Sangoma Technologies Corp (SANG) 2017 Q4 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the Sangoma Fourth Quarter and Full Year 2017 Investor Conference Call. (Operator Instructions) And the conference is being recorded. (Operator Instructions)

I would now like to turn the conference over to David Moore, Chief Financial Officer. Please go ahead, Mr. Moore.

Thank you, operator. Hello, everybody, and welcome to the Sangoma Financial 2017 Year-end Conference Call. I'm here today with Bill Wignall, Sangoma's President and Chief Executive Officer, to take you through our fourth quarter results and the order to the annual financial statements for fiscal 2017.

As a reminder, Sangoma reports under International Financial Reporting Standards, and during the call, we may refer to a couple of terms such as operating income and EBITDA that are not IFRS measures, but which are defined in our MD&A.

Also, please note that unless otherwise stated, all reference to dollars are to the Canadian dollar.

This call will discuss the press release that was distributed over the wire services on October 10, together with the company's annual audited financial statements and Q4 MD&A, which are filed on SEDAR and which are also available on our website at www.sangoma.com.

This call is being recorded and the prepared remarks will be available on our website shortly after the call concludes.

Before we start, I'd like to remind you that the statements made during the course of this call that are not purely historical are forward-looking statements regarding the company's or management's intentions, hopes, beliefs, expectation and strategies for the future. Because such statements deal with future events, they are subject to various risks and uncertainties and actual results might differ materially from those projected in the forward-looking statements. Important factors that could cause actual results to differ materially are covered in our MD&A and in the company's annual audited financial statements.

It is now my pleasure to introduce Bill Wignall, Sangoma's President and CEO.

Thank you, David. Welcome, everyone, and thanks for joining us today. Fiscal 2017 was a very positive year for Sangoma, one in which we made substantial progress on most of the key strategic objectives for your company including substantial sales growth and real progress with profitability.

As I've done in the past for this annual call, I will provide a comprehensive review of Sangoma's business in 5 sections today. First, I will briefly cover our Q4 financials, and then second, I'll share with you our annual results for fiscal '17. Third, I will cover our year-end balance sheet and cash flow. And fourth, I'll provide an overview of strategy. Finally, we'll update you on guidance for fiscal 2018.

At the conclusion of my prepared remarks, we will, of course, open the call to any questions that you may have.

Okay. Let's start with our Q4 financials. I will make these comments on our fourth quarter somewhat brief today, partly because Q4 followed much the same pattern as our other quarters this year and partly because I'd like to focus more of our time together on the overall year in the section to follow.

Sales for the fourth quarter of fiscal 2017 were $7.7 million, the first-ever quarter where we've exceeded $7 million. This was 26% higher than in the same quarter last year and 13% over the immediately preceding third quarter of this year.

Continuing through the income statement for Q4. Gross profit for the quarter was $4.9 million, well above last year for the same quarter. On a percentage-of-revenue basis, gross margin was 64% of sales in our fourth quarter. This was in line with our expectation and the continuation of the trend we've seen for some time regarding margin pressures from competitive pricing situations in the marketplace, products at differing levels of gross margin for us and regional prices that require lower pricing in developing economies around the globe.

Operating expenses were $4.5 million for the quarter, up 18% from the same quarter in fiscal 2016, but down as a percentage of revenue from 63% last year to 59% in this same quarter this year.

As a result, EBITDA was $0.7 million in Q4, a very solid quarter.

So let's now turn to a more comprehensive overview of the full year. Let me begin by, again, saying I'm very pleased with the progress made during the year, with strong sales growth and significantly better profitability on both absolute and relative terms. Sales for the year ended June 30, 2017 were a record $26.9 million, up by 27% from the $21 million in fiscal '16. The trend you've heard me describe previously on these calls regarding sales by product category continued in fiscal '17 with higher sales from most of our newer products and services and the gradual decline in some of our legacy business. A more complete product portfolio allows us to compete for a greater share of wallet in each sales cycle, and as you know, we are focusing more attention on our cloud services, software sales and maintenance streams, which continued to grow as an important part of our corporate strategy.

Working down the income statement. Gross margin for the year ended June 30 averaged 65% this year, also down somewhat from fiscal '16 as we had indicated and for the same reasons I've just described in my comments on Q4. On an absolute basis, the growth in sales generated gross profit of $17.5 million, 22% above the $14.4 million in fiscal '16, helping to drive overall profitability up. A big factor this past year is that we've been able to grow expenses more slowly than revenue. This year, we spent 14% more to deliver that top line growth of 27%, an excellent result, which I'll now elaborate on a little with some commentary on spending in each of our major IFRS cost centers.

So while we grow spending more slowly than we're growing revenue, on an absolute dollar basis, we indeed invest more each year in the business, a fact critical to our success. First, our sales and marketing expenses were just below 20% of revenue in fiscal '17 and up by about 17% versus last year, an important investment and necessary to deliver the top line growth. Our R&D spending was also slightly under 20% of sales and grew by 11% from the year prior, also required to continue Sangoma's innovation. General and admin expense also came done in percentage terms with Sangoma spending 20% of sales in this category in fiscal '17 versus 23% of revenue last year. And a portion of this spending is, of course, noncash expense related to intangible amortization and stock options.

This combination of growing revenue and gross profit with OpEx spending being increased more slowly generated EBITDA of $2.6 million in fiscal '17, almost double last year's $1.4 million. As a percentage of revenue, this took Sangoma from EBITDA of under 7% of sales last year to over 9% of sales this year, consistent with our earlier commentary and right on strategy.

And finally, this higher EBITDA translated to a significant improvement in earnings per share, with EPS going from $0.004 last year to $0.023 this year. Overall, a positive year on both top and bottom lines, one that I'm very proud of the hard-working team here for delivering.

And now we can turn to a couple of comments on key balance sheet and cash flow items. Sangoma continues with a very healthy balance sheet and finished the year with working capital of $7.3 million versus $6.5 million last year.

As for cash and cash flow, there is one modest timing anomaly that I'd like to clarify. We announced the acquisition of VoIP Supply in June, but with a planned closing at the beginning of July. For this reason, in late June, we drew on the debt that we had announced so as to be able to close that transaction in early July. This was a little tricky with a July 1 Canadian holiday and the July 4 U.S. holiday so we just wanted to be prudent. Hence, our cash balance spiked somewhat to that $6.8 million for a few days just before the end of our fiscal year. So when we exclude this timing anomaly to avoid distortion, Sangoma generated $2.9 million of adjusted cash flow this year, a good result for us and up significantly from the prior year.

You may have noted that the further reduction in overdue accounts. Last year, I shared that our finance organization had begun an effort in this area, and I'm pleased that our over 90-day balance was cut in half. At the same time, prepaids and other current assets and inventory have collectively increased by about 20% year-over-year, which has been required to support the higher sales levels. This is dependent upon our supply chain and the country in which we manufacture individual products because some require more upfront deposits than others. It is partially impacted by Sangoma placing bigger orders on our factories as our sales grow in order to leverage buying power. Overall, I expect to see some continuing fluctuation in this line quarter-by-quarter, but it's all to keep up with sales volume.

So regarding my overall assessment of our fiscal '17 financial results, I'm pleased to say that we closed the year with a stronger balance sheet, positive sales momentum, growing profitability and higher cash flow, all during a year when some of our competitors struggled.

And with that, I'll close off my remarks on our financial results and turn to some reflections on corporate strategy.

As those of you who have joined us for these calls previously will know I have described Sangoma's strategy to you as investing to drive renewed growth. We continue to see growth in spite of the challenging market conditions through a mix of organic and inorganic means, all while demanding healthy profitability. This is a conscious decision from the Board of Directors, one that most of you support, and based on my discussions with the people on the call, we will continue on that same path.

A few years ago, when new management came in to take over the reins at Sangoma, we recognized quite quickly that sales of telephony cards were unavoidably going to decline gradually as networks gravitated away from the PSTN towards the Internet. So the first stage of strategy was to begin the turnaround and manifested as 3 principal planks: growth through broadening the product portfolio, penetrating new customer segments and selling into new geographies. Over the next couple of years, we evolved from a single product line company to one with a much broader portfolio made up of multiple products all part of plank number one. In order to expand our market presence, Sangoma began targeting not just our traditional customers in the SMB segment, but also enterprise, OEM and carrier customers fulfilling the second plank in that turnaround strategy. And plank number three was to globalize the company and increase revenue outside of North America, especially in regions with higher growth rates. This has the ancillary benefit of also extending the life cycle of our PSTN-based cards since these regions are moving away from the PSTN more gradually than in more developed economies. This strategy is important to us, but we've had to accept that these types of markets are much more volatile than the West.

As the turnaround phase was enfolding, the next step in strategy was to go from a portfolio of individual products to a complete solution. So Sangoma now has the ability to offer a full unified communications suite that includes not only the PBX as the central part of this full solution, but also the other connectivity products that purchasers need such as telephony cards, gateways and SBCs and the phones themselves as well. As we'd hoped, I think you can see that the whole has proven greater than the sum of the individual parts and this has allowed us to compete for a larger share of wallet.

Finally, the most recent phase in our strategy was to take that full solution that could be sold on-premise, a fancy word meaning the software and hardware is installed at the customer site, and introduce a cloud-based service in which we host our own software and hardware in data centers and use it to provide a monthly subscription service for customers who prefer a hosted cloud-based service to the on-premise model. This then enabled the recurring revenue model to begin its growth phase at Sangoma.

I trust that update provides a clearer picture of your company's strategy and how it has unfolded over the past few years.

So now we'd like to turn to our fifth and final section for today's call, on forward guidance. In February of this year, as part of the company's maturation, we announced guidance for the first time. We projected $25 million in revenue for fiscal '17 and $2.4 million in EBITDA at that time. I'm pleased to say that we exceeded both revenue and EBITDA guidance for this past year with almost $27 million in sales and $2.6 million of EBITDA that you've now heard about and seen in our public release documents. The executive team and Board of Directors take this very seriously naturally and so I'm pleased that we were not only able to deliver on our forecasts during Sangoma's first year of guidance, but actually surpassed those targets.

And then, when we announced the VoIP Supply acquisition around the time we were closing our fiscal year, we committed to updating guidance for fiscal '18 when we released fiscal 2017 results. As most of you will now have noticed in our press release earlier this week, we did just that.

We've guided fiscal '18 revenues to $46 million for the year that we've now started and forecasted EBITDA to be about $4 million. I would also like to point out that the historical Q1 dip in revenue from Q4 sales will not occur this year, partly because of the growing recurring revenue, which doesn't exhibit seasonality in that way and partly because Q1 sales will also include VoIP Supply consolidated revenue and our quarterly results for the first time.

And with that, I'll conclude my prepared remarks for today. I hope that I provided you with a clear understanding of Sangoma's business in fiscal '17 and how it fits in with the previously shared strategy. In summary, a strong year with solid top line growth, strengthening profitability, good cash flow and a healthy balance sheet.

Looking back over the last few years, in spite of the extremely challenging starting point for Sangoma, we've grown revenue from just over $10 million up to a level where we expect $46 million this year while expanding profitability to the point where we should generate $4 million in EBITDA, and all this while not raising significant additional capital that would have diluted shareholders while building out an entirely new portfolio that required very significant R&D investment, completely reposition the company and started us on the recurring revenue path, and all while we maintained in group profitability throughout.

I think you'd agree this is a pretty unusual set of circumstances, so I would like to personally thank our employees for their incredibly hard work, delivering the outcome I've just described. They have come together from multiple geographies and many companies to deliver these impressive results. I'd also like to thank our customers for their business and confidence in Sangoma and you, our investors, for your support and your patience. Thanks for your time today. I look forward to speaking with you in just over a month when we release our fiscal '18 and Q1 results in November.

And with that, I'll turn the call back to David, so we can take your questions.

Thank you, Bill. To make sure everybody knows how to ask questions, I will ask the operator to go over the instructions. Operator, we're ready to take questions now, please.

(Operator Instructions) The first question comes from Gabriel Leung of Beacon Securities.

Couple of things. Bill, just going back to fiscal '18 guidance for a second. Obviously, Sangoma's a lot more of a complex company now, a lot of moving parts. Can you talk about some of the underlying assumptions behind the revenue guidance you provided, specifically what sort of growth rates are you looking for, for your various lines such as, on a broader base, sort of products or recurring revenues, VoIP Supply. Can you provide any feedback around that?

Gabe, of course, we do know that stuff. It's all part of the budgeting cycle and how we come up with appropriate guidance. It's the one thing I said on prior calls we tried to steer away from. It's a -- I think, as you would understand, since we talk regularly, it's probably the most competitively sensitive stock, right? If our direct competitors know we're growing product line X much faster than them, they're going to put extra effort in there whether it's R&D or marketing and sales. So I'd prefer not to quantify it publicly because once I do, it's out in the public domain and we have to continue doing that. My preference would be just to talk a little bit about qualitatively the various buckets, if that's okay. So let me try and do the best I can and I know it's not exactly what you're asking for and I hope you don't think it's evasive. It's just we're trying to balance what helps you guys understand the business at a deeper level with what we need to continue winning in the market. So the traditional products, as I mentioned, continue to generally decline so that would include things, which are dominantly PSTN-based, so not just cards but gateways. And in any individual quarter or year, of course, we could get an order that deviates from that trend and that absolutely happens. So in some quarters, we might actually have card sales go up versus the prior quarter or gateway sales go up or in a 1 year we might see card sales spike if we got a good sized order or something. But the general trend in those product lines is gradually down and we do everything we can to slow that decline and we look for opportunities to get atypical orders, that's all great. Other businesses are growing more quickly whether it's Session Border Controllers or UC, and we expect that to continue. So the growth rates we've seen there are encouraging and those are the same rates that we expect in this year. We've not ramped up our expectations for those product lines. We've got rates of growth for fiscal '18 that look quite similar to the rates of growth for fiscal '17. And then we've got the other parts of the business, which are the software services, recurring revenue pieces and those grow at different rates as well, but continue to become more important to us each year. We've talked about 3 sub-buckets. The overall category includes cloud-based services and we have 3 or 4 services in the cloud, it includes software licenses and it includes maintenance streams. And maintenance streams grow a little bit less quickly and follow in a more logical way the rate of growth of product sales because it's the product sales that post through the maintenance stream, of course. So I tried to give you something, Gabe, without doing anything that's going to hurt us in the marketplace. I hope you understand.

Yes, I know, it's perfect. I appreciate that. And then on the cost side of the equation, can you remind us again how big -- I'm sorry, how many employees Sangoma has now with the inclusion of VoIP Supply? And how do you think about the size of that employee base as we go through fiscal '18? If there are increases in headcount expected, where would they be focused around?

Yes, okay. So we fluctuate up and down between 135 and 140 right now based upon individual projects and do we need a contractor here or there. But that's where we sit today. We do have hiring planned in fiscal '18. And I would say much of the growth in expenses that you heard me describe in fiscal '17, the growth above '16, even though it came down as a percentage of revenue, in absolute dollars it grew, was in people. In R&D and marketing and sales, it was mostly headcount-driven as we add more people in customer-facing roles and more people working on product development. In fiscal '18, we're planning the same thing: expense growth continuing; more people being hired, again at a lower rate than revenue growth; and most of the people will be added in marketing and sales and R&D once again.

Got you. And then on the sales front, where are the priorities right now in terms of potentially celebrating the organic growth profile? Is it in, like I said, just adding more quota-carrying sales? Is it to expand the product set, expanding geographic reach? Where do you think are the priorities will lie this year?

It's spread across all of those, Gabe, and it's slightly different in different regions as well. So with North America, it's less about sales coverage across different product sets because all of our products are already sold in North America and so we have people who are either competent to sell the whole portfolio or are focused on one piece of it. And there, it's more about capacity, just more quota, more people. In Europe and Asia, it's slightly different. In Europe, in some cases, it's looking at infilling in particular countries where we have holes or are underpenetrated right now, and there are 1 or 2 or 3 significant economies where we either don't have the right kind of distribution, and we need people need to build that up or we have a partner and it's just not working like we think it should given the size of that economy. So we're very, very geographically targeted. The second thing that's happening in Europe is we would like to be able to launch our cloud services in Europe this year. Planning for that is beginning. It certainly won't roll out in the first half of the year, but I'm hopeful by the second half we'll have some of our cloud services that are up and running in North America now running in Europe. And in Asia, it's more about just better coverage. We need extra person or two, looking for the right kind of channel partners who are covering large direct sales opportunities. So that's kind of where I see the sales growth coming.

Got you. And maybe 2 more questions, if I could. First, on VoIP Supply, you've had it for under your belt for a couple of months now. Have there been any surprises from that acquisition, either positive or negative? That's the first question. And then the second question is just on a similar topic. Do you see M&A being -- continue to be an important contributor to your growth over the near term? And if so, what areas of M&A are you focused around?

Okay. So VoIP Supply has unfolded very closely to what we expected, that's quite positive. We're very satisfied with the way that's going right now. We have a good set of people there who seem excited to be part of a larger organization with a product set that seems to be motivating right now. They're enjoying paying attention to a global business. There haven't been many material surprises at this point, Gabe. We're fine-tuning some of the efficiencies and focus that Sangoma might be a little bit stronger at just because of having a larger organization with perhaps more experience than flushed out processes and systems and that seems to be helping at VoIP Supply. On the M&A front, I mentioned in my prepared remarks that Sangoma is growing through a combination of both organic and inorganic means, and I do see that continuing. I'm happy with the organic growth and we must not turn this into purely an acquisition machine that can grow only through acquisition and -- that's not my intent and that's certainly not the basis of our fiscal '18 plan. But acquisitions do continue to be important to Sangoma. We are looking at possible acquisitions almost all the time in some form. I think it would be fairly obvious to you, guys, that in order to close a deal for one company, we've probably looked at many, many businesses to get to the point of believing that's the right one, and that's the case at most points in time as well. So we're looking at multiple companies right now. There is nothing strange about that, but none of them are far enough along that I can announce something publicly. But I think as an investor or as an analyst, you guys should assume that acquisitions will continue to be a core part of Sangoma's future.

(Operator Instructions) Our next question comes from [Michael Dumont], a private investor.

So great quarter, great year. I guess, maybe I want to congratulate you before I start asking questions. So just following the acquisition of VoIP Supply in June, I believe you guided for revenues of $45 million for this fiscal year. Now I had presumed that the recent strength in the Canadian dollar is a headwind to the business or to the revenues there, but your revenue guidance is up nonetheless. Were there any positive recent surprises?

Well, I don't think there was any one singular surprise, Michael, but you're absolutely right to ask the question. It's quite insightful actually. That is right, that the strengthening Canadian dollar or weakening U.S. dollar, for sure, I 'd use a much stronger word than headwind. It is a challenge for us; almost all of our sales are denominated in US dollars. So not only has the FX rate moved against us, but it's moved a fair amount and even more importantly very quickly, right? So you can do the arithmetic, it's moved by depending upon which point in time you look at now and compare it to 5% or 10% over the space of just a few months. So a 5% or 10% times $45 million is a lot of revenue and we've not only been able to offset whatever that impact would have been, but we've increased our guidance, so generally you can intuit that we are feeling bullish about the business. But I do pay attention to the FX rate. It's one of the things that keeps David and I awake at night when we are going through the budgeting exercise. It was really a substantive issue that needed to be grappled with. So I don't want my answer to, in any way, sound dismissive to your question. You're right, FX rate does matter. It is a material impact right now. We pay a lot of attention to it. And in spite of all that stuff, we've increased guidance. So you're right, that's a good sign, although it's really not, Michael, because of any one individual thing. There was no one big thing that happened to cause us to feel that way.

Okay. No, that's fair enough. Look, it's good to see the numbers headed that way anyways, so I appreciate your response. And maybe if I can turn then to margins. So your guidance implies about 8.5% EBIT margins for next year, that compares to closer to 10% this year. So now I would assume VoIP Supply acquisition could be dilutive to the margin percentage? But I would also assume that you're expecting incremental operating leverage and maybe some potential synergies. So a lot of moving parts, but could you give us a feel for how those buckets are moving around for next year?

Yes, sure. It's extremely -- it's probably almost impossible, even a quarter in, to look at margins between what you might think of as distinct parts of the business. We've now done 5 acquisitions in 5 years. And in order to get the benefit, whether it's a top line revenue synergy or a cost reduction, OpEx synergy, these businesses have to come together. I made a remark at the very end of my prepared comments thanking the team in which I said these people have come from all over the world, in multiple different companies, we're bringing them together, that is quite a chore. And when we bring them together, it's very difficult then to say the revenue from what was and then you fill in the blank for any of the acquisitions, VegaStream versus what was Sangoma is, that distinction begins to blur quickly and disappears at some stage and that's true for VegaStream or Schmooze or Micro Advantage or VoIP Supply. So you can't really say what's the EBITDA for what was company X and what was Sangoma. On the other hand, we can comment about what's driving margins and of course the impact on EBITDA margins starts at the gross margin line, but different pieces of our business have very different gross margins and different OpEx spending and so can still deliver similar EBITDA margins, and that's what we tried to describe when we were announcing the VoIP Supply deal. I think that's right, we're probably around 8.5% or 9% bottom line margins at this point. We're trying to guide the company up towards 10%. I don't think we'll get there quite this year, but we're on that path. And of course, that does include strengthening bottom line margins at VoIP Supply, too, and that is gradually working already. The pressures at the gross margin line that, in some cases, fall through to the EBITDA line are things that, in some cases, we can control and other things we can't control. So there's a certain set of pricing pressures out in the marketplace and customers will pay X dollars for Y capacity of product Z and we might like to charge what we charged last year and get 65% instead of 64% or 64% instead of 62% or whatever it might be on that product in that quarter. But that's usually not a luxury we have and so we're faced with decisions in which we can take a piece of business or not. We try to make those decisions on a balanced portfolio basis. So what I mean by that, Michael, is there will be an opportunity with customer X in country Y that may not be right at the margin targets that we have for that country or that region, but if it's blended across other customers or other products to that customer and those blended margins look okay, we'll accept that at a gross margin level and tolerate the impact on the EBITDA margins. So those market pricing pressures exist. In other cases, it's due to the evolution of our product portfolio and that definitely falls through to the EBITDA margin line, so we have products at 80%, close to 90% gross margin and we have products in the 30% or 40% gross margin area. And we need to manage the portfolio across all of those and try and do so in a way that pushes us up closer and closer towards 10% and I think, generally, we're doing an okay job of that. I'd acknowledge it's not easy when you add products like phones, which are closer to commoditized-type products, maintaining high gross margins is slightly higher but we do try to carve out a niche and we have a moat that protects us from just head-to-head kind of lowest-cost wins. And then the last thing I would say is if we're talking still about the gross margin level and how that falls to EBITDA margin, different regions in the world look very different to us. And so we have different pricing and different discounts, and we're tolerant of the fact that while we might want 65% margin in one country or region, 50% in another country might be okay and we monitor the impact of that on EBITDA. And if that margin starts -- if that region starts to grow quickly and more and more revenue was coming at lower and lower margin, we're very careful about that. So it's a very long-winded answer, I'm sorry. But that's kind of how we manage it across the business.

No, there's a lot there and I appreciate you giving that color. It's a helpful response. Maybe if I can just sneak in one last one. So on VoIP Supply, I mean, how long do you think that acquisition will take to digest for a management who has a little bit more comfort around pursuing additional M&A? And how do you position the balance sheet in the context of M&A as well?

Yes. I would say it's unlikely we would close another acquisition early in this quarter. But by the end of this quarter, by Christmas, if we could find further acquisitions that were a good fit, VoIP Supply would not be an impediment or hold back. We're doing well at making that organization a part of the business. It's quite handy that they're in Buffalo. It makes getting more of our people there a little bit more manageable. We've had the lady who runs that business for us in our headquarters office the last couple of days here and a 2-hour drive is a lot easier than a 5-hour flight that we might have to do if we bought something on the West Coast. So I wouldn't want you to think of VoIP Supply as the timing hurdle to the next acquisition. The timing hurdle is finding the right company from amongst the companies we'd be speaking with, getting the right deal, putting the right financing in place, all of those kinds of things, Michael.

And on the balance sheet, how do you think about managing leverage?

Yes. Yes, sorry, I completely ignored your question. It wasn't intentional. We're at this stage where, like many companies that go through a growth phase similar to Sangoma's, we've gone from, as I said, just around $10 million up to between $45 million and $50 million, the size of an acquisition in order for it to be material or impactful is obviously getting larger as well. So buying a company with $1 million of revenue is probably not as wise as it was a few years ago. And that means over time, as acquisitions get larger, our ability to fund them from either just cash that sits on our balance sheet or $1 million of debt here and there is probably lower. We know that, we're paying attention to it. We are out talking to people about sources of capital and what that would look like and how much of that should be equity and how much of it should be debt, and I think it's premature for me to comment on that answer outside of the context of a particular acquisition. But if what you're asking is can we do it based upon the balance sheet as it sits today, I would say probably not. We would have to add some debt or issue some equity or some combination of those two.

(Operator Instructions)

So operator maybe I'll say something. It's David Moore speaking. For those of you that are on the call, if there's anybody who is new to these calls, please feel free to ask any questions, if you have, on your mind. We don't limit the call to analysts or professional investors. We are open to anybody who has some thoughts they would like to share with us or ask questions. So please let's just give it one more minute. Anybody else who would like to ask a question, please take this opportunity to do so.

And maybe, David, also worth mentioning that, as David said, for those of you who might be joining this call for the first time, we do try to facilitate relationships with our shareholders. So if you've never spoken to David or myself, please do feel free to reach out. We like talking to our owners. Give us a call or drop us an e-mail. You don't have to have a question to do so, just a quick note saying, hi, we've not met or spoken before, but I own your shares. We'd be happy to at least be able to put a "face" to a name.

There is one more question in the queue, [Ian Trollier] who is a private investor.

Really quickly, do you have any sort of special Investor Relations plans for fiscal 2018?

Thank you, good question. We didn't really talk much about it. As you may have noticed, you've seen share price in Sangoma, which we continue to believe is dramatically undervalued. But it has moved, it's approximately doubled over the last year. We believe that's a combination of just strengthening results, both top line and bottom line, and us investing more time and effort to get our story out there since we think there is a good story to be told. So we have done more Investor Relations activity. We've had road shows in many different cities across Canada and the U.S. this year, Toronto, Vancouver, Montreal, New York, et cetera. We see that continuing. We put a lot of work into these calls. For a company of our size, we've had a lot of shareholders call us or e-mail saying, these calls are well done and very professional for a business at our stage, so we certainly appreciate that. We're happy to have direct discussions one-on-one with our shareholders, which we do a lot of. We've spoken at a few industry and investor conferences and we see doing more of that. We've retained the services of an IR firm called Bristol here in Toronto who's doing quite a lot of work with us to organize some of those road trips and speaking engagements and meeting with analysts and institutional investors and retail brokers. So there is activity there, Ian. We don't typically publicize it and say here's what we're doing, but you might well find out that we're in your city. I don't know where you're based, Ian, but if you have any particular thoughts or ideas or there's something more (inaudible) I'd be happy to hear it. But I hope you find that useful.

(Operator Instructions) There are no more questions at this time. I'd like to turn the conference back over to Mr. Moore for any closing remarks.

Well, thank you, everybody. Really appreciate you joining us today. This now concludes our conference call, and a recording of the prepared remarks will be available on our website shortly. We want to thank you for participating today. Thank you for your ongoing support of Sangoma over the past year and wish you a very pleasant day.

Thank you, everyone. And I guess, David, the next call is just a month away.

That's right. We'll be back with you very shortly.

Okay. Bye, everyone.

Thanks.

This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.