Intermap Technologies' (ITMSF) CEO Todd Oseth on Q1 2016 Results - Earnings Call Transcript

| About: Intermap Technologies (ITMSF)

Intermap Technologies Corp. (OTCPK:ITMSF) Q1 2016 Earnings Conference Call May 13, 2016 11:00 AM ET

Executives

Cory Pala - Director of Investor Relations

Todd Oseth - President and Chief Executive Officer

Rich Mohr - Chief Financial Officer

Analysts

Mark Gomes - Pipeline Data LLC

George Melas - MKH Management

Elliot Penn - Lazarus Management

Thomas Crocker - Private Investor

Operator

Good morning. My name is Blair and I will be your conference operator today. At this time, I would like to welcome everyone to Intermap Technologies Corporation First Quarter Results Conference Call. [Operator Instructions] Thank you. Cory Pala, Director of Investor Relations, you may begin your call.

Cory Pala

Thanks, Blair and good morning everyone. Thank you for joining us for our 2016 first quarter conference call. This call is being broadcast live over the web, accessible through our website and a replay will be available via archived webcast in the Investor Relations section of our website and as well by phone for the call-in replay details outlined in our Q1 press release.

Leading our call today is Intermap President and CEO, Todd Oseth, along with CFO, Rich Mohr. This conference call will contain forward-looking statements, most specifically, with regards to the finalization of a large SDI contract previously announced by the company. These forward-looking statements will include opinions, assumptions and management’s expectations of future plans and operations. Although, Intermap believes these statements are based on information and assumptions, which are current and reasonable, these statements are necessarily subject to risks to a variety of unknown and unknown risks and uncertainties. You can find a discussion of all these risks and uncertainties in our annual securities regulatory filings on sedar.com.

With that, I will now hand over the call to Todd Oseth, CEO.

Todd Oseth

Thank you, Cory. During Q1, we recorded $1.4 million in revenue with a negative $2.3 million of adjusted EBITDA. Roughly, 50% of this revenue was generated from data sales and 30% from our software products. Our cash used in operation was down from Q1 of last year by $1.8 million to $600,000. Our emphasis remains on enhancing the Orion Platform for our first SDI project expected to start in Q2 of this year. We did not have any new acquisition projects during the quarter, but we have been awarded a new project for $2.6 million that we just announced. We are expecting an expansion of this amount as we get closer to the commencement of flying on the project in the June-July time frame. Under this contract, we will be collecting data during the summer months within processing and delivering all through the rest of the year. This is an extension of the project that we have been working on that started in 2010.

We have recently seen numerous new opportunities in the market for additional SDI projects of all different sizes. We will be proposing our solution as these opportunities progress into RFPs. In Q1, our software revenue increased by 79% over the same period last year, going from $239,000 to $428,000. This increase was driven by our increased use of InsitePro for flood underwriters. Our InsitePro software is starting to make a real marketing industry as it can be easily customized for a unique customer-specific scoring. This scoring uses Intermap’s standard flood model analysis, but can also include an analysis of location to water or other parallels. The application can also easily ingest specialized data from the customer, which allows for a score that is specific to the customer’s unique business plans.

Our mapping services revenue was $194,000 and consisted of data deliveries of SPEC data that we have collected in other periods. But as previously mentioned, we have received an order for acquisition for this side. Our data licensing was up 109% from $345,000 in Q1 of last year to $722,000 in the first quarter of this year. A large portion of our data sales is being used for expectation of other sensor datas such as satellite imaging.

Our professional services revenue was up slightly from the first quarter of last year and approximately $100,000. This increase comes from creating digital elevation models from optical sensor data in Australia. And this work should approach close to $1 million by the end of the year. Back to our software development activities, as you might expect, no two customers’ user interfaces are the same and even the analytics can change dramatically between customers in the same industry. These different methods of evaluation are each company’s individual competitive advantage. This is why we choose to build the platform for our software instead of a static application. The platform approach allows us to quickly facilitate the requested customization from our customers. Our previous applications do not have this modification capability built into it. So, any customization will take a long time to implement and revert very costly to our customers.

Finally, we are waiting for the project financing on our February announced SDI to close this quarter. We have previously reported that we were informed by the clients the project financing will be in place and the project would commence during the second quarter. We continue to be told that this timing remains accurate. We cannot provide any more definitive date at this time. Please understand that the project financing does not involve Intermap. It’s the responsibility of the client. So, we do not have all of the associated details. We do however get some of the reports weekly from the client on the progress that has already occurred.

Now with that, I am going to turn it over to Rich for a little bit more information on the quarter. So, Rich?

Rich Mohr

Thank you, Todd and thank you all for joining us today. As our press release noted and as Todd mentioned, total revenue for the first quarter was $1.4 million, up modestly on a year-over-year basis. Adjusted EBITDA was a negative $2.3 million, an improvement over the first quarter of last year and operating loss was $2.7 million also an improvement over the first quarter of last year.

Q1 has historically been the lowest revenue quarter of the year for the company. It is important to remember that the company’s expense structure is in place to carryout multimillion dollar SDI projects, which is why we are showing losses and uses of cash during the quarter when we aren’t in the middle of an SDI. Without this investment, it would be virtually impossible for the company to perform on an SDI when they ultimately close and commence. Many Intermap’s personnel have specialized skillsets and finding these type of people in the market will be difficult, if not impossible if we had released after in the periods leading up to the SDI contract. However, we were able to use these people in the preparation phase of the pending SDI.

Additionally, there are certain aircraft-related costs that are ongoing even when the planes are not flying that we cannot avoid. The components of first quarter’s revenue of $1.4 million includes a $194,000 in mapping services, $94,000 in professional services and this amount should increase in future periods based on new contracts already in place. Data licensing of $722,000 and $428,000 in software revenue, which is consistently increasing from our InsitePro risk based software. At the end of the quarter, we had a revenue backlog of roughly $1 million.

Operating costs on a year-over-year basis were 16% lower coming in at $3.9 million versus $4.7 million for the first quarter of last year. As you can see, we continue to aggressively manage our operating costs as we wait for the commencement of the SDI contract. Once that contract is funded, we can then begin to increase costs to more fully support the project requirements.

As Todd mentioned earlier, the primary focus of the company during the first quarter was enhancing our Orion software for the pending SDI contract and support to our SDI client in regards to their project financing requirements and their own logistical requirements of the contract. Further to our SDI efforts, we understand the frustration regarding the time it takes to ultimately close the financing portion of this contract. We share those frustrations as well. However, we all need to put this in perspective and realize that this is the first contract of its kind and we know no other geospatial SDI contract of this magnitude that has been put in place that also requires project financing from the client with no direct funding from the government.

Based on the visibility we have, the project financing project progress has been mythological and reasonable. Our client is still communicating to us, but the project financing should be in place prior to the end of the second quarter, but we can’t provide a specific date at this time for that completion. We will obviously press release the receipt of the down payment once that occurs.

On April 15, we announced that we had reached an agreement with Vertex One Asset Management, our senior lender to restructure and consolidate three outstanding notes with the principal balance of $7 million that came due in April and we added an additional $5 million of financing to this restructuring. The new notes includes the capitalization of all accrued interest and now totals $13.1 million. The associated rate on two of the notes was reduced from 20% to 15%. We coupled this new $13.1 million note with the restructuring note from March totaling $9.1 million, the new outstanding balance with Vertex is therefore $22.3 million. The $9.1 million portion of this balance is due in August and the $13.1 million portion is due in October. We expect to service this debt from the proceeds of our SDI work and other portions of our business. The proceeds of the new $5 million borrowings were used to retire $600,000 of debt that came due in April from a lender other than Vertex, is also used for the payment of certain outstanding operating costs of the company and for the funding of pre-SDI activities required in advance of the project down payment and commencements.

We have communicated previously our six step plan that includes. Number one, close the $12 million upfront payment on the SDI. We are being communicated with from our client and that this should still occur by the end of Q2. Number two, revise the turns of the $7 million debt that came due in April, this has been completed. Number three, deliver on the SDI project once it commences. We are already working in advance on certain of the deliverables. Number four, work on other material opportunities in the pipeline. We just closed one of those with $2.6 million announcement this morning and the others remain as priorities for the company. Number five, work towards the repayment of all outstanding debt within a year or so. Number six, address the outstanding net royalty with Vertex, communication on this is expected to increase once the SDI is in place and we are delivering on the contract.

One final comment on the statement of cash flows, which is probably a better barometer of the company’s performance for the quarter. During the first quarter, we used $600,000 of cash in operations and $49,000 for the purchase of property and equipment. This PP&E purchase was for modifications to our radar system to increase acceptance rates and ultimately lower our cost of goods for future SDI projects. So to wrap up, we remain very optimistic about our opportunities in the coming months and the financial performance that we can deliver for the year. The variations in over quarter-to-quarter businesses are typical for our project based company such as Intermap. Also, our expected margins on our future business including the SDIs should be strong and lead to greatly improved adjusted EBITDA amounts, operating results and cash flows.

That covers the financial update for the quarter and I will now turn the call back over to Todd for further comments. Todd?

Todd Oseth

Thanks Rich. While the revenue increased slightly year-over-year, it doesn’t yet really encompass any of the SDI projects. We still expect to start the large SDI in Q2 and will be in full swing during Q3 of this year. Additionally, we are working on other SDI opportunities. Some of these are all inclusive with data collection, multiple sensors, software professional services, but not all. Some are more focused on the software component and professional services, utilizing the customer’s existing geospatial data. The ultimate deliverables as well as the size of the country dictates different dollar values for these projects. As our press release noted the sales cycle of these SDIs is measured in years, not weeks or months. This is due to the complexity of the projects, politics, complex approval requirements associated with multiple ministries who are ultimately the end customers for this information. We can obviously make no guarantees on the timing of any new SDI project including whether any new SDI will ultimately close. Also, our intention on large SDI contracts in the future is to comment on them only once they have been announced and the launch of the project is eminent.

As always, we thank you for your continued support and we look forward to talking with you again after the close of Q2. With that operator, can we go ahead and open up the lines for any kind of questions that our investors may have?

Question-and-Answer Session

Operator

[Operator Instructions] There are no audio questions at this time. I will turn the call back over to Todd Oseth for closing remarks.

Cory Pala

Blair, I think we do have somebody that’s just come in here. There was a delay last time as well with a number of people that tried to ask questions. So maybe we will just give it one more second for the phone line?

Operator

Yes, there actually is some questions. The first question comes from the line of Ivan [indiscernible] from MBI. Your line is open.

Unidentified Analyst

Yes. So, can you hear me?

Todd Oseth

Yes.

Unidentified Analyst

Yes. Hi, so maybe my question would be as in reports to what’s you know your relationship with Vertex, so maybe you could comment on how your discussions are with Vertex, in other words, how did they get the confidence to invest and reinvest with more lenient terms that you got for example, with the $5 million financing as of recently?

Todd Oseth

Well, clearly Vertex is still following us, tracking us and believing in our company and our business. They also have had access directly with our prime contractors, so that their confidence that this business is going to move forward. So Vertex continues to support Intermap as seen in the additional $5 million that was lent here just a few weeks ago. So it takes your question straight out, the relationship is still quite good.

Unidentified Analyst

Understood. Thank you. And then just as a follow-up, so you mentioned working on other SDIs and I do understand that you don’t want to comment on any of these in particular, but would it be possible for you to give us any sort of magnitude in terms of number of SDIs that are in the pipeline, would it be zero to five, five to ten or is it too hard to say?

Todd Oseth

Yes. I think right now, it’s too hard to say. There is still a number, we just gives a couple numbers, there is roughly 194 countries that are out there, of which 40 are considered established infrastructures. The rest are opportunities for us. So there are quite a few of them out there. And as a matter of getting into the budget cycles and making sure that we are there and they understand what kinds of data is going to be required and what kind of answers are they looking to produce from the data. So it’s very difficult to say a specific number, because it moves up and down. Some years they are washed and pushed to another year just because of local budgeting.

Unidentified Analyst

Great, understood, so that’s all I had guys. Thank you very much.

Todd Oseth

Thank you.

Operator

The next question comes from the line of Mark Gomes from Pipeline Data LLC. Your line is open.

Mark Gomes

Good morning gentlemen. Just going to start with the newly announced project, can you give us any color regarding the scale of expansion you might expect a little bit of historical perspective that might help us understand how much add-on business you might expect from initial amount?

Todd Oseth

It’s always very difficult to put that kind of number out there, because it’s a government contract. And it really depends upon what kind of funds are available at the end of the year. We have no idea of that number at this time.

Mark Gomes

And any historical perspective on that?

Todd Oseth

Just on the base contract itself, this is something if you look back for the last 5 years, we have performed on the same business every year for the last 5 years and we expect it to go for another 1 year or 2 years.

Mark Gomes

Great. Thank you. And so looking at the recent loan that $5 million figures was larger than most loans historically, which is investing at a time when you are anticipating some large SDI related inflows, I mean, what’s the thinking behind the size of that loan?

Rich Mohr

Mark, if you think last year, we did these small one-off loans as required and it became very burdensome, both for the company and for Vertex. Vertex does not have anymore information regarding the ultimate closing date of the SDI than we do, nor than the investors do. And as a result of that, it seems to make sense for us to just do one loan to be able to cover us until that point. And that’s why we did one at $5 million rather than a sequence of smaller ones on an as needed basis.

Mark Gomes

Okay, great. And also on the last call, you mentioned that you expect or hope to become debt free in about a year or so obviously probably SDI being a major component of that. Is the new $5 million loan, a part of that statement that you made last quarter?

Todd Oseth

Sure. We have models. Obviously, the assumptions on revenues associated with the models and the cash flows have to work out. But our models do show our capability to repay all of our debt within a year or so as we have communicated.

Mark Gomes

Okay. So that hasn’t changed.

Todd Oseth

No.

Mark Gomes

Okay. What are the some of the underlying assumptions required to achieve that goal in your mind?

Todd Oseth

I think ultimately, it’s the success of this SDI could be additional win there as well as well as our base business. And our base business includes this contract that we just announced today as well as success on our software and additional sales of our professional services and our data. We look at our pipeline. We see what the opportunities are out there and we think we have relatively robust opportunities for revenue and growth in the company as we proceed.

Mark Gomes

Great. I have a few more not as many as last time, but I will give somebody else a chance to ask some questions and come back.

Todd Oseth

Very good. Thanks Mark.

Operator

The next question comes from the line of George Melas from MKH Management. Your line is open.

George Melas

Thank you. Good morning guys. On the additional SDI project that you are pursuing, can you tell us a little bit of how you are going about it, are you working with the same client or are you working with a number of clients to try to develop these opportunities?

Todd Oseth

Okay. In general, as the model goes, sometimes it’s not the same prime, as most primes have specific local regional understanding of what’s going on. So, each SDI that we pursue ends up being different especially when it comes to different continents that we go after. Sometimes, we will go direct with the government if it’s opportunity that will be funded directly from the government versus how you get things project financed. So, all of them are in the case. And to answer your question specifically, this prime that we are using it today is not going to be used for the ones that we are currently looking at, but I should hope that they will be in places we continue to pursue more in the region of this project.

George Melas

Okay. And how do you decide to go direct, so you feel like if the project is funded directly by the government, you have the capability of going direct?

Todd Oseth

That’s correct. And basically what happens is that, it all has to do with the ability to get a certain amount of funds passed in the single year. There is typically a mismatch between our spend and what the government has available. So, that’s why the project financing comes in. The total number is achievable, but it may take an extra year or two of the government to put in instead of paying for it directly upfront. So, it depends upon as acquisition associated with it whether it’s software and just audit services and then focusing on the answers.

George Melas

Okay, great. And I don’t know how articulate I am going to be, but I just want to take this opportunity to talk to the people for the Vertex who of course are listening to this call. And I just wanted to – I hope that they are not vulture investors or targeted investors and they need to address the net royalty is absolutely key and they have had the opportunity to continue to fund this company with, of course, like you mentioned privileged information they have access to the prime of course. And I just hope that they will be reasonable and that they will think of all the shareholders and that developed a reputation as a vulture finance year, which I think could be very detrimental time in the future. Thanks a lot.

Todd Oseth

Great. Thank you, George for the comment.

Operator

Your next question comes from the line of Elliot Penn from Lazarus Management. Your line is open.

Elliot Penn

Hi, guys. Congrats on the progress. I am looking forward to an exciting year ahead. I heard you mentioned in the call that the project SDI should have attractive margin, strong margins and strong EBITDA. I was hoping you would offer us additional commentary on what those margins might look like? It’s not giving a number, maybe a range of numbers or just some context of thinking about them and how those margins might vary as you move from the implementation phase to the operations and maintenance phase to the customization phase? Thanks.

Todd Oseth

Well, it’s very difficult to get and give a specific number or an expectation on other SDIs, but if you were to look at our history, if you just look at our acquisitions that occurred each summer, our margins are in the 60% plus range. And there is no reason to believe that in this SDI, they will be any worse than that. Our software courses like any other software in the high 90s kind of margins. So, it all depends upon how much additional professional services are requested by the customer to determine exactly how much work with the margin is going to come up in a blended aspect. So, those are the ones that you can expect.

Elliot Penn

That’s helpful. Thank you. And what about in terms of increased investment the company will need to make to support the SDI CapEx or new hires, how should we think about that over the life of SDI we are now working on?

Todd Oseth

Great. So, there is a small amount of increase that’s going to require specifically more in the software development area, but it’s funded directly through the activity of the SDI. So, there really is not going to have to be additional dollars raised in order to do that. It will come from the contract itself. And as we have said before, we try to make sure we always maintain ourselves in a cash positive position throughout all of the phases of our project.

Rich Mohr

And regarding CapEx, there is some CapEx that is required. And when we think about the CapEx, it is for IT infrastructure. Obviously, as we proceed through these SDIs, there is a large amount of data that has created, has to be processed, has to be put in archives, and that requires IT horsepower to do that. Additionally, there is always requirements for our aircraft to keep them up functional and performing at their best. And we are also looking at other opportunities to increase our throughput on those aircraft, maximize our acceptance rates and lower our costs to the project and those investments will come through over the next year or two as well.

Elliot Penn

Got it. And then one more question, if I may. I believe the press release stated that besides the headline number for the current SDI that’s also an opportunity to turn additional revenues through customization. Do you have any sense of what that could look like just might lead to material revenue for the company or is it just more adjustments around the hedges? Thank you.

Todd Oseth

Add it altogether, it could become quite material, because each of the – we call them intelligent queries. Each query can vary between $500,000 to $5 million and to me both $500,000 and $5 million are material to the organization. It all depends upon the complexity of the query that needs to be developed and how many new layers that may need to be brought into the equation and how long it takes for us to manipulate that data to produce the respective answers.

Elliot Penn

Got it. Thank you very much.

Todd Oseth

Sure.

Operator

The next question comes from the line of Thomas Crocker, Private Investor. Your line is open.

Thomas Crocker

Thank you. Hello, gentlemen. Thank you for providing such comprehensive comments. If I understand things properly, you need to get approval from the U.S. government in order to use your plane in the country of the SDI we are currently talking about. Do you anticipate based on the recent political issues in that country, any difficulties in getting approval from the U.S. government?

Todd Oseth

Well, currently we have permission from the U.S. government and have a license that expires in a few months. So, what we are asking for is an extension to a decision they have already agreed to. So to answer your question, I don’t foresee any problems because they have already granted such permission to us.

Thomas Crocker

Okay. Thank you. And a couple of other quick questions, as the – with regards to the financing, there was a 90-day time period, which began sometime in February, which would indicate that that should close before the end of May, but you have been talking about it closing in the second quarter, which would be the end of June, is there any issue in getting an extension to that 90-day period should it be necessary?

Todd Oseth

What we don’t know, but given the extensions is part of government life, unfortunately. And that was up to our prime contractor to manage that interface. We don’t get involved in that.

Thomas Crocker

Okay. Thank you. And then two other real quick ones, will you be using one airplane or two for the SDI we are currently talking about?

Todd Oseth

The plan today is a single aircraft, but there is a possibility of bringing another one in to get things done more rapidly. As we see what I prefer to do is we had another SDI and have a plane operating in another region.

Thomas Crocker

Okay. And that was the purpose of my question, actually. And regarding that then and this will be my last question, with regard to second large SDI, can you give any color on your level of confidence on whether or not you think one might be closing within, say a 1-year time period?

Todd Oseth

It’s very difficult to say, these SDIs, honestly we have gotten in trouble with, because expectations get set and they take an extraordinary long period of time to actually get close and set up. So since at this point in time, we don’t have a specific one that we have been referring to, it would be just dangerous for me to set an expectation.

Thomas Crocker

Okay. Thank you very much gentlemen. Good luck, fascinating company and that’s all I have. Thank you.

Todd Oseth

Thank you.

Operator

The next question comes from the line of Mark Gomes from Pipeline Data LLC. Your line is open.

Mark Gomes

Hi. Okay. Stepping back in, on the last call I asked there is anything you guys would need to do in advance of receiving payments in order to mobilize this SDI as quickly as possible and content of this call and the debt restructuring press release indicate otherwise, what’s the reconciliation of between those two things?

Todd Oseth

I am not sure, if we understood your question?

Mark Gomes

On the last call, I asked if there is anything you guys needed to do in advance of receiving payment to mobilize on the SDI as quickly as possible and I believe it was Todd according to the transcripts, you have said actually we make sure that we don’t start doing any of that until we receive payment, so we don’t – so we are never trying to get into a negative position as we are performing on a project?

Rich Mohr

So as we communicated in our remarks Mark, we do have staff here that’s available. We have gotten ourselves to the lowest possible level that we can get. We are utilizing that staff for efforts regarding this SDI everyday. So that when the commencement of the contract begins, we will already be ahead of the game. That’s happening from a people perspective and from an asset perspective, especially on the aircraft side. So we are working on those items. So we can kick off immediately once the commencement is in place.

Mark Gomes

Okay. Thanks for that clarification. So what’s the difference between the update that you received from the prime and how that relates to your inability to narrow down the anticipated timeframe closing. And the follow-up to that would be, do the update you provided at least provided with increasing confidence that the financings will be getting done in a timely manner?

Todd Oseth

There are many different parameters that are discussed on a weekly basis. Some which has the decisions on how many points of LIBOR has it been decided upon, some of which they started asking questions upon operational details. And our conversation has moved from the pure financial side of things into operational questions, which we believe is a good sign, because there are certain things we need to be able to do prior to getting the planes mobilize in that country.

Rich Mohr

And perfect to that one Mark, the financing partners are dealing with two substantial contracts. So one of that is between our clients and the government and another one is between our clients and us. So two material contracts are in place that they have to work through and make sure all elements of those contracts are being addressed and in place as a prerequisite for the financing to come in play, so one could understand that from a legal perspective, it’s pretty complex.

Mark Gomes

Great. Moving on, just to confirm a little earlier on the comments section, you mentioned that if I am not mistaken, that you will announce future SDIs when project commencement is eminent, just wanted to confirm that?

Todd Oseth

That’s right.

Mark Gomes

Okay. Thank you. And moving on, are you aware of any risks associated and I don’t ask anymore question that was answered already, are you aware of any risks associated with the customer’s political climate outside rest of sanctions or any other factors like the Panama papers?

Todd Oseth

We are not aware of any additional risks that have already been in place for some time. Remember, a lot of this is based on sovereign debt. So even if there is small durations of problems, the country is still on the hook to pay. So even if change occurs, we believe we still will be able to move forward.

Mark Gomes

Yes. And can you for the sake of those on the call who don’t already, can you remind us of what’s on the hook in-horse?

Todd Oseth

They have a certain amount of money that they are going to pay. They back started this entire project.

Mark Gomes

Right. So they have contractual financial obligations to...?

Todd Oseth

Correct.

Mark Gomes

Right. Okay. alright. So the last question on the SDI front actually, three quick questions up here, how many perspective SDI nations reside within the cloud belt and how do you proceed your competitive advantage at present and going forward, how to get alternatives evolve?

Todd Oseth

Okay. Well, it’s great question, because SDIs themselves are not limited to just the cloud belt. We happen to have a competitive advantage in our acquisition technology in the cloud belt. But we will see SDIs in the future that will not involve any new data acquisition. It will just be accumulation of existing geospatial content. So there is roughly 68 different countries that are in the cloud belt that you could expect additional acquisitions to occur. But again, where SDIs are not limited to where we do acquisition with our technology, we are just as happy of using satellite data or LiDAR data or any other geospatial components.

Mark Gomes

Right. But you do have an advantage in the cloud belt, right?

Todd Oseth

Yes, we do.

Mark Gomes

And there are 68 countries approximately in the cloud belt?

Todd Oseth

Correct. That have a less than desirable spatial data infrastructure. So if you are a mature country in the cloud belt, that’s really not an opportunity for us.

Mark Gomes

Right, that kind of points to a pretty big opportunity when you have one deal of this size and you have on the hands 68 others potentially going forward with various maturity levels of course, in any case. So moving on to the non-SDI business, second last question here, how does that look to you right now, what kind of revenue growth might you expect from that business over the next 1 year to 5 years?

Todd Oseth

I don’t have numbers. But as we saw in Q1, I think we said we had 70% plus growth year-over-year. There is no reason not to believe that our software will have continued success of that range for quite a few years to come. It’s a very large market for doing underwriting. And this is specifically for our product called InsitePro. There will be derivatives that will hit the market place too that may not be used just for underwriting, but could be used for other purposes. That’s once again the advantage of a platform approach is that adding new features and new capabilities is much simpler for us to go after those markets too.

Mark Gomes

Based on the capabilities that you currently have in place and the deals and that you have signed thus far, have you been able to maybe kind triangulate the market share of the customers that you have signed, the penetration rate into those accounts to maybe ascertain what sort of total market opportunity your current capabilities you might have with this product?

Todd Oseth

So the answer is really, it depends on region. So North America, it’s a different, of course than in Europe or Asia. There is roughly a $300 million to $500 million opportunity out there for underwriting for us. We have just started to scratch the surface of this opportunity. There are a few other companies that have underwriting solutions, most of which do not have quite as accurate data as we do, that does not prevent them from giving more accurate data. It will just take some time, neither of the companies that I m referring to actually have the flexibility to rapidly create unique scoring capabilities. So our penetration rate should be quite high compared to others. If you wanted to have the direct number, a company of Corelogic with this product RiskMeter is a direct competitor for our product. And they are currently just in The United States doing over $59 million.

Mark Gomes

Great. Is there any sense as to kind of the amount of software R&D investment you folks have made let’s say over the past 5 years cumulatively?

Todd Oseth

Well, that would be hard to say because, so I believe that it’s – and yes, I mean we are looking at some of the past years.

Mark Gomes

Yes, please to take your time.

Todd Oseth

Yes, we will scrabble and if we are able to get to it, we will send it back to you as soon as we can accumulate the numbers.

Mark Gomes

Right. My last question is, in a worst case scenario, let’s say, the financing doesn’t come through, the SDI falls through, worst case scenario planning have you done that sort of worst case scenario planning. Obviously, there is a lot more opportunities out there, but without the deal, capital options would be constrained in such, what might their company look like under your direction, let’s say, a year after that catastrophic event?

Todd Oseth

Yes, we don’t do that level of catastrophic planning. Again, part of the planning on this to be able to do both software and acquisition, I think it’s very important that we continue to pursue both sides of things and successful not always we measured in these ones that are $100 plus million. We will probably see more success in infrastructures that already have significant geospatial content that neither way of organizing it and analyzing it.

Mark Gomes

Great. That’s it for me aside from the software R&D investment question. Thanks guys.

Todd Oseth

Thank you.

Operator

And there are no further audio questions at this time. I will turn the call back over to Todd Oseth for closing remarks.

Todd Oseth

Well, thank you everybody, especially thank you for the questions. This helps us. Make sure that we can try to address them upfront in our comments. So, I encourage you to keep asking these types of questions. I appreciate all of your patience with the organization as it is frustrating waiting for these to kickoff. These SDIs are rather large magnitude and we intend to make something of them here during 2016. Again, thank you and have yourself a great day.

Operator

This concludes today’s conference call. You may now disconnect.

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!