Sangoma Technologies Corp (SANG) 2019 Q2 法說會逐字稿

Thank you for standing by. This is the conference operator. Welcome to the Sangoma Technologies 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, everyone, and welcome to the Sangoma investor call. We are recording the call, and we'll make it available on our website for anyone who is unable to join it live.

I'm here today together with Bill Wignall, Sangoma's President and Chief Executive Officer, to take you through the second quarter of our fiscal 2019, which ended on December 31, 2018, and we will discuss the press release that was distributed over the wire services on February 14, together with the company's interim and audited financial statements and Q2 MD&A, which are available on SEDAR and our website at www.sangoma.com.

As a reminder, Sangoma reports under International Financial Reporting Standards, IFRS, and during the call, we may also refer to a couple of terms such as operating income, EBITDA and adjusted cash flow, that are not IFRS measures, but which are defined in our MD&A. Please also note that unless otherwise stated, all references to dollars are to the Canadian dollar.

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 or management's intentions, hopes, beliefs, expectations 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 from those in the forward-looking statements are discussed in the accompanying MD&A and in the company's annual audited financial statements posted on SEDAR.

With that, I'd like to hand over the call to Bill.

Thank you, David. Welcome, everyone, and thanks for joining us. Today, my prepared remarks will fall into 4 categories. I will start by covering our operating results for Q2 and year-to-date. Second, I will share a few comments under balance sheet and cash flow. Third, I will provide an update on how the Digium integration is proceeding, rather than a more general update on strategy today. And finally, I'll wrap up with a comment on forward guidance.

As always, I will then offer a short summary before turning the call back to David for questions. Just before starting, I'd like to remind you about the impact of the timing of our last 2 acquisitions on Q2 results. CCD closed in January 2018, and Digium closed in September 2018, so the results from those acquisitions are fully consolidated into this past quarter's Q2 results for fiscal '19 but were not in Q2 of '18, of course.

Okay. So let's now turn to the Q2 results. Our second quarter of fiscal '19, ending on December 31, was another record and the 16th consecutive quarter in which we've delivered more revenue than in the same quarter of the preceding year. Sales were excellent at $29.2 million, about 2.5x that in the same quarter last year, and the 36% jump from the immediately preceding first quarter of fiscal '19. This increase came from the ongoing intrinsic growth at Sangoma, the compounding of recurring services revenue and the full quarter addition of the CCD and Digium businesses.

Gross profit was $17.8 million in the second quarter at a gross margin of 60%. Gross margin percentage increased slightly from Q1 as a result of having the Digium market included for an entire quarter.

Operating expenses were $17 million in the second quarter, about double those of the prior year as a result of the 2 acquisitions mentioned above. Please note that Sangoma undertook a cost reduction in December to realize synergies following the Digium transaction. I'll talk more about that in the Digium update. But I simply wanted to point out here that we did not see much of the benefit from those synergies on OpEx spending in our Q2 results and that you'll see the full effect of that in Q3.

But the second quarter EBITDA at $2.4 million was almost double that of the same period in fiscal '18. Below the EBITDA line, we incurred about $600,000 in integration costs, which are the last onetime costs related to the Digium transaction that we expect to incur. Because of the onetime cost just mentioned and the higher headcount for this quarter prior to the rationalization, there was a net loss in the quarter.

In summary, a very strong second quarter, and so now, I'll turn to our year-to-date performance. Sales for the 6 months ended December 31 were $50.7 million, more than double the $23.6 million in the same period last year. Again, this was fueled by a mixture of intrinsic growth at Sangoma, together with the addition of the 2 acquisitions.

Gross profit for the year, so far, was $30.3 million, more than double last year, and that 59% gross margin is almost right on target with our 60% expectation going forward.

Operating expense for the first 6 months of fiscal '19 was $27.7 million, considerably higher than last year, but again, this was mostly prior to the rationalization conducted in December.

EBITDA was $4.9 million for the first half, double that of fiscal '18, and at nearly 10% of sales already is a very encouraging sign, suggesting we will hit our 13% EBITDA target for next year even a bit earlier than anticipated. Because of the acquisition costs of $2.1 million last quarter and the synergy costs of $0.6 million this quarter, net income was a negative $1.3 million.

So let's turn now to a few comments on Sangoma's balance sheet. Please recall from our last quarter that there are significant changes to our balance sheet now that the Digium acquisition is in place. As at December 31, Sangoma finished with a cash balance of $6.8 million, up $1.8 million for the quarter. Accounts receivable declined despite the revenue growth, and inventory grew a bit as we had anticipated last quarter it would.

During Q2, we generated $3.8 million of operating cash flow on an adjusted basis. In fact, as a reference point, Sangoma has now generated more adjusted cash flow in the first 6 months of fiscal '19 than we did in the whole of fiscal '18. I think this demonstrates to some of our more cautious shareholders that the company was more than up for the magnitude of the Digium acquisition, and I'm pleased to confirm that, of course, we met all the loan covenants more than comfortably.

With that, I'll bring my remarks on our financials to a close and turn to a short update on the Digium integration. This will be considerably briefer than last quarter because it mostly covers the execution of plans that I described in more detail on our last call together. First, I'll discuss the synergies and restructuring, and then, I'll cover a bit about customers and channels. Last quarter, I explained that we were looking at the synergies in 2 broad buckets. One was people, and one was savings from nonpersonnel sources. In the people bucket, staff reductions were undertaken during December. I can now say that this step is fully complete and amounted to around 10% of the combined workforce. Such things are never easy, but I'm very proud of how everyone at Sangoma handled this difficult decision and subsequently stepped up to the challenge.

Of course, cost reduction isn't limited to headcount, and so in the second bucket of nonpersonnel savings, we are well into many such projects. We have consolidated data centers, we've closed one warehouse, we're in the process of simplifying our supply chain to reduce the number of contract manufacturers and are starting to shrink some unneeded office space. These savings are now underway but will be more visible in our Q3 results, just like the OpEx savings resulting from the staffing changes.

And last, but certainly not least, I'd like to offer a few comments on customers and channels. Most of the customer base has now been contacted and briefed on the merger, and I can confirm for you that they are generally very happy. We are handling the integration of the internal sales teams and our channel in slightly different ways domestically versus internationally.

Outside of North America, we are already servicing Digium international customers and channel partners from our traditional Sangoma in-country sales teams. As you may recall, Sangoma had more global presence than Digium, and the clients and partners are both excited about local support in their country, culture and language. In North America, this takes a little bit more time because the teams, customer base and channel are a bit more complex. That step has now started in Q3, and I expect it to be mostly completed by the end of our fourth quarter.

Even with the best due diligence and intentions, it's not always possible to avoid a surprise or 2 when doing acquisitions. But after 7 in 7 years, I am pleased to share with you that we are now clear of that concern with respect to Digium. I'm most pleased about the integration and thrilled with the significant contribution from so many great Digium folks that have recently become part of the Sangoma family.

Finally, I'd like to add that based upon where we are with the integration work, some of the senior executive team can now start allocating a bit of time, once again, to restarting the M&A pipeline.

With that, I'd like to discuss forward guidance for just a minute. As you may recall, back in September, at the time we closed Digium, we produced guidance of $100 million and $9 million to $10 million for revenue and EBITDA, respectively. Then, in November, when Q1 results were released, we updated guidance by committing to $10 million in EBITDA, with a forecast of 13% of revenue by fiscal '20.

Now year-to-date, we are already at $50.7 million and $4.9 million, as you've just seen. And thus, as you will have no doubt noticed from our press release yesterday, we've increased our guidance again. We now expect to achieve $11 million in EBITDA and to exceed $100 million in sales. Further, we anticipate getting to our 13% target for EBITDA ahead of schedule and being there by Q4 of this fiscal year rather than by fiscal '20.

With that, I'll wrap up my prepared remarks with a quick summary. Sangoma is now a $100 million company with demonstrable growth, healthy and expanding EBITDA margins, positive cash flow and with the management to continue winning new customers, building new products and acquiring new businesses. The turnaround from a few years ago has created a strong public company that's 10x the size in an industry that caused many investors to doubt this was possible. And we did all this while not raising a lot of additional equity that would have diluted shareholders during a time when share prices were very low and while building out an entirely new product portfolio that required very significant R&D investment, completely repositioning the company, getting us on the recurring revenue path, buying multiple businesses and growing profitability throughout the entire sequence.

So while nobody is in business to win awards, it's gratifying to see the increasing awareness and acknowledgment that what has happened at Sangoma is both unusual and impressive. I know some of you have noticed that Sangoma was presented with the top tech company of the year award on the TSXV at the recent Cantech Conference in Toronto. We are definitely getting more awareness south of the border, with invitations to present at both technology investor conferences there, and we've now gotten highlighted in quant reports for what I think is the first time. And thus, given your company's performance, financial results and this increased awareness, our Board of Directors continues to believe that Sangoma remains undervalued at today's share prices, even though it's been good to see the recent strength to getting us up into the $1.60 to $1.70 range.

After all, the 4 analysts who cover us had price targets of between $2.25 and $2.50 per share on us prior to these results, and I think I saw some of those targets getting increased this morning already.

Finally, since our last call together, I've had questions from 3 different shareholders about why I referenced the IBM Red Hat transaction last quarter in my remarks if those companies had nothing to do with communications. For sure, we were not trying to suggest that Red Hat was a communications company. My comments about that acquisition was because there have not been very many open source software transactions with public disclosure. Given that one of Sangoma's differentiating factors in our business is our open source expertise and presence, it's very interesting to observe the valuation in that IBM deal. At about $34 billion, it was around 10x revenue.

Open source software has been very hot recently, with Microsoft buying GitHub for over $7 billion, Salesforce by MuleSoft for over $6 billion, and if you didn't notice, yesterday, Warren Buffett announced he owns 4 million shares in Red Hat. All of this simply reinforces the point I just made above that Sangoma looks undervalued, and it offers this reinforcement from a completely different point of view. Some encouraging signs indeed.

With that, I'd like to close off my prepared remarks. I remain very proud of our progress and our track record at Sangoma. We've come a long way in just a few years when many folks didn't believe it possible. We've now developed a reputation as a company that does what it says it will do and has built a history of delivering on its promises to both customers and shareholders. As such, everyone here is looking forward to still further appreciation in stock price.

David, I'll now turn the call back to you for questions.

Thank you, Bill. To make sure everybody knows how to ask questions, I will ask the operator to go over the instructions, please.

(Operator Instructions) Our first question comes from Gabriel Leung with Beacon Securities.

Bill, can we talk about your forward-looking guidance for a second, specifically around the $11 million in EBITDA expected for this fiscal year, and also, concurrently, the expectations of hitting 13% EBITDA margins towards latter half of fiscal year? Can you talk about what your key assumptions are that are driving the guidance, specifically, around top line, expected top line growth, for the second half of the year? And also what additional costs are coming out of the operating expense base to get you to those -- to get you the guidance number?

Sure. Sure. Okay. Good question, actually, Gabe. So there's kind of 2 parts to it, right? What are the assumptions about revenue, and what are the assumptions about costs. On revenue, we're quite happy with where things sit right now, so we don't need any kind of super aggressive assumptions about things going up further. We see growth continuing. But getting to the EBITDA numbers we've now guided towards, the $11 million for this year and 13% by the end, doesn't need large extra ramping of revenue. So while we will see revenue strength continue, I do not need that to happen in order for us to get where we need to be with EBITDA.

So now I'll turn to OpEx. As I said, when we were talking about the Digium update, the OpEx changes have mostly been in these 2 super broad buckets, I realize they're crazy broad. On the people side, there were no other assumptions, Gabe. The people changes that were appropriate are now done, fully implemented, and there's no more savings coming from that source. On the nonpeople part, the assumptions that underpin the guidance for EBITDA are mostly the execution of, or finalizing, of decisions that are now already in place and actions had started. So I went through a few of them, I'll touch on them briefly for you, but the point here is that all of them, while started, have not necessarily resulted in the full OpEx savings being visible in Q2.

So if it's -- I don't know, we had, on the last call, discussed the number of warehouses, which I realize is very low level operational detail for a call like this, the number of warehouses we had in North America. And I explained, we had 4: there was one in Huntsville; and one in Wisconsin; one in Toronto; one in Buffalo. And our view was, we didn't need 4 warehouses, and so we've now closed the warehouse in Huntsville. But the OpEx savings from that come from 2 sources. The people that would've been involved there, which are now already in place. Those savings are already in place, but the closing of the warehouse and exiting from the lease and things like that can't be done overnight, right? That takes a few months to work through and the landlord to find a new tenant, et cetera, et cetera, et cetera. And those kinds of things are the assumptions that we have made about getting to the OpEx numbers that we expect. There's very low risk to those assumptions, Gabe.

And that's why I'm trying to say it's execution of decisions that have already been taken. And whether it's a warehouse or whether it's supply chain simplification, or whether it's consolidating data centers, these are important decisions and decisions which impact financials, but they are now very, very low risk, and will happen perfectly as planned over the next few months.

Got you. Yes. That's great feedback. And given the global nature of your operations now, maybe you can talk to us about the -- what you're seeing in the demand environment. One could argue that the macro environment is certainly a bit more challenging since our last conference call. What are you seeing in the marketplace right now as it relates to demand?

Well, I think we could talk about it from the macro point of view, which you've just touched on or more narrowly, from the perspective of our industry. So I'll try a bit of both, and see how I'm doing, and ask me for more if you want. From the industry perspective, we are not seeing dips in demand. I'm quite pleased with the way the industry seems to be holding up. Customers are buying at similar rates, you see revenue scaling. If you think about our ability to influence demand, for example, something like having a global sales force where we have people in front of customers in Europe, or Asia, or Latin America is entirely new for the Digium part of the business. So whatever the demand was, my suspicion is it was being under-serviced in the old Digium model, and we'll do a better job of tapping into that demand in the Sangoma sales force outside of North America.

If we turn from industry demand to the macro question you've asked, we all read the same news, right, the world seems a little bit less stable than it was a quarter or 2 ago, for sure there's a lot of stuff going on in the world. That hasn't done anything to affect our business yet, Gabe. But we're like you, right, we pay attention to this stuff all the time. I travel extensively, including around the world, and this is something I'm looking for at every corner. But right now, there are naught signs that that's about to impact Sangoma. We're just prudent like every other well-run company out there, and things like Brexit or trade disputes between the U.S. and China, or foreign exchange rates, these things do matter. I just don't have any specific information on those kinds of topics that would allow me to refine any kind of a forecast as they affect Sangoma.

Got you. Maybe one last question for me. You talked a bit about some of the, I guess, the reorg initiatives you've undertaken. I'm curious to hear your thoughts around whether or not there'll be any and initiatives around product consolidation, given the number of acquisitions you've made over the past couple of years, whether we'll hear some more about that over the coming quarters. And that's it for me.

Yes. Good. Thank you, Gabe. I don't actually recall that we touched on this last quarter at all. So I'll start, and if it seems in any way repetitive, please tell me. So of course, right, when you are merging companies together, and this is true of any of the acquisitions we've done, it's wise to look at the product portfolios, and where there's overlap, what does one do about it, and so there is some of that happening. Some of its already taking place and done, some of it is still to come over the next few quarters, but it's nothing hugely radical. So for example, Gabe, between Sangoma plus Digium, there were 3 lines of phones in the IP phone product category. There was a line of phones called the S-Series from Sangoma, a line of phones called the D-Series from Digium and a newer line that Digium had just launched called the A-Series. And A-Series overlapped, in our subjective judgment, too much with the S and D-Series. So we discontinued the A-Series. That decision has been made and communicated.

And so that's a perfectly normal example of product line rationalization. It's no problem for customers and channel. It was a fairly new product, and all we've done is said, we don't need 3, we need 2 to service the needs of all those customers. And that's starting to happen as we look at all of the products across the portfolio, whether they're new, fast-growing products and services or maybe some of the more mature ones. If there's overlap, we're trying to do wise things to make it easier for customers to choose and more efficient for us to support. So some of the telephony cards from the more mature product line had overlapped between Sangoma and Digium's offering. And we're working through which of those to continue with into the future and which we won't need. Or our SIP trunking service, I've said to you guys 2 quarters -- 2 calls ago that Sangoma had more penetration in the SIP trunking part of our cloud business, and Digium had more penetration in the UCaaS part of our cloud business. So we're moving towards the Sangoma SIP trunking platform, that's called SIPStation, and it's just going to be a gradual process. There's no super hurried deadline this all has to be done by, it's not going to enormously affect the OpEx spending or the EBITDA ratios that you've heard us describe, all of those kinds of things are built in these assumptions to the guidance you've seen.

Our next question comes from David Kwan with PI Financial.

On the quarter, obviously, a pretty nice jump in the revenue side. Was there anything in particular that drove that -- the strong revenue this quarter? Was there anything related to budget flush, any particular product lines or customer groups?

Nothing singularly obvious that would be worth pointing out, David. You've heard me say in prior calls that Sangoma naturally has revenue variability from quarter-to-quarter, and given some sales are still at that onetime revenue type versus the MRR form, so we've typically not done quarterly guidance, that's why we do it on a yearly basis. Q2 sales are a little bit stronger than we've forecasted, you're right, but not out of line. Part of that business continues to come from a large number of small and medium-size orders each quarter, and part comes from the fewer number of large orders, and we're kind of accustomed to it. So we did, for sure, have a couple of larger orders this quarter but nothing that I think is worth specifically commenting on or not anything that would suggest Q2 was some kind of an anomalous spike and Q3 is about to drop to the floor, anything, if that's what you're worried about.

Yes. I was just kind of wondering like so whether the deal's upholding or anything anomalous, but could you see Q3 potentially being slightly down? Not cratering, but see it modestly down given strong performance in Q2?

Again, we've not done quarterly guidance. I don't want to do something that's going to put us on that path. But no, I do not see that happening.

Okay. That's good to know. There was a commentary in the MD&A that talked about inventory I think moving up a bit here, and I think, related to the consolidation of your factories and your supply chain. I just assume -- is that you guys just wanting to ensure you have additional buffer, given the reduced number of suppliers that you're going to be working with? And could that also maybe help your gross margins a bit because you're dealing with less suppliers?

Yes. Very insightful. That's precisely what it is. You've nailed it. And although I don't think we see it changing gross margin materially, I think you guys know that the contract manufacturing business is a super thin margin business. So it's not like one of them has huge margins or one has small margins and moving from one to another, changes our cost of goods hugely. Everybody is buying components from the same suppliers, the bonds should be the same, whether the stuff that they need to buy is bought by manufacturer X or manufacturer Y. It's really more about our management of them. Do we have the right size CM that can give us enough attention in the right number of places. So that's really what we're going for. I will say that and I think what you just touched on is something that we'll have to be prepared for over the next quarter or 2, as we move away from one CM and consolidate stuffing to another. For sure, we would need to buy product in higher volume than normal run rate could give us what you called that buffer, and that's the way to look at it.

Okay. That's good to know. Good to know. Just a clarification, I guess, on the guidance in terms of that 13% adjusted EBITDA margin, so when you're saying you'd expect to hit it by Q4 fiscal '19, is that meaning like effectively in Q3? Or are you saying kind of in Q4, you expect to hit -- you hit it effectively sometime this year, whether it's Q3 or Q4?

Yes. So for sure, I wouldn't want you guys to start modeling 13% in Q3, right? It's possible, but what we were trying to say was, we had guided to 13% in fiscal '20, we hadn't even said whether that meant 13% flat exactly quarter-to-quarter or whether we might be at 11% or 12% in Q1 and going up over the quarters and averaging 13%. And what we were trying to do was say, we now know we're going to be there in Q4.

Okay. So effectively, exiting the year, you expect to get to 13% then?

Correct.

Okay. That's good. That's good. Then David, just on the run rate for the amortization of intangibles related to Digium, I think I recall reading in the notes, just talking about the intangible assets valuation is, I guess, not expected to change much. So is what we saw in Q2 kind of reflective of the number that we should see going forward? And I think all -- and can you confirm all that's in the G&A line?

That's exactly correct, David, on both counts.

Okay. Perfect. And the last question, Bill, just in your comments, you were talking about M&A pipeline, and now that you've got -- you're well, I guess, into the Digium integration that you're -- have some more time to look at acquisitions, so is it conceivable that within the next couple of quarters here, you might be able to execute on a potential larger transaction, in a range of a CCD or even, maybe, a Digium?

I guess, it depends on what you mean by the next couple of quarters. If you mean couple in the strict definition of 2, and will we have a deal consummated by the end of this fiscal year, I'd say the answer is highly unlikely. Anything could happen, but very unlikely.

So probably, if anything, the second half of this calendar year?

Yes. Possible.

So maybe I'll take a moment at this point to just ask, are there any other questions? Please take this opportunity if you have anything that you want to ask, and the operator will -- perhaps the operator will explain how to ask questions again for anybody who missed that. But please, take this opportunity to ask anything that you like.

(Operator Instructions) We currently have a questioner, Stephen Boland with INFOR Financial.

Just a question on the balance sheet. With positive cash flow, what would be your expectation going forward in terms of cash levels and debt levels for the remainder of the year? And what's your goal with your cash flow?

Let me just start it, and you add something to it, David? Stephen, the only comment I really feel like it's important for me to make and answers your question, maybe David wants to add something more, is the thing we want you guys to see when thinking about cash flow and cash and debt is that the delevering that we talked about at the time of announcing the Digium transaction, it is indeed happening exactly as expected, perfectly on plan. And so using some of that cash to pay down the debt and reduce the debt levels over time is exactly what we're trying to do. I feel like the amount of debt we use was perfectly prudent, no one here is worried about either going home or having trouble sleeping at night. And especially, when you feel like your shares are undervalued, using some leverage to not raise more of the capital by equity than necessary makes good sense from a strategic point of view of how we're managing the business than financing acquisitions, that's what matters to me, to share with you. David, would you like to add something?

So I think if you just look at it on a going-forward basis, do you expect us to repay our debt more quickly than the amortization on the loan? Those are questions that we will address kind of over time, but because we continue to be looking forward and want to keep our options open, that there's not a huge incentive to repay it more quickly now, and then, need to reborrow to finance a new acquisition. So at this point, we are continuing with the paydown that's required under the loan agreements, which means we will hold some cash subject to some of the investment in inventory we talked about. So we want to keep plenty of flexibility for ourselves over the next little while. But the important thing is we're growing our cash resources while we're paying down the debt, and we had indicated that that's what our expectations are. And I think you can now see, in the 4 months into the acquisition of Digium, you can see that we are safely cash flow positive and that keeps our options open going forward.

Our next question comes from Jeff Schacter with TD Securities.

Everything looks great. So congrats. But I just wanted to ask, are you finding when you guys are going up for new -- or like, are you taking business -- do you find that you're taking business from either larger other types of companies or having more success sort of winning battles that you were, in the past, more of an uphill climb? Has that changed? And then, just on a second question, and I don't have anymore, would be just to expand a little bit on this whole open source item you mentioned with respect to Red Hat and Microsoft and helping me understand how that sort of integrates into your space as far as what strategies they're doing by acquiring all those assets.

Yes. Okay. Two totally different questions. On the first one, I would say nothing radically has shifted about our customer acquisition strategy, or win rate, or types of customers, Jeff. It's always been the case, and I've described this as continue [climbing] a pyramid, right? It's always been the case at Sangoma that there's a lot of small customers, and many -- but not as many as the small ones in the medium category and fewer in the large, and that's like for most companies so there's nothing surprising about any of that. What's happening, I think, is that the size of each of those levels in the pyramid is just gradually expanding over time. It's not the case that more of our wins are at the top of the pyramid or more of the wins are at the bottom, or there's something magical happening in the bottom -- in the middle.

Sangoma is positioned to sell to small, medium and enterprise customers. We're doing so successfully in all 3 of those categories. The only thing that I think would be worth mentioning when you ask is it a bit easier is, for sure, there are customers for whom the perceived stability of their supplier is important, and I think we always did a good job, whether it was when we were $10 million, or $20 million, or $40 million, or $70 million, of showing them that it was a financially disciplined company, it was healthy. We didn't have a whole bunch of debt. We weren't losing money and could be out of business in 2 years.

So we had a good story. But I think you can imagine that when you're a $100 million publicly traded company, we just get fewer of those questions now, right? People can do their own research. If they have a question, the salespeople know what to say. It's $100 million company, generating $10 million of EBITDA, next question. So from that point of view, it's a little bit more reassuring, I would say, to customers that ask that. On your second question about open source, the point I was trying to make was, I was attempting to come at this question of Sangoma share price and our valuation, and the company's view, and our board's view that the shares are undervalued, in a slightly different way. The people who dial in to these calls are typically sophisticated investors, you don't need me to get up here and say, here's how to do a valuation based upon revenue multiples or EBITDA multiples or discounted cash flows or public company comparables or similar transactions with private companies. Lots of you guys know that stuff.

My point was, with all of that evidence, coupled with improving company performance, we've made the argument over the last year or 2, that our view is the share should be trading at much higher pricing. And I thought it was somewhat interesting to add a third way of looking at that question. Separate from doing a bunch of models and comparing companies out there in the fields in similar transactions and public companies, it just looks, for me, like it confirms or reinforces that message. That's why I brought it up. So the thing that matters is the market seems to be acknowledging more and more, with more clarity, that open source is not the strange thing that nobody can understand, and you can't make money from, there is now ample evidence that open source software companies are getting good, solid valuations.

And open source matters to Sangoma immensely, it's something that differentiates us from our competitors, which is not like the same field that IBM Red Hat is in, and I'll talk about that for a moment. But we have the 2, probably the only 2, open source projects that matter in our entire history between Asterisk and FreePBX. It's a way for us not to bang our heads against the wall and compete directly with companies that are larger and have bigger marketing budgets. We have a user base that respects what we do and provide to them. And as long as we continue to do a good job of investing in those projects and providing value to them, if they need to buy a phone or pay for tech support or get training, I hope and believe they'll continue to want to do that from us. And the fact that Red Hat happens to be a company whose open source software mostly implements operating systems was not really the point I was trying to make.

I wasn't saying that operating systems and communication systems are the same, I was just trying to draw that the analogy that open source software companies are getting more respect and because open source matters to us, and we're good at it, I see that as hammering home the message that there's lots of room for Sangoma share price to go up. That's all.

Yes. It was more for me just to kind of pull that out because some of the analysts just drill down on numbers, numbers, numbers, but there's sometimes some other subtle things going on behind the scenes, and that's why I just wanted to address the whole open source network you have.

Yes. I had another question yesterday from someone about this. He was saying, I don't really know -- which products are open source, and, which one's not? And I said, if you're interested in this stuff, although it's kind of esoteric for an investor call like this, go type in to some web browser the word LAMP Stack, L-A-M-P. And lots of, maybe almost all, at least most of the websites in the world run on LAMP. And LAMP is a set of open-source products. It's Linux at the bottom for operating system, and Apache as a web server, and MySQL and PHP on the top. And the world, I think, has decided that open source is a real thing, and a real business, and deserves respect, and gets good valuations. And that's really the point I was trying to make. That's all.

Okay. Yes. I was just wondering if there's people in your sector, like in the Microsoft and what IBM is trying to do, whether in your space there's other companies looking to do the same in the open source. And obviously, you're the only way in. So that's an interesting sort of added value, hidden value.

This concludes the question-and-answer session. I would now like to turn the conference back over to David Moore for any closing remarks.

Thank you, operator, and thanks to everybody for participating today. We really appreciate it. We will be putting up a recording of the call on our website in the next couple of hours and want to wish you a very pleasant rest of day. Thank you.

Thanks.

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