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Edited Transcript of ISDR earnings conference call or presentation 28-Feb-19 9:30pm GMT

Q4 2018 Issuer Direct Corp Earnings Call

Cary Mar 7, 2019 (Thomson StreetEvents) -- Edited Transcript of Issuer Direct Corp earnings conference call or presentation Thursday, February 28, 2019 at 9:30:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Brian R. Balbirnie

Issuer Direct Corporation - Founder, President, CEO & Director

* Steven Knerr

Issuer Direct Corporation - CFO

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Conference Call Participants

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* Michael John Grondahl

Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst

* Mike Schellinger

MicroCapClub LLC - Partner

* Todd Felte

RHK Capital, LLC - VP of Investments

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Presentation

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Operator [1]

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Ladies and gentlemen, thank you for standing by, and welcome to the Issuer Direct Corporation Fourth Quarter and Year Ended December 31, 2018, Earnings Conference Call. Today's call will be conducted by the company's Founder and Chief Executive Officer, Brian Balbirnie; and its Chief Financial Officer, Steve Knerr.

Before I turn the call over to Mr. Brian Balbirnie, I'd like to read you the company's abbreviated safe harbor statement. I'd like to remind you that statements made on this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, estimated impact of tax reform, product releases, partnerships and any other statements that may be construed as a prediction of the future performance or events are forward-looking statements, which may be -- excuse me, which may involve known and unknown risks and uncertainties and other factors, which may cause actual results to differ materially from those expressed or implied by such statements.

Non-GAAP results will be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company's ongoing operations, and is provided for informational purposes only.

With that said, Mr. Balbirnie, you may begin.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [2]

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Good afternoon, everyone, and thank you for joining us. After the market close today, we issued a press release announcing our results for the fourth quarter and year ended December 31, 2018. A copy of the press release is now available on our Investor Relations section of our website and our ACCESSWIRE newsroom for your reference during today's call.

The fourth quarter marked a solid end to the year for Issuer Direct in revenues, customer counts and key hires, all of which put us in a firm position to execute against our corporate goals in 2019. Q4 achieved $3,648,000 in total revenue, which represents a 7% increase over Q4 of last year and 12% sequentially over Q3 2018. This growth was driven by our continued expansion of our Platform and Technology business, which posted revenue improvements of 24% when compared to Q4 of last year and 7% sequentially over Q3.

We ended the year with 2,412 Platform and Technology customers during the fourth quarter, successfully added 593 new customers, which is up 33% over Q4 of the prior year. We feel this customer base is just the beginning as we continue to make our headway in our public, private and our conference businesses.

As previously announced, we also added to our leadership team with the addition of Dick Bromley, our new EVP of Sales; and promoted the 12-year veteran to our business, Preston Burnett, to Director of Operations.

At this point, I'd like to turn it over to Steve for a deeper dive into the financials and following, I'll elaborate further on some of our developments and to provide an outlook for 2019. Steve?

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Steven Knerr, Issuer Direct Corporation - CFO [3]

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Thank you, and good afternoon, everyone. I'll begin by going over our results for the fourth quarter and full year of 2018 and then turn it back to Brian who will provide his operational review and outlook, followed by a Q&A session.

As Brian mentioned, Q4 marked another successful quarter for us as we continue our path toward growing the business. We worked toward the completion of acquiring the VisualWebcaster Platform from Onstream Media Corporation, which was completed on January 3; launched our conference management module; and continued to make enhancements and additional sales of Platform id.

Turning to the results for the quarter. Total revenue increased 7%, or $249,000, to $3,648,000 for the fourth quarter of 2018 as compared to $3,399,000 for the same period of the prior year. Contributing to the increase in revenue during the fourth quarter is approximately $157,000 of revenue from customers acquired from FSCwire in July 2018. Revenue for the full year ended December 31, 2018, increased 13% to $14,232,000, as compared to $12,628,000 for the same period of the prior year. On a year-to-date basis, revenue from acquired customers of FSCwire and Interwest, which was acquired in October of 2017, contributed just under $1.5 million of the increase. Of this amount, approximately $243,000 of revenue came from additional subscriptions to Platform id. for services cross-sold to these customers.

Platform and Technology revenue increased $432,000, or 24%, to $2,230,000 for the fourth quarter of 2018 and increased $1,512,000, or 21%, to $8,593,000 for the full year of 2018. Platform and Technology revenue increased to 61% of our total revenue for the fourth quarter of 2018 and 60% for the full year of 2018, compared to 53% and 56% for the same period of 2017. The increase in revenue for the quarter is due to a combination of the addition of FSCwire, continued success of our ACCESSWIRE news distribution offering and additional licenses of Platform id.

During the quarter, we entered into an additional 20 licenses of Platform id. with a combined annual contract value of $226,000, bringing our total to 109 net new subscriptions for the year with annual contract value of $1,134,000. These additions, as well as growth in our transfer agent module due to the addition of customers from the Interwest acquisition, contributed to the increase on a year-to-date basis. These increases were offset by the continued decline in revenue of our shareholder outreach offering that are specifically tied to our annual report distribution services.

Services revenue of $1,418,000 for the fourth quarter of 2018 decreased 11% compared to the fourth quarter of 2017. The decrease was due to continued decline of revenue from our legacy Annual Report Service as well as decline in revenue from our compliance services as we continue to face pricing pressure from customers beginning to take advantage of our platform offerings. Services revenue of $5,639,000 for the full year of 2018 increased 2% compared to 2017. This increase was due to an increase in transfer agent services, due in combination to the addition of Interwest customers as well as an increase in activity of our longer-term Issuer Direct transfer agent customers. These increases were offset by the declines of our annual report and compliance services I just mentioned.

It is important to note when comparing results to previously filed reports, $133,000 and $683,000 of revenue during the 3 months and full year ended December 31, 2017, which were previously reported as Services revenue, were reclassified to Platform and Technology revenue. This was the result of the adoption of a new accounting pronouncement as of January 1, 2018, that required us to separate the revenue in bundled contracts for ARS or shareholder outreach offering, which include both electronic and physical hard copy delivery of our customers' annual reports. The reclassified amounts represent the allocation of contract value of electronic delivery of the annual reports. All results have been appropriately adjusted for comparison purposes.

Moving to gross margins, our overall gross margin percentage was 71% for the fourth quarter and full year of 2018, compared to 73% for the same period of the prior year. Cost of revenues increased $152,000 and $708,000 during the 3 and 12 months ended December 31, 2018, compared to the prior year. Majority of this increase is due to an increase in amortization of capitalized software placed in service in 2017, which accounted for $141,000 and $514,000 of the increase during the fourth quarter and full year of 2018.

Platform and Technology gross margin percentage was 78% and 79% for the 3 and 12 months ended December 31, 2018, respectively, compared to 83% and 84% for the same period of 2017. Again, there is an increase in cost of revenues due to the increase of amortization I noted earlier, as well as additional costs as we continue to expand our news distribution capability. Absent the increase in amortization cost, Platform and Technology gross margin percentage would have been 84% and 85% for the fourth quarter and full year of 2018. Gross margin from our Services revenue stream was 59% for the 3 and 12 months ended December 31, 2018, compared to 61% and 59% for the same periods of the prior year.

Switching to operating expenses. We had an increase in operating expenses of $423,000, or 21%, and $1,761,000, or 24%, during the 3 and 12 months ended December 31, 2018, as we continue to invest in our business for top line growth. G&A expenses increased 38% for the quarter and 21% year-to-date due to acquisition-related expenses, increase in corporate headcount, stock compensation expense as well as an increase in bad debt expense. Sales and marketing expenses increased 7% and 15% for the quarter and year-to-date due to an increase in our sales and marketing team and costs associated with expanding our distribution capability.

On a year-over-year basis, product development expense, which was 9% of revenue, increased due to less capitalization and continued development of enhancements to Platform id. We expect this expense to be more comparable going forward.

Lastly, amortization expense increased due to additional amortization resulting from intangible assets acquired as both the InterWest and FSCwire acquisitions.

Our income tax expense was $127,000 and $373,000 for the 3 and 12 months ended December 31, 2018, compared to a benefit of $307,000 and expense of $131,000 during the same periods of the prior year. The benefit in 2017 was related to the passage of the Jobs Cuts and Tax Reform Act (sic) [Tax Cuts and Jobs Act] of 2017, specifically, the remeasurement of certain deferred tax liabilities to the new statutory rate.

For GAAP purposes, we recorded net income of $65,000, or $0.02 per diluted share, for the fourth quarter of 2018 as compared to net income of $745,000, or $0.24 per diluted share for the same period of 2017. For the full year of 2018, we recorded net income of $837,000, or $0.24 per diluted share, compared to net income of $1,871,000, or $0.62 per diluted share for 2017. The decrease in net income and earnings per share was primarily due to the higher operating expenses and income taxes noted earlier.

Looking at some non-GAAP metrics. Total EBITDA for the fourth quarter of 2018 was $497,000, or 14% of revenue, compared to $646,000, or 19% of revenue, during the same period of the prior year. On a year-to-date basis, EBITDA was $2,560,000, or 18% of revenue, compared to $2,739,000, or 22% of revenue for 2017. Non-GAAP net income was $437,000, or $0.10 per diluted share, for the fourth quarter of 2018, compared to $546,000, or $0.18 per diluted share, for the fourth quarter of 2017. For the full year of 2018, non-GAAP net income was $1,969,000, or $0.57 per diluted share, compared to $1,987,000, or $0.65 per diluted share for 2017. The decrease in non-GAAP earnings per share despite similar non-GAAP net income was due to the additional shares outstanding as a result of our secondary offering that closed during the third quarter of 2018.

Switching gears to the cash flow statement. We continued to generate positive cash flows from operations, as we generated an additional $716,000 from operations during the fourth quarter of 2018, compared to $417,000 during the same period of the prior year, bringing total cash flow from operations to $2,869,000 for 2018, compared to $2,512,000 during the same period of the prior year. Also, our deferred revenue balance has increased to $1,249,000, a 41% increase since last year, due to the additional licenses of Platform id.

In conclusion, I want to mention that we are excited about our most recent acquisition of the Visual Webcasting (sic) [VisualWebcaster] platform and the new employees who have joined the Issuer Direct team. The visual webcasting platform has proven to be a reliable product for many years and significantly upgrades our webcasting platform and video capability. The dedicated employees have helped for a smooth integration thus far, and we look forward to working with our new customers and fostering our partnerships in the future. 2019 will no doubt be another exciting year in our growth journey.

With that, I will turn it back over to Brian, who will now talk further about our new products and outlook for 2019 and beyond.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [4]

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Thanks, Steve. As we both just highlighted, the fourth quarter was a good end to the year for Issuer Direct, resulting in annual record revenues, accelerating our brand initiatives and continued investment in our platform and sales and marketing team. Our Platform business accounted for 61% of our overall revenues in the quarter, and 63% in the second half of the year. On an annual basis, our Platform business represented 60% of our overall revenues, compared to 56% last year and 44% in 2016.

In order to keep this momentum and further expand our platform strategy, new customer acquisition is extremely important, as well as expansion of ARPU from our current customers. Our goal is to see platform spend reach over 70% in overall revenues in 2019. Helping this would be our growing news brand, ACCESSWIRE, and new platform modules we will discuss in a few moments.

2018 had revenue contributions from acquisitions of ITC and FSC. During the entire year, we generated $1,597,000 in revenue from ITC customers alone, which included cross-selling efforts of our Platform id., and in the last 6 months, just over $300,000 in revenue from FSC customers. We continue to feel good about these acquisitions as they are fully integrated into our platform and customer base.

ITC customers lost during 2018 were the results of go-private M&As and insolvencies. Active customers continue to use our services and subscriptions. FSC was fully integrated, as you may recall us talking about last quarter, during Q3 and 4. Customer activity during the back half of the year was higher than anticipated, and revenues are within management's expectations.

To continue for a minute on our newswire business, ACCESSWIRE, we added a handful of distribution points in Q4, including key platforms like Seeking Alpha. Client growth also contributed, both organically and because of FSC. In the fourth quarter, customer [count] increased 28% to 1,350 from 1,058 in Q3. On an annual basis, revenues from newswire also increased 22%, to almost $5 million, from our total revenues of 2018. Not that client counts and revenue growth are not important, we also needed to improve infrastructure, begin security and intrusion testing and prepare for our SSAE 16 Type II certifications coming this year. These critical components are part of our investment we're making in our platform and business to be ready to handle the next phase of our growth strategy.

Based on the information publicly available, ACCESSWIRE accounted for just over 6% of the news business in 2018, compared to less than 1% when we acquired the business. This obviously makes us the smallest of the 4 major newswires, meaning the momentum in upward is very exciting for us over the next several years. We see nothing but upside here, and achieving double-digit percentages in the markets are in sight.

In summary, ACCESSWIRE has several key components early in 2019 that had been anticipated by many of us. The first is critical distribution expansion to the broker community, and I'm happy to report this is on track and anticipated by the end of March. The second is an updated customer platform that will include single-click customer news formatting into our enhanced HTML. In plain English, this advancement will shorten turnaround times for complex press releases with financial themes from hours down to minutes. Of the 4 newswires today, we will be the only one with this advanced customer control learning feature, something we anticipate will help drive customer acquisitions in the agencies and large-volume news customers.

Another module of our platform we're excited about is our conference software one-on-one and event marketing system. This subscription is targeted at investment banks and non-bank conference organizers who are conducting company presentations and conferences globally. It is our estimate there are over 1,000 conferences a year of all sizes, with thousands of companies and hundreds of thousands of investors interacting both on-site and virtually. As of today, we have almost a dozen events either live or in planning to go live early this year, with a growing pipeline. And to keep up with this demand, we have hired additional full-time resources to be dedicated to this cause as we expect to be a market leader in 2 years.

This business will have the opportunity to be material in nature to us in 2019 in several ways: the first will be the subscription revenue generated from conference organizers; the second, our webcasting and events production platform; and third, follow-up subscriptions from the presenting companies to harness our analytics and engagement modules. These 3 are the immediate opportunities early in 2019 for Issuer Direct. As we approach some proven volumes and credibility in the market, we will then release a partnered enhancement that will extend functionality to the corporate access professions, to conduct deal and non-deal road shows, bookings and scheduling all from one system.

The deliberate launch of the conference offer first will help drive our analytics components, and we are planning to see revenues early in the second half of 2019. As I mentioned before, customers will be able to take advantage of direct insights and engagements from conference activities, shareholder meetings, earnings events like this one today, and general investor requests and interactions, all while being managed in the shareholder distribution and engagement module.

As a customer, when you step back and look at the entire platform subscription offering with analytics and engagement, it's going to be a compelling offering and something we believe companies of all sizes will at least have to take a serious look at to consider. In contrast and in the past, we had been susceptible to pricing pressures, commoditization of individual components of services and beholden to printing and legacy fulfillment businesses; whereas today, our focus for clients and revenue growth is on highly scalable, high-margin repeatable platform subscriptions that we believe will -- that cannot only compete in the market, but one day be a leader.

In conclusion, I want to take a minute here to fully explain what's ahead for Issuer Direct. We have historically reported client count numbers in both our Platform business and Service businesses without having insight into customers that are public, private and now part of our new conference business. In 2019, our shareholders should expect to see even further transparency into our business; client counts and ARPU, which will be the telltale signs of our customers, our trends and our growth. This is different than we've provided in the past, as we typically reported total ARPU of subscriptions in a given quarter. We will now be providing ARPU on a customer classification, which will be a total customer revenues for that period reported. So in short, we will provide number of customers in each of the 3 areas -- public, private and conference businesses -- for a given period, with year-over-year comparisons.

We will also provide continued ARPU spend for each of the 3 areas on a year-over-year basis and continue percentages in total revenues between platforms and services. And to the extent that's material, trends on what products that we continue to see growth in or not, like we've done with ACCESSWIRE in the past and here today. The reasoning to make this change is because costs to acquire these types of customers are drastically different. And conversely, the spends of public and private are also different. 2 years ago when we began segmenting customers who purchased platforms and services, and in the past year, we have further detailed ARPU spend for new Platform id. subscriptions. But this is not telling the full story. There are even more customers renewing individual modules each year, and this is why it's become necessary for us to further segment our customers spending both by public, private and conferences.

Something else I think is worth mentioning on today's call, on December 5, we've repurchased approximately 5% of the issued and outstanding shares of the company in a private transaction. The repurchase of these shares, at the per share price of $12.25, is a byproduct of the confidence management has in the business and overall value that we're building here. Optimally, our cash on hand was almost $6 million during that time, and the secondary offering of $13 million we did in August was not the reason to conduct the buyback, but we had an opportunity and felt it was in the best interests of all shareholders at an attractive price. Obviously, our plan is to deploy the capital prudently and accretive, and find synergistic opportunities like the recent January webcasting transaction.

Speaking of, the assets purchased of the visual webcasting from Onstream is the third acquisition in 18 months. These bolt-ons, including InterWest and FSC, are the latest demonstrations of the solid track record of integrating accretive acquisitions. We continue to believe in our industry and further consolidation, and as such, we are focused on additional accretive opportunities in the market. This is part of the reason why we raised the additional capital mid last year.

More specifically, the assets purchased from Onstream expanded our office footprint to now include New York and Florida, a great group of employees and team members, and a customer reach in the business plan that we felt is a perfect fit for our company products and overall communications subscription. We have put ourselves in a prime position to capitalize in the tremendous opportunity in front of us. We are encouraged by the continued client expansion -- specifically the customers that are purchasing our platforms and subscriptions -- and the investment that we're making in our business, both in our new product development and our employee base, which will put us in a position to further grow and scale the business.

We've enjoyed speaking with you today and look forward to your questions and visiting you again soon. Don't forget, many of the investor conferences you might be attending this year will be using our technology, which means we want your feedback. We want your experience to be not only to be as good as it was before, but even better.

Operator, can we please begin the Q&A portion of the call?

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Questions and Answers

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Operator [1]

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(Operator Instructions) Our first question comes from the line of Mike Grondahl with Northland Securities.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [2]

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Maybe first, as it relates to ACCESSWIRE, I know you said things were kind of progressing through the first quarter. But specifically with TD Ameritrade and Schwab and Merrill Lynch, where do those kind of stand?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [3]

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Mike, it's Brian. Yes, one of those is in testing and delivering to them and scheduled to be turned on at the end of this current fiscal quarter. Both the other 2 are in negotiation and very close to a very similar type of time frame, which means that we should see that in Q2.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [4]

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Great. And then could you repeat what you said, I think you said ACCESSWIRE clients at year-end were up to 1,350 from -- what was to the previous number you gave, was it 1,058? I didn't quite catch that.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [5]

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Yes, it was 1,058, yes.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [6]

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Got it. And then, if I could ask 1 or 2 more, the sales staff -- I know you hired a new person to sort of run sales, and then you were looking at maybe adding someone on the East Coast, someone on the West Coast, out in the field. Kind of where in the process are you with adding a little bit more help there?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [7]

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Yes. We are actively recruiting for those markets, right, and that was part of Dick's process as EVP of Sales is to find additional enterprise sales folks in the field. He and a good portion of our team are focused on that, conducting interviews out in the field and drawing to conclusion; that should be done here shortly. We're focused on it. We know it's a big part of what our growth strategy is for early on this year, fiscal year, and into the coming years. So we think we're on track, right? There's good opportunities. There's been folks displaced in the market that we've identified and folks from other industries with good enterprise SaaS experience that we're also courting as well. So I think we're on track there, and we look forward to those individuals joining us shortly.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [8]

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Okay. And then did I hear that for the conference module, there's 12 conferences signed up, with a pipeline, and then in the second half of the year, the insights and analytics module will be live, and you'll kind of be able to cross-sell that to the people attending the conferences?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [9]

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Yes, that's correct. So, how this works is, many folks listening to today's call have been a part of these conferences from an investor perspective. And a lot of investment banks have multiple conferences a year, and a lot of non-bank conferences also do have multiples. So -- and as we think about the dozen that we've got and our pipeline, it is what's going to happen here at the first half of the year and what will come to us in the back half of the year. A good percentage of those have even more conferences at the back half of the year that we have not signed up yet today or are not part of our subscription plans for the first half of the year. And we feel good about that, and that's part of our pipeline. So the deliberate launch of the conference offer, first, its mobile app, which was launched just here recently last week -- it's available both on Google Play and the iTunes store -- gives us the ability then to start to understand engagements even further, like the webcast call today, like our IR platforms and new distribution engines. So we're going to be able to come back to the IR communities and our customers and the ones presenting at conferences to let them see the true engagements of what transpired during that event. And we feel that's a bigger value to what we're building as a platform. It actually puts us above our competition and what they're able to offer. So we're super excited about that. And part of our sales strategy from a growth potential is talking to folks who have experience selling these types of solutions. As I talked about a few minutes ago, it's going to make the customer have to stop and take a look. And we're really excited about putting a platform in place to a customer that actually has to see something that not only gives them the insights that they've never had, but also gives them the ability to do the work that they've historically done with several different vendors in one platform. And that is a better position for us to be, in a strategic directive, more so than talking about price always to win customers, we tend to make that a less sort of a priority. So yes, that is kind of the deliberate path that we're on, and we're super excited to see where it's headed so far.

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Operator [10]

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(Operator Instructions) Our next question comes from the line of Todd Felte with our RHK Capital.

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Todd Felte, RHK Capital, LLC - VP of Investments [11]

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Just recently got involved with this talk and was just wondering if you had considered doing a forward split to make the stock a little more tradable and easier to pick up a position. I know it seems to trade by appointment with so few shares outstanding, and for those of us who try to buy stock, it becomes a little frustrating.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [12]

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Hey, Todd, that's -- you know, most -- that's a great question. A lot of folks have asked it. And I will tell you this that from our perspective, we are absolutely heads down focused on what we need to focus on as a business and delivering the revenues and the growth necessary and client count numbers. We've always viewed liquidity as something that will take care of itself over time. With that said, we have a lot of fans and shareholders that are passionate about our company just like our customers and our employees are. And that's a good thing, right? But it can be a patience game, right, picking up what's available at the right times and the dips. And so I encourage you to keep on being patient there. I don't think that that's something that we as a company, or the board, would look at doing anytime soon. We've got enough going on and, candidly, focused on investing the capital that we have to put it to work and make the liquidity take care of itself naturally.

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Todd Felte, RHK Capital, LLC - VP of Investments [13]

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Sure. And would any future acquisitions that you do, would that be in cash like the last couple? Or would you look to do that possibly with a combination of equity and cash?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [14]

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Yes. Look, we're confident in the cash flows we generate from the business. And Steve and I have had this conversation many times on what we believe we need to keep on hand in cash and access to an operating line as needed. So we want to use the cash that we raised and our current cash to do transactions. If we're presented with an opportunity that we can get a bigger get, so to speak, a company that's a little larger than maybe we've historically bought, we won't be afraid to use equity as an instrument as part of the transaction in a restricted form and maybe in an earn-out capacity. But we -- like you, and a lot of us, we love it like gold so we don't want to have to give it up if we don't have to.

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Operator [15]

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Our next question is a follow-up from Mike Grondahl with Northland Securities.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [16]

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Yes, Brian. Could you just talk a little bit about the progress up in Canada of FSCwire?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [17]

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Yes. We've done well there, right? The client count numbers have been strong, meaning clients that we acquired in the transaction that have been integrated into our platform, continue to do work at a higher pace than what we perhaps anticipated. We had a view of their past historical news work, right, what they've done in the past. And they seem to have much more activity there. What that really means specifically is that not only are they running news distribution from a Canadian perspective, but they're also looking at other options for global, North American distribution, as well as regulatory filing, SEDAR, in Canada. So I think we're doing really well there. We've got client success managers there and operational folks in the field working with customers to be sure that they get to learn the rest of what Issuer Direct has to offer. A brand like FSC was around in the market for a long time, so we're working hard to indoctrinate those folks into ACCESSWIRE and what Issuer Direct is. I think we still continue to see plenty of momentum there, interest in the market. So I don't think this is an acquisition of maintenance. I think it's an acquisition of growth, that we're still going to be able to find additional customers. And we still continue to see customer growth coming from that market without investing a lot at this present time. So we're encouraged by it and we continue to see that opportunity to invest there.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [18]

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Got it. And I guess, you've owned the webcasting platform for not quite 2 months yet, but what's just kind of your initial takeaway from that acquisition?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [19]

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Yes. It's a fantastic product, right? We have done earnings events here since the beginning of PrecisionIR's history, right? Just to go back to an acquisition we've done a long time ago. So we have a deep history at understanding the earnings events webcast marketplace. But I think the live event concept as a production of an event that comes from every other webcast other than earnings is what the VisualWebcaster product got for us. So if we conducted an earnings event today, let's say for Issuer Direct, and there's 100 to 500 people on the call, we have been able to, with capacity and technologies acquired, do calls with about 30,000 to 40,000 individuals registered and participating. So the scalability that we get is phenomenal. The people that we've been able to integrate as part of our team are absolutely top-notch, and the customer base and the clients that we work with is very encouraging to us. We have 2 really good sales individuals in the field managing customers that have a good deal of spend there, and we feel confident we're going to be able to move some of the Platform id. products into them. So I think it was a great pickup. It's a good asset to get. We needed it from a communications path of our platform, and we're encouraged here that our Issuer Direct customers that have used our old legacy platforms are going to be able to be introducing a presenter-controlled slide concepts into their webcast, like we'll do beginning in 2019, as well as some video. So we're excited about it. And I guess, bluntly, it's everything we expected it to be thus far.

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Michael John Grondahl, Northland Capital Markets, Research Division - Head of Equity Research & Senior Research Analyst [20]

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Got it. And just, I guess, a follow-up there. When do you think you'll begin to start cross-selling it?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [21]

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As you know I would say that on very small doses it's already occurring right now, but not a meaningful number, right? Not a number that's worth us having a detailed conversation about. I think that by the end of Q2, we're going to see full integration there. We've already started some developmental plans internally about what needs to be done to allow folks to integrate news distribution on that side, meaning at the click of a button make it a press release to tell the world that you're having a call. So there's things that we already got in place that we expect to be done here in the next 90 to 100 days that we'll start to see revenue from pretty quickly.

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Operator [22]

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Our next question comes from the line of Mike Schellinger with MicroCapClub.

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Mike Schellinger, MicroCapClub LLC - Partner [23]

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I have some questions or a question about the Platform and Technology statistics. So in the customer account metrics in the press release, it says there's -- there are 2,412 customers during Q4 '18 versus 2,143 during Q2, so like almost a 300 customer increase. And then later down, it says this quarter, we entered into 20 new -- net new licenses with new or existing customers. So I'm wondering, there's like something I'm not understanding between those 2 sets of metrics. And if you could explain that, that would be great.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [24]

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Yes. Thanks, Mike. And that's why we alluded in the call that we're going to start to break it out even more granular, to make some of this a lot clearer. Those full subscriptions, right, our communication platform subscriptions we talked about, are one part of it. The other part of it is news distribution. So we think about our platform subscription business being in the form of news, that isn't a full Platform id. subscription, it may be a news subscription, it may be a news bundle or a defined period of time during that Q4 period that folks bought access to that news network. That makes up the differences.

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Mike Schellinger, MicroCapClub LLC - Partner [25]

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So if I understand correctly, what you're saying is you added like 250-plus ACCESSWIRE customers during the quarter?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [26]

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Yes, that's correct.

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Mike Schellinger, MicroCapClub LLC - Partner [27]

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Okay, great. Then just one other question. Regarding operating expenses, I know you're going through a number of different growth initiatives. Can you give us some color on how we should think of operating expenses going forward, maybe as a percentage of revenue, or maybe you're driving more towards top line revenue growth. Just how should we look at that?

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [28]

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Yes. We really are focused on the top line revenue growth. And we recognize, and I think that anybody that knows the story and the business knows, that we've had a very lean team here for quite a long period of time. And we've made strides to improve management teams, to broaden help to Steve and I, to help build critical mass with us, because we obviously can't do it alone and we needed folks to do that. So with that said, it does come with a little bit of G&A increases. I wouldn't suggest that this maybe is the new norm. I think it may be a little higher than what it will be in the coming years, but we're definitely focused on that top line growth, which we'll take care of -- as a percentage, take care of it.

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Operator [29]

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There are no further questions at this time. I would like to turn the call back over to Mr. Balbirnie for any closing remarks.

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Brian R. Balbirnie, Issuer Direct Corporation - Founder, President, CEO & Director [30]

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Thank you, Michelle. I do really want to thank everyone for their time today and to our employees, customers and investors for their continued support. We look forward to updating you on our next call. Thank you, and have a great day.

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Operator [31]

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Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.