計方面，我們總是與財務長建立聯繫，他們向財務長、克里斯報告實線，向總裁和管理層報告虛線。因此，我們銷售方面的下一步確實是改善交叉銷售並將其整合在一起。

I don't know if that helps, Nick, does it?

我不知道這是否有幫助，尼克，是嗎？

It does. Thank you. And you also mentioned plans to build partnerships and create new distribution channels in the UK. Can you talk a little bit more about the UK strategy?

確實如此。謝謝。您還提到了在英國建立合作夥伴關係並創建新分銷管道的計劃。能多談談英國的戰略嗎？

Sure. So we are going out -- every day, there's a number of e-mails that go out to -- we have a list of 1,000 MSPs, managed service providers. It's hard to tell whether they're IBM, whether they're x86, and where they are. But we're trying to focus more on the IBM side only for the fact that this is -- we know the migration has taken place and there are not many competitors that are doing it. I'm not saying there are zero competitors, but we could be one of them in this very, very large marketplace of Europe.

當然。因此，我們每天都會收到大量電子郵件，我們有 1,000 個 MSP（託管服務提供者）的清單。很難判斷它們是否是 IBM、是否為 x86、以及它們在哪裡。但我們試圖更專注於 IBM 方面，只是因為這樣一個事實——我們知道遷移已經發生，而且沒有太多競爭對手正在這樣做。我並不是說競爭對手為零，但在歐洲這個非常非常大的市場上，我們可能是其中之一。

So starting with the UK, so we have e-mails going out saying we're willing to make the investment. We have the cash in the bank and, like we do in the United States and Canada, co-op marketing dollars, support, training, all the marketing material, and help them roll out a program. So that's what's in the e-mail that's going out to these MSPs.

首先從英國開始，我們發出電子郵件表示我們願意進行投資。我們在銀行裡有現金，就像我們在美國和加拿大一樣，還有合作行銷資金、支援、培訓和所有行銷材料，並幫助他們推出計畫。這就是發送給這些 MSP 的電子郵件中的內容。

And we hope to line up with -- frankly, 10 to 15 would be a fantastic start. And with that, then Hal and I will go over to the UK and spend a little time and finding out what folks we want to be in business with. If one turned into an acquisition, that would be great. But right now, we're looking on the partner side.

我們希望能夠與——坦率地說，10 到 15 個將是一個美妙的開始。之後，哈爾和我將前往英國，花一點時間找出我們想要與哪些人開展業務。如果能變成收購，那就太好了。但現在，我們正在尋找合作夥伴方面。

Okay, thank you. You also talked about the nurture list on this call and in the past. It seems like it's an important part of the strategy. Can you talk about how you plan to take advantage of this nurture list?

好的謝謝。您還在這次電話會議和過去談到了培育清單。看起來這是該戰略的重要組成部分。您能談談您打算如何利用這份培育清單嗎？

You want to -- maybe Hal can cover it.

你想要——也許哈爾可以覆蓋它。

Yeah, no problem. So it's part of our overall authority-based marketing and sales strategy. So we have a publication -- educational publications that we produce, and we are reaching out to this list and signing these people up to get them early -- to get on our distribution list and get them early in the buying cycle. So this has proved out to be a good strategy and very successful to this point.

是的，沒問題。因此，這是我們基於權威的整體行銷和銷售策略的一部分。因此，我們有一份出版物——我們製作的教育出版物，我們正在接觸這個名單並與這些人簽約以便儘早獲得它們——進入我們的分發名單並在購買週期的早期獲得它們。所以事實證明這是一個很好的策略並且到目前為止非常成功。

And we've also -- companies that are further along the buying cycle, we will arrange an appointment with a sales specialist, and that's also proved to be successful. So it helped us increase our opportunities substantially and is helping grow our pipeline.

我們也—對於處於購買週期較遠階段的公司，我們將安排與銷售專家的預約，這也被證明是成功的。因此，它幫助我們大幅增加了機會，並有助於擴大我們的管道。

Thank you. And then one last question. This is more of a macro question. But there have been an exploding number of cases of ransomware, major companies like Johnson Controls, ICBC, which I'm sure you guys know is one of the biggest banks in the world. It actually had a -- it disrupted the treasury markets, and it seems like the problem of these attacks is not getting any better. It's actually getting a lot worse.

謝謝。最後一個問題。這更多的是一個宏觀問題。但勒索軟體的案例呈現爆炸性成長，像江森自控、中國工商銀行這樣的大公司，我相信你們都知道這是世界上最大的銀行之一。它實際上擾亂了國債市場，而這些攻擊的問題似乎並沒有得到任何改善。實際上情況變得更糟了。

So I was hoping you could talk about how this is affecting the market and the demand for disaster recovery. You'd think that big companies like these would have something in place, but apparently, they don't.

所以我希望您能談談這對市場和災難復原的需求有何影響。你可能會認為像這樣的大公司會採取一些措施，但顯然他們沒有。

I'm going to answer that in two parts. I'll do the first and Hal can do the second. The first part of it, I've made so many sales calls early years in the business and even recently. And when you sit down with officers of the company and you talk about disaster recovery, for the most part, they're in the dock.

我將分兩部分來回答這個問題。我會做第一個，哈爾可以做第二個。第一部分，我在業務的早期甚至最近打了很多銷售電話。當你與公司高層坐下來談論災難復原時，大多數情況下，他們都在被告席上。

There's more awareness now. But if you ask them how long it would take you to recover various critical systems, their expectations are not in line with what the technology folks within their own company know. So there is a little bit of darkness and expectations not matching up, just as I mentioned in the earnings call with one company with an unexpected downtime.

現在有了更多的認識。但如果你問他們需要多長時間才能恢復各種關鍵系統，他們的期望與他們自己公司內技術人員的了解並不相符。因此，存在一些黑暗和預期不匹配的情況，正如我在財報電話會議中提到的一家公司意外停機的情況。

So this alignment really is not there. Along with the fact that a lot of these problems are also caused by employees that are not educated and the companies are not educating them enough, they help create the problems themselves.

所以這種對齊方式確實不存在。事實上，許多這些問題也是由未受過教育的員工造成的，公司也沒有對他們進行足夠的教育，他們自己也製造了問題。

But as to the growing need for cybersecurity and our services, Hal, you want to touch on that piece? How you see it growing.

但至於對網路安全和我們的服務日益增長的需求，哈爾，您想談談這一點嗎？你如何看待它的成長。

Yeah. There's definitely a huge demand for it. And part of the reason is that a lot of companies don't have a holistic approach to security. Many even large enterprises are not required to meet or gain certification and security standards. And these standards look at the overall big picture for training, best practices, and the like. So there's a huge demand out there from companies that want to gain this knowledge and implement that strategy. And that is part of our overall growth strategy for 2024 is to attack that market and gain traction there.

是的。肯定有龐大的需求。部分原因是許多公司沒有整體的安全方法。許多甚至大型企業不需要滿足或獲得認證和安全標準。這些標準著重於訓練、最佳實踐等的整體情況。因此，想要獲得這些知識並實施該策略的公司有巨大的需求。我們 2024 年整體成長策略的一部分是進攻該市場並在那裡獲得吸引力。

Go on, sorry.

繼續吧，抱歉。

No. It seems to me that it's only a matter of time when you have a company like ICBC that's not putting the right controls in place, and it's disrupting treasury markets. This isn't really a question, but it seems like it's only a matter of time before there's going to be more regulation requiring these services.

不。在我看來，像中國工商銀行這樣的公司沒有實施正確的控制，並且正在擾亂資金市場，這只是時間問題。這實際上並不是一個問題，但對這些服務進行更多監管似乎只是時間問題。

Yes, I would agree.

是的，我同意。

Yeah. Flagship has recently sold, I think, a large cybersecurity and, I believe, one of the IBM products, I believe.

是的。我認為，Flagship 最近出售了大型網路安全產品，我相信，還有 IBM 產品之一。

Yes, the IBM QRadar. And we also have several large security opportunities in our pipeline at the moment.

是的，IBM QRadar。目前我們還有幾個重大的安全機會。

That's great. Thank you, guys, for answering all the questions.

那太棒了。謝謝你們回答所有的問題。

Okay.

好的。

There are no further questions. I would like to turn the floor back over to management for closing comments.

沒有其他問題了。我想將發言權交還給管理層以徵求結束意見。

Thank you for the questions, Nick and Adam. We have successfully implemented our business strategy, and we believe it will support our growth and long-term sustainable profitability. We'll maximize our value to our shareholders. We expect to realize the full benefits of our initiatives over time, and we're excited about the outlook for the business. We look forward to providing meaningful updates to shareholders.

謝謝尼克和亞當提出的問題。我們已經成功實施了我們的業務策略，我們相信它將支持我們的成長和長期可持續獲利能力。我們將最大限度地為股東創造價值。我們希望隨著時間的推移，我們的舉措能夠發揮全部效益，並且我們對業務前景感到興奮。我們期待為股東提供有意義的更新。

And with that, I'd like to thank everyone who joined today on the call. Thank you, and have a great day.

在此，我要感謝今天參加電話會議的所有人。謝謝您，祝您有美好的一天。

This concludes today's teleconference. You may disconnect your lines at this time, and thank you for your participation.

今天的電話會議到此結束。此時您可以斷開線路，感謝您的參與。