Executives
Bill Tamblyn – EVP & CFO
Todd Simpson – President & CEO
Jamie Siminoff – Chief Strategy Officer
Analysts
Tim Leehealey – Lamassu Holdings
Joel Achramowicz – Blaylock Robert Van
Ditech Networks, Inc. (DITC) F3Q10 (Qtr End 01/31/10) Earnings Call Transcript February 25, 2010 4:30 PM ET
Operator
Ladies and gentlemen, thank you for standing by. Welcome to the Ditech Networks' third quarter fiscal year 2010 conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session; instructions will be given at that time. (Operator instructions) And as a reminder, this conference is being recorded.
I’d now like to turn the conference over to Chief Financial Officer, Bill Tamblyn. Please go ahead.
Bill Tamblyn
Thank you very much. Good afternoon, everyone. This is Bill Tamblyn, the CFO of Ditech Networks. Thank you for joining us for this conference call, which will cover Ditech Networks' announcement of results for the fiscal 2010 third quarter ended January 31, 2010.
Today’s conference call will cover our financial results for the quarter and we will also provide our outlook for the fourth quarter of fiscal 2010. Todd Simpson, Ditech’s President and CEO, will provide the business and strategic analysis and I will provide a more detailed analysis on the financials. Following, we will open the call up for Q&A.
Before we begin, let me state that this conference call is being held on February 25th, 2010. Any sound recording or republishing of the contents of this call is expressly forbidden without the written approval of Ditech Networks.
Also, we must point out that as with similar presentations, the following discussion contains forward-looking statements and in particular, the financial projections of our fourth fiscal quarter of 2010 that involves risks and uncertainties. Our actual results may differ materially from those discussed here. We will attempt to identify such forward-looking statements with qualifying words such as we intend, plan, believe, estimate or predict, or we may, could or will or other comparable language.
Factors that could cause results to differ include factors discussed today in this conference call and in our press release today, as well as those detailed in the section entitled future growth and operating results subject to risk of Ditech’s Form 10-Q for the second quarter ended October 31st, 2009 that was filed December 11th, 2009 with the Securities and Exchange Commission.
We assume no obligation to update these projections or other forward-looking statements. Additionally, we – let me comment on our approach to governance and SEC compliance. Please allow me to mention that we comply with all effective SEC and NASDAQ requirements related to audit committee compliance and independence. We have disclosed all Related Party Disclosures as required.
Today’s announcement was released over the wire this afternoon in a press release and you may also read it on Ditech’s website by going to the Investors section of the site at www.ditechnetworks.com.
Non-GAAP financial measures will be discussed on the call and a reconciliation of GAAP and non-GAAP financial measures is disclosed in our press release of today, as well as in our press release of November 19th, 2009 with respect to our Q2 numbers, both of which are located on the Ditech Networks' website at www.ditechnetworks.com.
With that, I’d like to turn the call over to Todd to comment on the announcement and our strategy going forward. Todd?
Todd Simpson
Thanks, Bill. Good afternoon and welcome to Ditech Networks' Q3 earnings call. The first nine of this fiscal year have seen us executing on our plan to transform Ditech Networks. We've made significant strides in this regards and are shifting focus from investing in our vision to gaining market traction with our solutions.
While our Q3 revenue fell short of our expectations at $4.3 million, this was due to quarter-end timing issues. We booked several orders in the first 10 days of Q4, some of which we had expected in Q3. With these orders, we predict Q4 revenue will approximate $7 million to $7.5 million.
Our cash flow is also largely tied to the timing of VQA orders and we had anticipated that Q3 cash flows would not be optimal. We gave investors a heads-up on this in our last call. The actual change in cash was a usage of $3.5 million in the period. However, Q4 looks positive and we expect the total cash usage over the combined Q3-Q4 period to match what we communicated in the last call, namely less than $4 million, meaning Q4 should be close to cash-even. For our full fiscal year, this would mean the cash used organically, i.e., not including the SimulScribe transaction, will be in line with our previous communications.
We needed to invest to bring new products to market and we have worked hard to do so in a judicious compassion. As I mentioned in opening, we are now highly focused on turning those investments into further market traction. We believe our entry into the voice services market has great potential as the industry accelerates through innovation and the integration of voice into more and more applications.
In particular, we believe voicemail-to-text is a voice application that will have widespread appeal and deployment. Our PhoneTag offering is based upon speech-to-text technology, which can be used for this application, as well as others. For example, one customer is using it for real-time conference call transcription.
As we evolve, we continue to work hard to manage our operating expenses. We have integrated the PhoneTag product, while reducing our OpEx. We have also reduced our investment rate for mStage and toktok, reflecting the maturity and customer focus of these developments. Our development expenses are now highly focused on definitive customer and market-driven projects.
To give more details on our strategy, it's my pleasure to introduce Jamie Siminoff, our Chief Strategy Officer. Jamie has started and built several successful companies including PhoneTag. Jamie?
Jamie Siminoff
Thanks, Todd. So this is my first call. I would like to first just say hello and that has been a really exciting six months at Ditech. Todd has set forth a strategy last year to add recurring revenues from voice services, while maintaining our strength in delivering Tier 1 class solutions. We believe the evolution of the market towards voice services is accelerating and our core products can be core enablers for this market.
We refined our strategy over the last quarter, creating Ditech Labs as a launch pad for our applications and services. In the Labs program, we bundle up technologies offered by Ditech to the early adopter communities in order to gain both feedback and market awareness. The Labs products are built from day one with an architecture that allows both developers and carriers to use components of the products to add their – to add value to their offerings. As the product evolves out of Labs, it will be hosted on carrier-grade platforms including the toktok-mStage infrastructure.
Currently, we have a few products in Labs, PhoneTag, toktok, PoketyPoke and we are also working to position VQA as a Lab service. I'll start with PhoneTag, our voicemail-to-text product, which spans solutions from fully automated to fully human. The fully automated product allows aggressive price points and scalability that are not possible when human touchups are involved. And we are seeing lots of market interest in automated solutions. This interest is driving us to develop incremental languages.
With the publishing of our PhoneTag APIs, other applications beyond voicemail also become possible. One of these, real-time conference call transcription, was implemented and launched by one of our customers at the Consumer Electronics Trade Show in January. We believe we have a healthy funnel of opportunities for PhoneTag, which give us the potential to grow well over the next few years.
Next, toktok. With PhoneTag being our lead application in the carriers, we consciously decided not to invest in having the toktok application marketed broadly to end-users. Instead, toktok is more actively described as a set of voice services that enable many different voice applications. Through the toktok APIs, developers and carriers can access the voice dialer, the whisper messaging, rich conferencing features, and other toktok components.
The toktok APIs are gaining traction in the market in two ways. First, there are developers directly accessing the APIs to build voice applications. And second, carriers are looking at Labs applications on top of the API. One such application for voice integration with Facebook is generating good activity with carriers.
PoketyPoke is perhaps the best example of the last strategy. PoketyPoke makes conferencing calls simple. You simply send any calendar invite or e-mail with a bridge number and time to PoketyPoke and it will call you at the time of the conference, you have no digits to enter, no codes to remember.
We launched PoketyPoke beta at the Consumer Electronics Trade Show in order to drive interest in the solution. Already over 1,500 people have signed up for the application. To compare that, it took PhoneTag almost two years to reach that number of early adopters.
Additionally, PoketyPoke is already generating interest from carriers with a good opportunity for having product in the market this calendar year. This is consistent with our strategy. We do not intend to spend a lot of money targeting end users directly with PoketyPoke. Instead, we are focusing on turning it into a larger opportunity through partnership with those players that have already have users and adjacent businesses.
Finally, we are leveraging our Labs infrastructure to position VQA for smaller platforms and PBXs [ph]. We have our first platform chosen and have the algorithms running on that platform in the Lab. This is not a large effort, but can reflect a major change in the way that VQA is being sold.
Our strategy and infrastructure is designed to allow us to cost-effectively put applications and products into the market. We see market feedback and invest additional money based on a clear ROI. Of course, no project is without risk, but this approach allows us to judge risk early in the product cycle.
Now, Todd, I give it back to you.
Todd Simpson
Thanks, Jamie. So as Jamie just mentioned, as products migrate out of the Labs environment and into higher-scale production, we expect to transition them to the mStage-toktok infrastructure. This is currently the plan for both PhoneTag and PoketyPoke.
This is designed to allow us and developers to easily add incremental features to applications using the underlying infrastructure, essentially a wedge-based strategy. In the case of mStage, another path to market is to integrate mStage into the core design of a network so that a carrier can open up virtual voice capabilities to their own developers and development communities. mStage is also already showing traction in this path to the market, again, reflecting specific customer interactions.
So let me summarize our current state. VQA continues to generate revenue for us, typically with larger one-time orders. It's an important business for us as it maintains our customer contacts and media processing cache. VQA is also central to all of our voice services as we believe high quality will increasingly become a significant differentiator.
Our investments are making measurable progress and traction. PhoneTag is generating revenue with good growth opportunities, toktok and mStage activity is focused on specific and well-defined opportunities, and PoketyPoke is in discussions with the lead customer. We have turned the corner from investing in products to investing in customer-driven projects.
Q3 certainly highlighted the timing issues associated with large platform sales, but should be mitigated by what we see in Q4 in terms of both revenue and use of cash. As we start to blend recurring application revenue with the platform sales, we expect to see more deterministic quarters and results.
I will now hand the call back to Bill Tamblyn to give some more details on the numbers. Bill?
Bill Tamblyn
Thanks, Todd. I'd like to now share with you the financial results for the third quarter of fiscal 2010, as well as our outlook for the fourth quarter of fiscal 2010. Please allow me to mention that in our discussion today, our operating results will be provided on a non-GAAP basis. Our press release posted on our website includes the summary information from GAAP and related reconciliation for Q3. The primary change is the elimination of $347,000 related to stock compensation and $697,000 related to restructuring charges, primarily headcount related.
The key points of the third quarter results as noted in our press release are as follows. Revenues were $4.3 million, non-GAAP gross margin was 50.6%, the non-GAAP loss from operations was $3.3 million, the non-GAAP loss was $3.4 million, and the non-GAAP diluted loss per share from continuing operations was $0.13 per share.
The third quarter details are as follows. Total revenue for the quarter was at $4.3 million. It was a 16% decline from the prior quarter of $5.1 million and a 12% decrease from the prior of $4.9 million. Q3 revenues were less than our projections. A couple of specific transactions that we thought would close by quarter-end did not. As noted by Todd, these Q3 potential items were booked in the first 10 days of Q4 and shipped prior to today's call. More on Q4 revenues later in the discussion.
International revenues were 33% of the total revenue in Q3. We had three greater than 10% customers in Q3 that approximated 69% of the revenues compared to two greater than 10% customers in Q2 that approximated 41% of revenues. The non-GAAP gross profit for the quarter was $2.2 million or approximately 50.6% of revenues, at the high end of our prior projections of the 45% to 50%. The mix of customers and products contributed to higher gross margins even with lower revenues.
Non-GAAP operating expenses were approximately $5.5 million for the quarter, better than our projection of $5.6 million to $5.8 million. We began to reallocate expenses from voice-to-text and reduced spending on other developed projects. The details of the operating expenses for each area are as follows.
Non-GAAP sales and marketing expense was $2.2 million. This was a decrease of less $100,000 from the prior quarter, due primarily to lower sales costs. Non-GAAP R&D expense was $2.3 million, supporting our legacy business and new mStage-toktok initiatives. This was a $400,000 decrease from the prior quarter. We are rolling off costs as appropriate and investing in new areas as prudently as we can.
The non-GAAP G&A was $1 million, down $200,000 from the prior quarter and in line with our expectations based on lower audit fees expense in the period as expected. Other income expense netted to an expense income of approximately $10,000, due to general low returns on short-term investments and interest accrual on our convertible notes.
The non-GAAP pretax operating loss approximated $3.3 million versus the non-GAAP loss of $3.8 million last quarter. Non-GAAP income tax is tied to AMT and foreign taxes and was nominal. Our non-GAAP net loss was $3.3 million, which is $0.13 per share compared to $3.8 million or $0.15 per share in the prior quarter.
To reiterate, all the operating results that I have given you, other than the revenue and net interest expense, are on a GAAP basis. Please refer to our press release for the second quarter of fiscal 2009 for comparative GAAP results, as well as a reconciliation of the non-GAAP results to our GAAP results.
Moving onto the balance sheet and cash flows, both of which are on a GAAP basis, cash equivalents, short-term and long-term investments at quarter-end totaled $34.5 million, an approximate $3.5 million reduction from the prior quarter. The reduction was $500,000 higher than our projections for the quarter.
We provided cash projections on a six-month basis in our last conference call at $2 million to $4 million, believing Q3 would be the tougher quarter for cash burn with our reduction in force and timing of shipments, and it was. Cash used in operations was also approximately $3.5 million for the quarter. This was a level we believed would occur based on working capital trends and overall business levels.
At quarter-end, accounts receivables were approximately $2.9 million. This was a $900,000 increase from the prior quarter. DSOs in Q3 approximate the high end of our expectations at approximately 59 days and were higher than our prior quarter's outstanding 33 days. We expect our long-term target to be between 45 and 60 days based on international revenues. Let me remind you that our DSOs are subject to change as the timing of sales and shipments in any given quarter is always subject to fluctuation.
Net inventory was $7.1 million for the quarter, down $1.6 million from the prior quarter of $8.7 million. This decrease in inventory is solely based on the using of existing inventories for customers, adding to reserves, and bringing in nominal new inventory during the period. At quarter-end, we believe the remaining inventory is still usable based on our forecasts. We still have sufficient – significant inventories that are fully reserved.
Capital spending approximated $26,000 in the quarter. Depreciation and amortization was approximately $550,000. We ended the quarter with 93 employees. This is down from 105 in the prior quarter. We did reduce our workforce in early November by approximately 10% and addressed expenditures based on the stages we are in at development with the legacy, newer products and the other operating areas. These reductions resulted in severance pay and other restructuring costs and expenses of $697,000.
I will now review our GAAP projections for the fourth quarter of fiscal 2010. In this regard, please note the cautionary statements regarding these forward-looking statements that we gave at the beginning of the call. Our Q4 outlook is derived from orders already shipped, existing backlog, deferred revenues, and our bookings forecast. Therefore, we project with a rollover of a couple other orders that our revenues will increase substantially in Q4 to approximate $7 million to $7.5 million. We believe the gross margin would be in a range of 55% to 58%. This may vary based on product and customer mix.
Regarding operating expense, we are attempting to manage our TDM and packet-based businesses as sustainable breakeven businesses and are therefore moving resources and related dollars to the initiatives phone tag, mStage, and new apps. Additionally, the quarter will have minimal severance charges carried over from Q3 and will have some additional marketing cost for a couple of major shows like this past week's Mobile World Congress in Barcelona.
Operating expense in the fourth quarter will be tied to customer and channel mix and our investment in PhoneTag. Overall, we would expect our GAAP operating expenses including an estimated $400,000 of stock compensation to approximate $5.7 million to $5.9 million. Our tax rate, again, would be in a range of 1% to 3%, due to the current loss situation we are in.
Additionally, a couple of other data points for you. Weighted average shares should continue to be calculated on a basic basis due to our losses at approximately 26.4 million shares. Cash burn remains a major focus item for us. On our last call, we stated that "over the next two quarters, we will burn $2 million to $4 million in total". This is very similar to what we project today. We believe we will be cash flow positive from operations in Q4.
Looking back at Q3, we were disappointed with the few missed revenue opportunities that were booked within the first 10 days of Q4. The SimulScribe-PhoneTag relationship has created many leads and opportunities. We look to more applications and desire to ramp these to revenues faster than traditional telecom sales cycles. That said, we remain focused on legacy business revenue, maintenance and growth, and we wish to continue to advance our product offerings while attempting to minimize our cash burn.
With these comments, I would like to turn it back over to Todd. Todd?
Todd Simpson
Thanks, Bill. Linda, we are now ready for Q&A.
Question-and-Answer Session
Operator
All right. (Operator instructions) All right, we do have a question from the line of Tim Leehealey. Please go ahead.
Tim Leehealey – Lamassu Holdings
Hey guys, how are you doing?
Todd Simpson
Good morning, Tim. How are you?
Tim Leehealey – Lamassu Holdings
Very good. All right. So I'm trying to understand a couple of things. One is the $7 million to $7.5 million outlook for Q4 is obviously a positive, but that really just effectively is the net outcome of the deals that slipped out of Q2 and Q3, correct? Because in the previous two calls, you had missed some deals and both times suggested that those deals were rolling forward and that is the reason for Q4?
Todd Simpson
Yes, absolutely. There is definitely some rollover into Q4 that is helping us out. Yes.
Tim Leehealey – Lamassu Holdings
How much of the better numbers in Q4 do you think are sustainable going forward? Because – I mean, obviously, listen, the financials are pretty intimidating if we drop back to the $5 million range that we were – $5 million to $6 million range that we were doing. I mean, at this point, the current assets have dropped just precipitously over the last several quarters. So we need some pretty impressive numbers. What – what's your feeling going forward?
Todd Simpson
Yes. So again, we don't give guidance out behind the –
Tim Leehealey – Lamassu Holdings
I'm not asking for specific numbers.
Todd Simpson
Right. Do we have the potential to continue to grow the revenue? Yes, we certainly have the potential and I think if you look on average over the last year – on average, we've been growing the revenue base. So obviously, we are pushing hard to continue that trend.
Tim Leehealey – Lamassu Holdings
What's the nature of the deals that rolled over? Are they traditional business or are they – was there any mStage business in this quarter?
Todd Simpson
So to the first question, the nature of the business is largely VQA deals and fairly large ones that truthfully this year, having our quarter-end at the end of January just ended up not being ideal given purchasing behavior at the beginning of fiscal years for people in just trying to get a deal from. So that was – they were VQA deals. And to the second question, no, it was not mStage related business.
Tim Leehealey – Lamassu Holdings
What's the outlook for mStage at this point? I mean, I – obviously, we have drilled on this subject every single quarter. Last quarter or two quarters ago, you said that if you didn’t have really meaningful results as defined by ROI type analysis, this quarter that you – we would have to have some strategic decisions, we would have to makes some strategic decisions. I'd like you to comment back on that sort of line of questioning.
Todd Simpson
Yes. Yes, for sure. So I'm pleased to say that mStage has definitive traction right now. Now, that traction today is not revenue. But there is a lot of activity involved in integrating mStage into the market and several locations, several opportunities. And so we are quite optimistic that that can lead to – I think –
Tim Leehealey – Lamassu Holdings
Yes, hold on. Before, you had always guys had been very clear. In fact, I think I have the quote here that you were really talking about numbers, not potential. Your mStage has had potential for the last two years. What we need at this point is numbers. So where are we in terms of the generation of revenue behind mStage-toktok.
Todd Simpson
Yes, so I think we are pretty close to it now. So like I said, we haven't –
Tim Leehealey – Lamassu Holdings
What does close to it mean?
Todd Simpson
Sorry?
Tim Leehealey – Lamassu Holdings
What does close to it mean?
Todd Simpson
Oh, well, so as we keep saying, these telecom sales take sometime to get integrated into large carriers and to start to generate revenue.
Tim Leehealey – Lamassu Holdings
Yes. But I think that by Bill's wording, specifically you guys had said that the product would be out at the end of this quarter, the product would have been out there for a full year, which accounted for the low – the slow adoption time for carriers and we should have expected to start to see meaningful numbers. But when – that doesn't appear to be the case, it's not in your guidance. I mean, I just – I see vagaries being thrown around, but nothing predictable – no return on the investment.
Todd Simpson
Yes. So we announced mStage actually exactly one year ago in Barcelona and we had said it would be GA [ph] and ready to the go – start in customer situations at the end of the calendar year, which we kept on target and that it would then be integrated and lead to traction after that. And I think we also said that we were definitely positioning mStage to be a recurring revenue product as opposed to our traditional platform sales. And so they were positioning in it to get embedded in the networks and generate quarter-over-quarter or month-over-month revenues as opposed to one-time sales. And so I think we are still well on that path.
Tim Leehealey – Lamassu Holdings
Yes, but I think you've thrown out before you need $4 million additional incremental revenue to let's say the $5 million to $6 million sustainable revenue out of your traditional business just to really get to breakeven. But you are not giving any guidance. I mean, as an investor whose money you are spending aggressively, I mean, how do I get any comfort here?
Todd Simpson
Yes, I mean – so beyond what we've said, right, that we have definitive, measurable customer traction today that we believe is going to turn into revenue and justify an ROI on the investment. I mean, I don't know how much more detail I can give you than that at this point.
Tim Leehealey – Lamassu Holdings
All right. Well, I'll let the next question go.
Todd Simpson
Okay.
Operator
(Operator instructions) All right. Next, we will go to the line of Joel Achramowicz. Please go ahead.
Joel Achramowicz – Blaylock Robert Van
Thank you very much. Todd and Bill, is there any way that – I mean, obviously, this is like a – an early-stage play, I mean, in many ways. You've got the legacy business, which is years past was extraordinarily volatile but also generated enormous cash during the top cycles, the top of the cycles. The key here is just getting some of an indication, some kind of a parameter that there is traction that reflects what you've been saying.
Are there any trade shows or publications or articles or I suppose, events that might be forthcoming that would give us an indication by their participation and attendance and also by talking to some of the people there as far as the interest and the exposure that mStage and PhoneTag and some of these products have had in the market?
Todd Simpson
Yes, that's a great question. So on the more sort of consumer-facing pieces of the business like PhoneTag and PoketyPoke and toktok, yes, there has been some good press and trade on some of those from the Consumer Electronics Show where we launched PoketyPoke, some good write-ups on TechCrunch and some other leading blogs on the Internet, as well as they've been at our booth at Mobile World Congress, you've seen the amount of traffic through compared to previous years, it was great. So, there is definitely a lot [ph] on those consumer-facing pieces of it.
On mStage, it's a little harder to drop press or trade, magazine, articles or what not, because it's again more of the platform sale, which is more deeply integrated into large customer opportunities. Did I – I hope I answered your question.
Joel Achramowicz – Blaylock Robert Van
So you are seeing the – is there any way we can access some of that material?
Todd Simpson
Yes, I think you do. Like, TechCrunch is the leading blog here on leading-edge technologies and how they are doing in the markets and if you go on there and search for PoketyPoke or PhoneTag, you should find some interesting stuff to read.
Joel Achramowicz – Blaylock Robert Van
And that's TechCrunch?
Todd Simpson
Yes.
Joel Achramowicz – Blaylock Robert Van
Okay, great. Well, you have opined that you are experiencing traction. Obviously, the key is converting that to revenue. Just – let's just say, aside from the fourth quarter, how about 2011? I mean, would you – would you be disappointed if you didn’t generate significant revenues from these new products in the upcoming fiscal year and could you maybe give us a range of what you would like to see or in terms of the top line? I'm understanding that it is early stage still, but –
Bill Tamblyn
It would be very difficult to give a top line expectation. Do we – would we be disappointed if it didn’t contribute significantly? Well, from voice-to-text, which is the PhoneTag to – through to the mStage applications, as well as some of the other things we are doing such as PoketyPoke and others; we would expect to have – what is significant? Is it millions of dollars? The answer we would be disappointed if it did not translate to millions of dollars. So going past that to a higher level would be a tough call at this moment.
We usually don't get out that far, but based on the things we've experienced, you've heard Jamie speak earlier, we have a lot of interest, we have a lot of energy inside the facility and the building and the PhoneTag revenues are improving and we do have tractions and integrations with people on the mStage that – it's tough to predict the timing.
We just had – example Q3, Q4, we have a change of management in a carrier that can delay an opportunity anywhere from one week to several months and that has happened to us recently. And as we did Q3, Q4, we received a significant amount of orders in the first several weeks of this quarter that could have shown up in the latter portion of Q3 and would have made a difference in the quarter from a revenue perspective and even potentially cash flow perspective. But those things we experience. So it's tough to be specific about timing of each activity. So that's the kind conundrum we are in.
Joel Achramowicz – Blaylock Robert Van
Yes, I understand. Just one final question. Bill and Todd, is there any possibility that there could be a significant inflection point in the legacy VQA platforms because of latent demand internationally or do you think it's, for the most part, just winding down now?
Todd Simpson
No. We have sort of been in this position for 18 months. So I don't want to over-hype the potential there either. But certainly, there are still opportunities out there that could be better than – raise the level of our VQA revenue from where it is today as well and obviously, we are still actively pursuing those.
Joel Achramowicz – Blaylock Robert Van
Well, it will be interesting to see your progress going forward. Good luck.
Todd Simpson
Thanks, Joel.
Operator
And next, we will go back to the line of Tim Leehealey. Please go ahead.
Tim Leehealey – Lamassu Holdings
Hey guys, I apologize, I forgot to ask one question regarding the PhoneTag stuff. I was in the impression as part of the transaction; we wound up with some of the existing revenue stream. How much of that is in the next quarter numbers?
Todd Simpson
In the Q4 numbers?
Tim Leehealey – Lamassu Holdings
Yes.
Bill Tamblyn
Hundreds of thousands.
Todd Simpson
Yes, hundreds of thousands.
Bill Tamblyn
Less than $1 million.
Tim Leehealey – Lamassu Holdings
Right. Okay, okay. All right. All right, that was it. I just wanted to see where that was.
Bill Tamblyn
Thank you.
Todd Simpson
Okay, sure.
Operator
And there are no further questions.
Todd Simpson
Okay. Thanks, Linda. So as always, I'd like to thank everyone for joining us on the call today. Bill and I are available for follow-up calls if desired. And we look forward to updating you again in about three months. Thanks.
Bill Tamblyn
Or seeing you at a trade show.
Todd Simpson
Or seeing you at a trade show, yes.
Operator
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