ICAD Inc (ICAD) 2024 Q4 法說會逐字稿

Greetings. Welcome to the ICAD Inc. fourth-quarter and full-year 2024 financial results conference call. (Operator Instructions) Please note, this conference is being recorded.

I will now turn the conference over to your host, Rosalyn Christian, Investor Relations at ICAP. You may begin.

Good afternoon, everyone. Thank you for joining us today for ICAD's fourth-quarter and full-year 2024 earnings call. On the call, we have Dana Brown, our President and Chief Executive Officer; and Eric Lonnqvist, our Chief Financial Officer.

Before turning the call over to Dana, I would like to remind everyone that we will be making forward-looking statements on the call today. These forward-looking statements are based on ICAD's current expectations and are subject to uncertainty and changes in circumstances. Actual results may differ materially from these expectations.

For a list of factors that could cause actual results to differ, please see today's press release and our filings with the US Securities and Exchange Commission. ICAD undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this conference call.

Also, please note that management will refer to certain non-GAAP financial measures. Management believes that these measures provide meaningful information for investors and reflect the way that they view the operating performance of the company. You can find a reconciliation of our GAAP to non-GAAP measures at the end of the earnings release.

And with that, I'll turn the call over to Dana.

Fourth quarter marked another strong quarter for ICAD, with our top-line results exceeding expectations as reflected in revenue of $5.4 million. We recorded increased full-year 2024 revenue of $19.6 million and ARR of $9.8 million. Our growth reflects the momentum we are seeing in our transformation strategy, including the accelerating adoption of ProFound Cloud and our broader shift to a software-as-a-service-based business model.

We believe 2024 can be characterized as the year when AI's pivotal role in healthcare was more widely understood and adopted. Across the industry, we saw increasing demand for AI-powered solutions that enhance clinical efficiency, improve diagnostic accuracy, and expand access to high-quality care. In breast cancer detection, AI adoption still has a long way to go with only about 37% of mammography sites in the US currently utilizing AI, but this is rapidly changing as providers recognize the significant benefits AI brings to patient care and workflow optimization.

At ICAD, we are uniquely positioned to lead this transformation. With FDA cleared, clinically proven technology that reduces radiologists' reading time by 52% and improves cancer detection by over 23%, our solutions are used by healthcare providers in over 50 countries. In 2024, we received FDA clearance of ProFound Detection version 4.0, the most advanced AI detection solution we've launched to date.

Version 4.0 delivers a smarter AI with a 22% improvement in detecting aggressive cancers compared to Version 3, including a 50% increase in sensitivity for dense breast tissue and a 60% improvement in identifying invasive lobular cancers. With an 18% reduction in false positives, it also enhances workflow efficiency and reduces unnecessary follow ups. improving both the patient's experience and clinical outcomes.

Additionally, for the first time, our AI now integrates prior exam analysis, replicating a radiologist's own comparative reading approach to increase diagnostic confidence. Coupled with our SaaS expansion through ProFound Cloud, the version 4.0 is a key milestone in ICAD's long-term growth strategy. Our transition to a reoccurring revenue model strengthens financial predictability, positioning us for continued success. As we move through 2025, we remain focused on driving innovation, expanding our SaaS footprint, and ensuring that our AI solutions reach more providers and patients worldwide.

Turning now to our Q4 deal highlights, in the fourth quarter, we closed a total of 106 deals. 54 perpetual, 33 subscription, and 19 cloud. Some of these deals included expanding at Sutter Health via our partner, Ferrum, where we have ICAD solutions installed and running at 16 of their 42 hospitals and breast centers. The ImageCare and PINK Breast Center in New Jersey signed a multi-year cloud contract with an upgrade to the latest ProFound AI, and Hartford HealthCare added 3D detection and density to their existing 2D license.

On the partnership front, we signed a partnership agreement with Olea for their breastscape MRI AI solution. And last month, we also announced a new partnership with Koios Medical, providing radiologists with an AI-powered pathway for breast US with the Koios Smart Ultrasound solution. This partnership broadens the scope of offerings for ICAD in North America to align best-in-class AI solutions with the care path of the patient, from screening mammograms to breast ultrasound and breast MRI.

These new partnerships not only expand ICAD's commercial opportunities in North America but also provide clinicians with a more complete end-to-end AI-powered approach to breast cancer screening and detection that enhances workflow efficiency and diagnostic accuracy. We've also begun a new push in Quebec and Ontario, Canada, with private medical centers starting to move to 3D imaging and the need for both AI detection and density assessment.

On the global partnership front, we signed a distribution agreement with a new distributor in South Africa, MedMB, and are already actively engaging in several new accounts. MedMB focuses on hosting, implementing, and supporting radiology department applications throughout South Africa, and this is part of our OUS expansion strategy. MedMB will be reselling our full suite of solutions.

We also signed our first deal with Sectra on the Sectra Amplifier Platform at London North West University Healthcare NHS Trust. This is a very important first step in expanding our Sectra channel. This is a docker implementation, meaning on the Sectra's AI platform amplifier. North West London is part of the NHS and serves approximately 1 million patients across London. We also signed a new distributor in Portugal, part of our OUS expansion strategy in the EU. And lastly, we secured final regulatory approval in Jordan, a new expansion country for us.

And now for an update on our SaaS transition. During 2024, we made tremendous progress with our transition to a SaaS-based model, a pivotal shift that is fundamentally changing how we deliver our technology and how we generate revenue. This transition is enabling us to expand accessibility to our AI solutions, enhance financial predictability, and position ICAD for long-term, sustainable growth.

In the fourth quarter, we saw continued momentum in cloud adoption, with 19 of our closed deals coming through ProFound Cloud, compared to 13 deals in Q3 and 10 cloud deals in Q2, which was the first quarter of its availability. This reinforces the increasing preference for software-as-a-service solutions that eliminate large upfront costs while ensuring continuous access to cutting-edge AI advancements.

As a result, annual reoccurring revenue, or ARR, grew 11% year over year, demonstrating strong customer demand and the scalability of our cloud platform. We believe there is a significant opportunity for ICAD to increase market share by providing a cost-effective, flexible alternative to traditional perpetual licensing models. Our cloud platform allows facilities to implement AI solutions more efficiently without the burden of large hardware investments, IT maintenance, or software update costs.

While we are encouraged by the strong adoption trends, It is important to note that SaaS transitions can impact near-term GAAP revenue recognition, since perpetual license sales provide immediate revenue, whereas with cloud deals, revenue is recognized over time. For example, a perpetual deal would traditionally generate all its revenue upfront, while a cloud deal of the same value would be recognized quarterly over its contract term.

In the short term, this dynamic may cause some flattening in reported GAAP revenue, but at the same time, it creates a backlog of recurring high-margin revenue that builds quarter over quarter, leading to greater financial stability and visibility over time. To drive this transition, we are leveraging our strong cash position to support the expansion of ProFound Cloud. This includes investing in scaling our cloud infrastructure, onboarding new customers, and expanding our commercial reach.

As our reoccurring revenue base grows, we expect to see improvement in profitability and cash flow. Eric will provide more details on the financial impact of this transition, but we remain highly confident in the long-term benefits of SaaS, both for our customers who gain access to a continuously improving AI solution, and for ICAD as we build a more predictable, scalable, and high-margin revenue model.

Turning for a quick review of our conference participation and industry engagement in the fourth quarter, at JFR 2024, ICAD debuted the global commercial availability of ProFound Cloud, marking a key milestone in our transition to a SaaS-based model. In the first two full quarters of US availability, ProFound Cloud processed nearly 100,000 cases, demonstrating rapid adoption and delivering AI-powered breast imaging solutions with more than 50% faster processing speeds compared to traditional on-prem solutions.

The platform's scalability, affordability, and regulatory clearances in key markets, including South Africa and the UAE, position it as a transformative solution for healthcare providers worldwide. At RSNA 2024, we announced a groundbreaking partnership with Cascade Health to launch ProFound Health, a virtual second-read service providing AI-powered breast health insights to patients who otherwise wouldn't have access to AI-based screening. This initiative aligns with our mission to democratize access to early breast cancer detection and support health equity in mammography.

Closing out the year at SABCS 2024, ICAD showcased four novel research abstracts demonstrating the impact of AI in improving early breast cancer detection, assessing disparities across diverse populations, and exploring the link between breast arterial calcification, or BAC, and cardiovascular risk. Notably, our research highlighted a higher prevalence of BAC in women with mammographically-detected breast cancer, suggesting that AI-powered BAC detection could play a role in integrating cardiovascular risk assessment into routine breast cancer screenings.

On the investor front in Q4, ICAD participated in the LD Micro Main Event XVII and the Craig-Hallum Alpha Select Conference, engaging with institutional investors to discuss our strategic SaaS transition, recent regulatory milestones, and long-term growth trajectory. Most recently, in February, we participated in the BTIG 12th Annual MedTech Digital Health, Life Science, and Diagnostic Tools Conference in Snowbird, Utah, where we continue to build relationships with investors and provide updates on our progress.

And now we'll hand it over to Eric for a review of our financial performance.

Good afternoon, everyone. And thank you, Dana. Before I cover our results, I want to take a few moments to add more context to our outlook for the SaaS transition. Historically, transitions like this can take up to three years. We expect 2025 to represent a significant phase of this shift as cloud adoption accelerates and begins to represent a larger portion of our overall business.

As noted in prior calls, this transition will result in a short-term headwind to both GAAP revenue and cash flow. We do, however, view this as a necessary step toward a more predictable and high-margin financial model. We also recognize the importance of offering flexibility through both subscription and perpetual options, particularly for our OEM partners, ensuring we can meet a broad range of customer needs while continuing to scale our business.

I'll now summarize our financial results for the fourth quarter and year-ended December 31, 2024. As a reminder, we are reporting annual recurring revenue metrics to help illustrate our progress during our SaaS transition. Total ARR, or TARR, represents the annualized value of subscription license, maintenance contracts, and active cloud services at the end of a reporting period.

Maintenance Services ARR, or MARR, represents the annualized value of active perpetual license maintenance service contracts at the end of the reporting period. Subscription ARR, or SARR, represents the annualized value of active subscription or term licenses at the end of a reporting period. Cloud ARR, or CARR, represents the annualized value of active cloud services contracts at the end of a reporting period.

Total ARR, or TARR, was $9.8 million at the end of Q4 2024, up from $8.8 million at the end of Q4 2023. Maintenance Services ARR, or MARR, was $6.4 million at the end of Q4 2024, down from $7.1 million at the end of Q4 2023. This decline is driven largely by customers migrating to subscription and cloud offerings. Subscription ARR, or SARR, was $2.6 million at the end of the fourth quarter of 2024, up from $1.7 million at the end of the fourth quarter of 2023. Cloud ARR, or CARR, was $28 million at the end of the fourth quarter of 2024, representing the accumulation of the first three quarters of recurring revenue from our cloud product.

We are pleased to report that in the fourth quarter of 2024, we closed 54 perpetual, 33 subscription, and 19 cloud orders. For the full-year period, we have secured 242 perpetual, 98 subscription, and 42 cloud orders. Please note that these counts include all new upsell and migration deals and exclude standard renewals. It is important to note that Q4 was a particularly strong quarter with some deals that we expected in Q1 of 2025 moving into Q4.

Revenue for the quarter was $5.4 million, an increase of $0.7 million or 14% over the fourth quarter of 2023. For the 2024 full-year period, revenue was $19.6 million compared to $17.3 million in 2023. Fourth-quarter 2024 product revenue was $3.7 million, up 24% over the prior year. For the full-year period, product revenue was $12.5 million compared to $9.9 million in 2023. Fourth-quarter 2024 service revenue was $1.7 million, flat versus prior year. For the full year, service revenue was $7.1 million compared to $7.4 million in 2023. This decline was largely driven by service customers migrating to our subscription or cloud products.

Moving on to gross profit, on a percentage of revenue basis, gross profit was 86% for the fourth quarter of 2024, which was down from 91% in the fourth quarter of 2023. The year-over-year decline is driven largely by a one-time benefit in Q4 23 along with amortization of our cloud product completed in Q1 24. On a pure-dollar basis, gross profit for the quarter was $4.7 million as compared to $4.3 million last year.

Total operating expenses for the fourth quarter of 2024 were $5.5 million, $8.5 million or 10% increase year over year. The largest driver of the increase was investments in R&D and regulatory to support plans for both product and regional expansion. For the 2024 full-year period, total operating expenses were $22.9 million compared to $22.5 million in 2023.

GAAP net loss from continuing operations for the fourth quarter of 2024 was $0.9 million, or $0.03 per diluted share, compared with a GAAP net loss from continuing operations of $0.5 million or $0.02 per diluted share for the fourth quarter of 2023. For the full-year period, GAAP net loss from continuing operations of $5.6 million or $0.21 per diluted share compared to $7 million or $0.27 per diluted share in 2023.

Non-GAAP adjusted EBITDA loss for the fourth quarter of 2024 was $0.5 million compared with $0.4 million in the fourth quarter of 2023. For the full 2024 year period, non-GAAP adjusted EBITDA loss was $5.4 million compared to $6.8 million in 2023. Moving to the balance sheet, as of December 31, 2024, the company had cash and cash equivalents of $17.2 million compared to cash and cash equivalents of $21.7 million as of December 31, 2023. Net cash used for operating activities for 2024's 12-month period was $3.9 million compared to $5 million for the 2023 12-month period.

This concludes the financial highlights of our presentation. I would now like to turn the call back over to the operator to lead the Q&A.

(Operator Instructions) Marie Thibault, BTIG.

Hi, good afternoon. Thanks for taking the questions. I wanted to congratulate you on the nice momentum to end the year. But Eric, I heard the commentary about thinking about things being a little more flattish going forward, that there were some orders pulled forward into Q4 from Q1. So I wondered if you could just kind of give us a holistic outlook for how you're thinking about the CapEx environment, the budget environment for hospitals and centers this yea. Anything on cadence on a quarterly basis? Anything on momentum or sequential increases we might expect in the cloud deal count? Any more detail on that would be great.

Yes. Hi, Marie. Yes, I think you can see from the last few quarters that we're still having some lumpiness in revenue. So Q3 historically has been one of our slower quarters. Q4 has been one of our stronger quarters, and you'll see that in the numbers. I think there's a lot of momentum in cloud. So we've seen now the three quarters that we've had cloud commercially available, we've seen growth in deals. And the conversations are continuing. It's a great experience. It's performing very well. In '25, we do expect this momentum to continue for cloud. Q4, I think two things happened.

One, really strong execution by the sales team, but there is some timing still in the business with perpetual and some of the subscription revenue. A few deals slipped from Q3, fell into Q4; and also a number of deals, as we noted, originally were slated for Q1 '25 that were pulled into Q4. So there will be some timing variances as we go through this transition, but I think the biggest benefit of getting to a SaaS-based business will be to eliminate just this kind of lumpiness that we're seeing.

Sure, we look forward to that visibility too. Okay, very helpful. And then I wondered if I could get some feedback on kind of the early reactions from customers to ProFound Detection version 4.0. What you're hearing from the field, if you're seeing that this is catalyzing more interest, accelerating deal closings, any kind of feedback on that, what I know is very early on launch. Thank you.

Hey, Marie. So I actually spoke with our Chief Product Officer yesterday, hoping that we would get this kind of question today, kind of an update on the performance of 4.0 in terms of its accuracy, which is its ability to get more cancers right and more no cancers right.

So if you think -- if you want your accuracy to be at kind of both ends of the spectrum and you don't want a lot of calls, if you will, to be in the middle, which is kind of that gray zone, it's actually performing even better or more accurately out in clinical practice than it even did against our regulatory data set that we used for the FDA clearance. So we're thrilled. We were very pleased with its accuracy when we did the FDA submission, but we're actually seeing even higher accuracy when it comes to patient outcomes out in the field.

So our marketing team and our sales team now that it's been out for, I guess, you would call it a full quarter, right, since it got cleared right around Thanksgiving and then we had to finish up its packaging so it could actually be shipped, are just now beginning to kind of take this message out to prospects and customers looking to upgrade. So hopefully by the time we're on this call with you next quarter, we'll have more evidence of kind of what the pull-through based on those results has been.

Okay, that's very encouraging. Thanks for taking the questions this evening.

Per Ostlund, Craig-Hallum Capital.

Great. Thank you very much, and good afternoon, Dana and Eric. That was a fantastic quarter, much better than even the pre-release would have suggested. Kind of piggybacking off of Marie's question, I think you alluded to the pull forward, and I appreciate the commentary about maybe some slippage from Q3. How much, I'm curious, and you also did talk about V4 there as well.

But how much -- did the confluence of V4 clearance right before RSNA -- did RSNA catalyze a little bit more? Because there might have just been a little bit more buzz late in the quarter that that might have triggered some quicker decision making on the part of your customers.

So I'll go first, and Eric, I mean, totally comfortable if you have a different point of view or want to add some other color commentary. But I really think Q4, one, I don't think that exceeding our expectations, right, in Q4 had very much to do with version 4. You don't know until literally you get the memo from the FDA that it's going to be cleared. And that happened so late, right around RSNA, and then there's only a few shopping weeks left in December.

I think to the point Eric made earlier, the performance in Q4 had to do more with one sales team execution. We're kind of wrapping up a full year with some of the revamping of that team that we did. I do think that the marketing team is also hitting its stride in getting out the right messaging.

They've been able to develop some very effective targeted customer programs, so not just Legion, but even with existing customers. And then you just have budget timing, right, that always helps and creates a lift in fourth quarter. People are anxious to use budgets. They're not sure what might happen in the upcoming year. So I think it's just -- everything lined right in Q4.

Sure sounds like it did, yes. Let's talk about the machinations of ARR. So go live is the trigger for inclusion. And I think last quarter when we -- on this very call, I think that trigger point was probably lost on a lot of people, certainly myself included, as you had some bigger deals that hadn't gone live at the point of the end of Q3, so they weren't in the ARR. Now we did see the ARR go up from Q3 to Q4.

How does that dynamic now look as we exit Q4? Are there meaningful deals? Because again, you had a nice sequential bump up in deals. Are there meaningful deals that likely hit ARR in Q1 or Q2 that hadn't hit yet in Q4? I'm guessing this is the kind of thing we could be chasing every single quarter because there's always going to be stuff that happens late in the quarter, but just kind of curious how you're looking at that overall dynamic and just making sure we understand that as best we can.

Yes, I can jump in, Dana. Do you want me to comment?

Yes.

Yes, I think what we're experiencing, the cloud implementations, there's more security checks involved. So the implementations take a little bit longer. So I think it's fair to assume about a quarter lag. So when we report deal counts, those are when the deals are closed, not live. And to your point, they don't hit our ARR until they go live. So I think every quarter that we sell more cloud deals, you kind of have more in the backlog.

So just anecdotally, we sold more deals in Q4 for cloud. We'd expect kind of a bigger bump from those deals in Q1 '25. So I think you're thinking about it right. We've discussed internally possibly reporting more backlog metrics this year that I think will help to show what revenue billing and ARR is in the backlog to be recognized at a later date. I think more to come on that, but I think just anecdotally with more deals in Q4, you could expect more in backlog from cloud. From Q4 deals, it will hit in Q1.

Okay, that makes sense. I just did not want to lose the plot on that because I hadn't anticipated that last quarter properly, and so I just wanted to make sure that I didn't miss it again and that the rest of us didn't miss it again. Dana, you talked about -- well, you both talked about sales force execution.

Dana, you mentioned the marketing team hitting its stride. When you announced these more recent collaborations, the Koios Medicals, the RamSofts, help us understand how they kind of fill in the blanks around what you're all doing internally. How do they contribute? How will we see that kind of manifest itself a little bit?

So our approach to partnerships, and I'm going to call them technology partnerships that round out the patient care journey after screening happens, have been driven by customer requests or inquiries. So often, they won't necessarily name a company name, but they'll say, for example, it's great that your AI detection is helping me find cancers faster. And earlier, do you have anything that can help in follow-on diagnostics? I'm using ultrasound. I'm using MRI.

And so we've been looking for partners that can help us field these questions and requests from our customers along those lines. And it also is a great way for us to understand market adoption on some of these, because if you look at the overall, I'll say, kind of size of the mammography market, sometimes in the follow-on imaging, it's not as necessarily large or as well covered.

And so it's a great way for us to, number one, meet the requests from the customers; number two, learn a lot more about the market dynamics and some of the follow-on areas, and help inform our corporate roadmap going forward. Do we continue to partner? Is it something that we would build?

Is it something that maybe in the future we're in a position where we could actually acquire? But for right now, I would say particularly some of the ones that we've announced over the past year, it's been going really well. And it's like we've already begun -- we've already been working with them in the field before we formalize it or memorialize it as a partnership.

Okay, very good. Thanks for that color. I appreciate it.

Yale Jen, Laidlaw & Company.

Good afternoon, and my congrats on the great quarter as well. As we talk about top line, so I'm going to start with a little bit on the operating expense side. We noticed that for the last two years, the operating expenses is roughly the same, almost the same. So should we anticipate, for example, for '25 or maybe even for '26, that will be the level we should be modeled with?

Dana, you want me to take that one?

Yes, that would be great.

Okay. No, I wouldn't assume that. I think there's a number of initiatives we have on track for this year. So I don't think you can assume that the OpEx run right now will continue into the future.

So I should assume that there will be some upward expenses increase in general, directionally speaking?

No, I can't really give too much guidance on the future OpEx. I think it's -- you can see the trend of where we've been. I'm sure, in Dana's script, she announces some of the initiatives we're undertaking, but I can't really guide on that, yes.

Okay, not a problem. And maybe on the top-line side, in terms of SAAR and the CAAR, we know that has increased over the years, and that's certainly a great very positive sort of directional thing. Again, with some -- any kind of color or guidance you guys may offer in terms for, let's say, for this year, how should we see that? I understand there's a lumpy -- somehow, some level of lumpiness or maybe even seasonality to that? But nevertheless, any sort of colors we can gain?

Yes, I think -- so we've had that uptick of approximately $1 million of ARR in the last year. I think, again, without guidance, just anecdotally now that we have our cloud business, our cloud product, three quarters under our belt, the deals have been growing every quarter, and we expect that momentum to continue for cloud. And that should -- just mathematically, that should fuel more ARR growth.

So internally, one of our biggest initiatives is, if not the, is to grow our ARR and convert to this recurring base we've talked about a lot. But I think this -- and I would pay attention to the mixed shift of deals that we release with perpetual and subscription and cloud. And the more we see that shift going forward, it should -- mathematically, it should translate to faster ARR growth. That's strategically the plan internally.

Okay. Maybe the last question here that -- again, congrats on the approval of 4.0. Do you guys anticipate 4.0 or version 4 will have much more sort of significant impact in terms of adoption because of -- several of those metrics have been improved versus the last version? And how should we think about that as well? And thanks for addressing those questions.

So I think in general, yes, I think we're going to see better adoption. Well, let me pause just a second, because I think 4.0 is in its first few months of availability. And I think if you probably rolled back the clock to when ICAD first released version 3, it also probably helped to accelerate adoption, customers choosing ICAD in its first several months of release as well.

But I think if you look at 4.0 today, the good news is it addresses several big requests that came from customers. One was reducing the number of what we call busyness, right, or marks on the mammogram that the radiologist didn't need to spend a lot of time on. So we increased not only the accuracy, but we also reduced the number of kind of busy marks.

The other thing that we did with 4.0 that was requested by radiologists was incorporate the analysis of priors into the algorithm, which is better replicates the way a radiologist reads manually a mammogram. They look at the prior image, and then they compare that to the current image, the one that was just taken. We actually do that inside the algorithm, so we don't process them individually. We actually process them together.

So that's a huge improvement and meets a very high demand and ask from radiologists out there. So those are kind of two unique differentiators for 4.0. But we're already thinking about what comes next. Releasing enhancements and updates already are in place for 4.0, so hopefully we can actually improve the speed with which we come out with updates, minor upgrades, before we get to the next version.

Okay, great. I appreciate that. Maybe just one more question. Does the 4.0 now will be the default launch product to all customers, or as well as whether existing customer will be upgraded to 4.0, or how this -- or they need to pay for a fee for doing that and the things?

Yes, so it would depend on whether or not the customer was current on a maintenance and support agreement. If they are, and they're ready to update -- because remember, it could require some additional training, rollout, communication. So it's not something that they're necessarily going to let just happen overnight. But if they are current on maintenance and support, they can get the new version. If they're not current on maintenance and support, then there is a fee to kind of get them current on maintenance and support agreements, and then we would go in and do the implementation of 4.0.

Okay, great. Thanks a lot again. Congrats on a very great quarter there.

Gene Mannheimer, Freedom Capital Markets.

Thank you. Congrats on a great finish to the year. I had a question on some of the components of the ARR, so in particular, maintenance. So maintenance ARR declined what looks to be about 9%. And Eric, you talked about that as maybe by design as you convert more customers to subscription in cloud. But I'm just curious if there was any outsized churn in the quarter that we should be aware of driving that number, or is that -- would you characterize it as normal churn?

Yes, thanks, Gene. Yes, you're interpreting all of that correctly in terms of the shift. Churn is another one we mentioned, backlog, a little bit earlier in the call. Churn is a metric we've discussed reporting externally. We've got a number of questions on that. So even though we don't report, I would say that there was nothing unusual as far as churn and Q4 that I would point to, or no large customer.

I would say it was in line with prior quarters as far as the decline being driven by expiring service contracts that convert over to a cloud or subscription deal. We haven't released those percentages of percent of customers that do migrate at this point. But it's been very successful in the last, I'd say, three to four quarters since we had cloud. Sales teams really got the sales process down in terms of showing the benefits to these customers of moving off maintenance and getting onto a cloud or a subscription deal. So it is a positive for the year, and I don't think there's any anomalies in Q4 I would point to.

Good. That's great to hear. And then my other question just relates to some of the partnerships that Dana called out. I think there was one earlier this month with RamSoft. And maybe I missed that, but I don't know if you talked about that one. I was just curious how that works, Dana. And their notable organization, been around for a long time. Wondering how you might quantify or talk about the impact of that one on incremental business.

Yes, I actually didn't chat about it. I was going to save it to the next call, but that's okay. It's really new, so I don't have, I would say, anything kind of anecdotal yet. They're more of a general reseller value-added partner than, for example, Koios, right, that has something directly. It's kind of like a counterpart to us but further down in the diagnostic, the follow-on screening type of technology. So that's kind of the differences between those two in terms of overall partnership. So more to come, yes, on RamSoft.

Very good. Okay. Well, thank you. Appreciate it.

Thank you. This does conclude today's Q&A session. I will now hand the call back to Dana Brown for closing remarks.

Thank you, operator. 2024 was a pivotal year for ICAD, marked by the successful launch of ProFound AI version 4, the accelerating adoption of ProFound Cloud, and our continued progress transitioning to a SaaS-based model. Demand for our technology remains strong, and the growing body of clinical evidence supporting its positive impact further reinforces our leadership in AI-powered breast health solutions.

As we move through 2025, we remain focused on expanding our SaaS adoption, driving revenue growth, and deepening our partnerships with imaging centers and partners. We anticipate further global expansion of ProFound Cloud and continued momentum in regulatory approvals. As more health networks and imaging centers transition to cloud-based AI solutions, we are well positioned to capture a growing share of the market while improving operational efficiency for our customers.

With this strong foundation in place, a clear strategic vision, and a dedicated team, I am confident in our ability to continue delivering innovative solutions, improving patient outcomes, and creating long-term value. Thank you all for your time today, and I look forward to updating you on our continued progress throughout this year. Thank you and have a great day.

Thank you. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.