OTCMKTS:ATGN Altigen Communications Q3 2024 Earnings Report $0.48 +0.00 (+0.79%) As of 03:42 PM Eastern Earnings History Altigen Communications EPS ResultsActual EPS$0.01Consensus EPS N/ABeat/MissN/AOne Year Ago EPSN/AAltigen Communications Revenue ResultsActual Revenue$3.28 millionExpected RevenueN/ABeat/MissN/AYoY Revenue GrowthN/AAltigen Communications Announcement DetailsQuarterQ3 2024Date8/1/2024TimeN/AConference Call DateThursday, August 1, 2024Conference Call Time5:00PM ETUpcoming EarningsAltigen Communications' Q2 2025 earnings is scheduled for Tuesday, April 29, 2025, with a conference call scheduled at 5:00 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptQuarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Altigen Communications Q3 2024 Earnings Call TranscriptProvided by QuartrAugust 1, 2024 ShareLink copied to clipboard.There are 6 speakers on the call. Operator00:00:00Greetings. Welcome to Altigen Technologies Third Quarter Fiscal Year 20 24 Results Conference Call. Please note this conference is being recorded. I will now turn the conference over to your host, Carolyn David, VP of Finance at Altigen Technologies. You may begin. Speaker 100:00:29Thanks, Paul. Good afternoon, everyone, and welcome to Altigen Technologies Earnings Call for the Q3 Fiscal 2024. Joining me on the call today is Jerry Fleming, President and Chief Executive Officer Joe Hamblin, Chief Digital and Transformation Officer and I'm Carolyn David, Vice President of Finance. Earlier today, we issued an earnings release reporting financial results for the period ended June 30, 2024. This release can be found on our IR website at www.altagen.com. Speaker 100:01:05We have also arranged a replay of this call, which may be accessed by phone. This replay will be available approximately 1 hour after the call's completion and remain in effect for 90 days. This call can also be accessed from the Investor Relations section of our website. Before we begin our formal remarks, we need to remind everyone that today's call may contain forward looking information regarding future events and future financial performance of the company. We wish to caution you that such statements are just predictions and actual results may differ materially due to certain risks and uncertainties that may pertain to our business. Speaker 100:01:47We refer you to the financial disclosures filed periodically by the company with the OTCQB over the counter market, specifically the company's audited annual report for the fiscal year ended September 30, 2023, as well as the Safe Harbor statement in the press release the company issued today. These documents contain important risk factors that could cause actual results to differ materially from those contained in the company's projections or forward looking statements. Altigen assumes no obligation to revise any forward looking information contained in today's call. In addition, during today's call, we will also be referring to certain non GAAP financial measures. These non GAAP measures are not superior to or a replacement for the comparable GAAP measures. Speaker 100:02:39However, we believe these measures will help investors gain a more complete understanding of results. A reconciliation of GAAP to non GAAP measures and additional disclosures regarding these measures are included in today's press release. With that, I'll now turn the call over to Jerry for opening remarks. Jerry? Speaker 200:03:02Thanks, Carolyn, and good afternoon, everyone. Thank you for joining us for today's call. I'm pleased to share our 3rd quarter fiscal results as well as to provide you with an update on our business progress. After my overview, Joe Hamblin, our Chief Digital and Transformation Officer, will expand upon our business execution strategies and operational excellence initiatives. Carolyn will then present an in-depth review of our 3rd quarter financials. Speaker 200:03:28Earlier today, we announced our fiscal Q3 2024 revenue of $3,300,000 which was approximately 2% lower compared to our prior quarter, generally due to a decline in our legacy business. On a positive note, our 3rd quarter operating income was $68,000 compared to a loss of $241,000 in our fiscal Q2. The reduction of just over $300,000 in operating expenses is a direct result of our operational excellence initiatives. On our last call, we committed to achieving profitability by our fiscal 2024 year end. I'm happy to report that we accomplished this objective 1 quarter earlier. Speaker 200:04:11I'll now turn to a discussion of our business transformation initiatives. 1st, revenues from our legacy on premises PBX business declined quarter over quarter as expected since we no longer provide enhancements to our on premises PBX systems as we have a new cloud based unified communications platform. Many of these customers have therefore chosen not to renew their software maintenance contracts. We've also had a few customers elect not to renew their contracts for the cloud version of MaxCS, also based on our legacy PBX platform, which is admittedly lacking modern unified communications functionality. These issues are resulting from the fact that our new Max Cloud UCaaS or Unified Communications platform has taken longer than expected to get to full release date due to a few nagging technical issues. Speaker 200:05:02Those issues have now been addressed. And as a result, we are finally beginning to see some traction with Max Cloud. Although the MaxCloud revenues have not yet fully replaced the decline we've experienced in our legacy PBX revenues, we are confident that this will soon change going forward. The same issues have also impacted the timelines for Pfizer to begin migrating their legacy MaxCS customers to the new MaxCloud UC platform. But with those issues now behind us, Fiserv has committed to begin their customer migrations from our legacy MaxCS to the new MaxCloud UC platform, which will generate additional Max Cloud incremental multi revenues. Speaker 200:05:47As I mentioned on last quarter's call, Fiserv is still on track to launch our groundbreaking new conversational AI IVR solution in October. This new solution includes significant enhancements and functionality along with higher pricing, which therefore will also begin to contribute to new incremental monthly cloud revenues. Shifting to Altigen's solutions for Microsoft Teams, that business has been fairly flat in the last few quarters as we have not yet been able to introduce a viable contact center solution for Microsoft Teams. However, just last month, we were able to introduce our new core Engage for Teams contact center platform. We've already signed contracts with several customers and have quite a few pilots taking place now with new prospective customers. Speaker 200:06:34Early indications are that this will prove to be a very successful commercial endeavor for us. Our consulting services business has continued to grow primarily as a result of the expansion of our business with the Connecticut Department of Transportation. In addition to that, we are gearing up to go after new customer logos, principally focused on AI and digital transformation services. I'd also want to clarify the role our consulting services business has in our overall business strategic planning. I'll start with a brief background. Speaker 200:07:11We initially acquired ZAC Consulting in May 2022 to increase our Microsoft technical expertise, to extend our capabilities to deliver custom communication solutions and to drive Altigin Software sales into ZEC's customer base. While the acquisition certainly improved our Microsoft technical expertise, it also set us back as many of the companies Zach represented as ongoing customers had either ceased doing business or were in the process of doing so at the time of the acquisition. The result was, as reported in prior quarters, a much lower than anticipated contribution from the ZAC Services Group. However, when we brought in Sherik Shaikh to run the ZAC Consulting division in November of 2023, along with the signing of a major contract extension with the Connecticut Department of Transportation in December of 2023, that situation began to change. Today, our consulting services business is not only thriving under Sharik's leadership, but we are also now converging the technical resources on the consulting services team with the Altigen Software Solutions team. Speaker 200:08:20This is particularly evident in our AI initiatives in which companies first want customer solutions built for their unique needs, then want Altigen to enhance and maintain those solutions in a monthly recurring managed services revenue model. We're set up to do just that. With that, I'll now hand the call to Joe Hamblin to provide additional color on both our software solutions and consulting services lines of business. Joe? Speaker 300:08:49Thank you, Jerry. Good afternoon, everyone. Earnings call, I outlined 3 key operational initiatives that we were going to be focused on that it helped enable our company to scale and compete in years to come. Those are operational efficiencies, financial stewardship and product delivery. So in the operational efficiencies area, we made significant progress, to enhance that area. Speaker 300:09:18We completed our back end automation for our legacy products, allowing our existing customers and partners to streamline their account management access. Additionally, we rolled out an enterprise billing center that enables these customers to access their online billing information much more easily and readily available to them. The team has also laid the foundation for the first phase of our solutions delivery portal by updating our product catalog and mapping out our end to end business processes so we can begin the automation process that allows us to scale rapidly. This will allow us to automate product ordering in Phase 1, which we will release at the end of August. And then we will quickly move into Phase 2, which will focus on the product provisioning piece, allowing customers to come in and access our site with a very wizard, simple to use friendly user interface that allows them to provision themselves. Speaker 300:10:17On the financial stewardship front, we continue to drive costs out of our business. As I mentioned last earnings call, we reduced our operating expense by $250,000 on an annualized basis through headcount, data center and associated licensing consolidations. And the migrations to the lower and migrations to a lower cost underlying SIP carrier. As Jerry noted earlier, we actually realized 300 ks from those efforts. During our fiscal Q3 performance, we achieved an estimated annualized savings of another $590,000 These savings stemmed from the completion of our hosted data center modernization and consolidation effort and the migration of SIP services over to our new providers platform. Speaker 300:11:04Keep in mind, we've only 1 third complete on that. We'll finish up the other 2 thirds of that migration by the end of this fiscal Q1 by the end of our 1st fiscal quarter. And I want to just note that having a strong financial stewardship will remain as a core part of our company DNA as we continue to transform our business and we start to grow. Now let's talk about product delivery. The 3rd pillar is a key pillar in the product delivery space. Speaker 300:11:38As both Jerry and I have discussed on previous calls, improving the delivery of new products and services is essential for us achieving our financial performance goals and driving new incremental revenue streams. This begins with growing our customers and revenue with our MaxCloud UC platform. While MaxCloud is GA for both Altigen and Fiserv customers, we needed to enhance our UC client with some critical modern workplace capabilities before we could scale out to the market with a true launch. These enhancements are nearing completion and will complete and clear our quality assurance process in time for the fiscal New Year. Additionally, we are targeting the introduction of a new Max Cloud, CCaaS platform, enabling customers to add omnichannel capabilities to support their business needs. Speaker 300:12:32More details on this will be shared soon. In parallel, we will launch core engage for Teams contact center. As Jerry mentioned, we already have signed contracts with several customers and have numerous pilots underway. Core Engage for Teams contact center will support our customers throughout the entire team's journey from PBX migration services to teams direct trunk routing using our best in class SIP services to Microsoft Teams call queues and finally to our full omnichannel contact center solution including reporting and call recording. Let's talk about Fiserv's progress real quick. Speaker 300:13:12Again, as Jerry mentioned, Xcloud UC Migrations are starting this quarter. We've already have our user ID validation and biometrics fraud detection currently in preview with our initial POC customers. IVR, our natural speech recognition tool will be delivered in October as promised. And also in Q1 of the fiscal new year, we will deliver IVR text to speech, during the Q1. And then finally, let's touch briefly on the Altigen Technologies consulting services. Speaker 300:13:54And I really this team has really performed well and continues to grow. Again, thanks to Sharik's leadership and that whole team coming together. High level, this team works directly with customer business units to design, develop and deliver business process and system solutions. We continue to see quarter over quarter revenue growth and our goal, as Jerry stated, will be over these next two quarters is to attract new customers and enter into new engagements. So to summarize, our transformation process is well underway. Speaker 300:14:31We continue to improve our performance every day. From my vantage point, the headwinds we have faced are beginning to fade. However, we still have a lot of work to do. The team is motivated, we're engaged and we're very focused. So glad to take any questions you might have we're done here. Speaker 300:14:48But with that, I'm going to turn it over to Carolyn for the financial review. Carolyn? Speaker 100:14:54Great. Thank you, Joe. I will now present the key financial highlights for Q3 FY 'twenty four, keeping in mind these comparisons are on a year over year basis unless otherwise noted. For our fiscal Q3 results, we reported total revenue of $3,300,000 compared to $3,400,000 for Q3 2023. Total cloud services revenue for Q3 was approximately $1,700,000 down 13% from $2,000,000 in the same period last year. Speaker 100:15:24Meanwhile, our services revenue increased by roughly 25 percent to $1,200,000 from $1,000,000 in the prior year quarter. Gross margin for the quarter was 61% compared to 63% in the same period last year, reflecting a decrease of approximately 200 basis points year over year. This decline was mainly due to a shift in our revenue mix towards higher professional services. On both a GAAP and non GAAP basis, we reduced our operating expenses in Q3 to $1,900,000 an improvement of roughly 15% year over year. This decrease was mostly due to lower headcount related expenses. Speaker 100:16:09GAAP net income for Q3 was $62,000 or 0 point 0 $0 per diluted share. This compares to GAAP net loss of $183,000 or negative $0.01 per diluted share a year ago. On a non GAAP basis, net income was approximately $200,000 or $0.01 per diluted share compared to non GAAP net income of $40,000 dollars or breakeven EPS in the same quarter last year. As noted, this increase in net income was primarily due to the aforementioned reduction in our OpEx. Moving to liquidity. Speaker 100:16:48We ended Q3 with approximately $2,000,000 in cash and cash equivalents, up 23% compared to the preceding quarter. Our working capital increased to $2,000,000 from $1,800,000 in the previous quarter, representing an 11% increase. In closing, we are pleased with our Q3 results, which are in line with our expectations, and we look forward to updating you on our progress in our next call. Now let me turn the call over back to Jerry for closing remarks. Jerry? Operator00:17:36And Jerry's line is still connected. Jerry, please check your mute button. Speaker 200:17:41Okay. Thank you. Thanks, Carolyn. Sorry for the delay. To summarize, we are making progress with sustainable business initiatives. Speaker 200:17:49We first shored up and are now growing our consulting services business. We've also made great strides toward achieving our operational excellence objectives with demonstrated tangible financial results. Our next major milestone, which we've been working on for some time, is to improve our ability to monetize our software. Achieving this objective has actually proven to be a difficult task, primarily due to the fact that Altigen had to go through our own digital transformation process. This process involved not only transfer forming our legacy on premises hardware and software products to modern cloud native all software solutions, but also required us to transform the entire company from business systems to infrastructure to personnel. Speaker 200:18:37And as you've heard from Joe Hamblin, this has been his number one objective and he's made great progress in that regard. Today, we are on the cusp of realizing the returns from the investments we've made in our key business initiatives and fully expect the financial results to follow soon. So with that, I'll ask the operator to open the call up for questions. Operator00:19:00Certainly. At this time, we will be conducting a question and answer session. The first question is coming from Mark Gomes from Pipeline. Mark, your line is live. Speaker 400:19:46Hey, gentlemen. Congratulations on reattaining profitability. Do you expect to maintain profitability is one question. The other is, when do you think we can expect to start seeing the top line resume sequential growth? Thanks. Speaker 200:20:09Yes. Thanks, Mark. Yes, we do expect those impact expect the savings to continue as we're actually doing a much better job of streamlining operational expenses. Yes, the top line, as you know, I've been actually promising we're going to be growing top line for a little while now. And I think we've overcome and I really think we've overcome these various hurdles and challenges and the just one more thing, objections, so we can start kicking in some real business here. Speaker 200:20:40One of the keys obviously is Fiserv with some of the new products that they're going to be launching, but it's not we're not just a Fiserv company. It's also my commentary about having a Teams contact center product that we can count on that people like and will pay for is also going to be very significant. So Mark, I expect here pretty soon this quarter, next quarter, we're going to start seeing I can't say how big it's going to get, but I do expect to start seeing tangible incremental revenue increases on a quarter over quarter basis very soon. Speaker 400:21:15Okay. And then just kind of looking at that you guys have made substantial investments in R and D for a company of your size over the last few years. So as you go into monetization, kind of what's kind of scale of revenues do you think you might be able to achieve with the products that you have kind of ready or near ready to go? Are we still looking at some of what you presented in the investor presentation several months back? Speaker 200:21:46Right. Okay. Yes, thanks for referencing that, Mark. Because it's a tough one without giving a forecast, but those numbers stand with us. And what we talked about was at the Planet Microcap Conference, We expect it to be within 5 years between $40,000,000 $60,000,000 with $50,000,000 at our midpoint. Speaker 200:22:09We showed the various categories we expect to generate that revenue and it's Fiserv is a chunk of that. We didn't really count on a whole lot from our UCaaS platform because it's a very crowded market and the remainder made up was made up with our Teams solutions, which we feel darn good about now as well as our AI solutions. So right at this point, yes, I think it's hard to say we're on track because it's just a couple of months later, but we think we're going to achieve those numbers. Thanks, Jerry. Operator00:22:44Thank you. The next question is coming from Maj Soodan from Veo Investing. Maj, your line is live. Speaker 500:22:53Thanks. I just have one question. You've talked about this switch to a new SIP provider. Can you give us an idea how much you're going to save on that? And has that even kicked in yet? Speaker 500:23:04Is that part of the your kind of operational excellence numbers you've given in terms of how much money you're going to be saving moving forward? Speaker 200:23:14Yes. Good question, Moshe. Joe, can you tackle that one? Speaker 300:23:17Hey, Moshe. Yes. So Moshe, some of those numbers are baked in. We're only about a third way through that migration. And it's a 2 pronged play. Speaker 300:23:26One is, it is a cost cutting effort for me. But in addition, it's also a wholesale SIP trunk play for me. So, it will help us on top line growth, but it also helps me on the bottom line expenses. And again, we've I can give you some ballpark numbers here. But roughly, we've probably taken out, if you look at my run rates, I'm going to be somewhere in the neighborhood of 64,000 is what it was costing me in January. Speaker 300:24:04And now I've gotten that down to 29,000 and I'm about a third of the Speaker 200:24:09way through. Great. Thanks. Operator00:24:13Thank you. There were no other questions from the lines at this time. I would now like to hand the call over to Jerry Fleming for closing remarks. Speaker 200:24:22Yes. Thank you. And thank you everyone for participating. And I can tell you guys, short term, we've been focused on let's get our house in order, right? Long term, yes, we're absolutely focused on top line revenue growth. Speaker 200:24:35That has been happening, while we're working on the short term initiatives that have made improvements in our financial results. But we are 100 percent focused on increasing this top line revenue and driving shareholder value and look forward to reporting on our next call our progress in that area. Thank you very much. Speaker 100:24:53Thank you, everyone. Operator00:24:55Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallAltigen Communications Q3 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsQuarterly report(10-Q) Altigen Communications Earnings HeadlinesAltigen Announces Second Quarter Fiscal Year 2025 Earnings Call InformationApril 14, 2025 | finance.yahoo.comAltigen Communications, Inc. (PNK:ATGN) Q1 2025 Earnings Call TranscriptMarch 3, 2025 | msn.comTrump Treasure April 19Thanks to President Trump… A $900 investment across5 specific cryptos… Could gain 12,000% so quickly that, just 12 months later…April 25, 2025 | Paradigm Press (Ad)Earnings call transcript: Altigen Technologies Q1 2025 sees profit turnaroundMarch 1, 2025 | investing.comAltigen Communications, Inc. (ATGN) Q1 2025 Earnings Call TranscriptFebruary 28, 2025 | seekingalpha.comAltigen Technologies: Altigen Announces First Quarter Fiscal Year 2025 Earnings Call InformationFebruary 19, 2025 | finanznachrichten.deSee More Altigen Communications Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Altigen Communications? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Altigen Communications and other key companies, straight to your email. Email Address About Altigen CommunicationsAltigen Communications (OTCMKTS:ATGN) designs, develops, markets, and supports integrated communications solutions worldwide. It provides MaxCS IP-PBX, a software-based phone system that provides customers with business communications solutions; MaxACD Voice Over Internet Protocol (VoIP) Contact Center, a software-based automatic call distribution engine, which offers call routing and call distribution options; MaxMobile that extends a set of business PBX functionality to smart phone devices; and MaxCommunicator, a Windows-based desktop application, which provides call control and visual voice mail management to the desktop. The company offers MaxAgent, a Windows-based desktop application to bring call control and workgroup information to call center agents; MaxSupervisor, a Windows-based desktop application for call center supervisors; and MaxACD for Skype, a call center solution. In addition, it provides hosted services, which include hosted IP PBX, Skype for Business, session initiation protocol trunk, call center solution, voice and video calling, conference calling, and various long-distance services; and software assurance services, which offer customers with software updates, patches, new releases, and technical support for the applications they are licensed to use. The company serves financial services, healthcare, retail, and business services industries through a channel of distributors and resellers. Altigen Communications, Inc. was incorporated in 1994 and is based in Milpitas, California.View Altigen Communications ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Booking (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 6 speakers on the call. Operator00:00:00Greetings. Welcome to Altigen Technologies Third Quarter Fiscal Year 20 24 Results Conference Call. Please note this conference is being recorded. I will now turn the conference over to your host, Carolyn David, VP of Finance at Altigen Technologies. You may begin. Speaker 100:00:29Thanks, Paul. Good afternoon, everyone, and welcome to Altigen Technologies Earnings Call for the Q3 Fiscal 2024. Joining me on the call today is Jerry Fleming, President and Chief Executive Officer Joe Hamblin, Chief Digital and Transformation Officer and I'm Carolyn David, Vice President of Finance. Earlier today, we issued an earnings release reporting financial results for the period ended June 30, 2024. This release can be found on our IR website at www.altagen.com. Speaker 100:01:05We have also arranged a replay of this call, which may be accessed by phone. This replay will be available approximately 1 hour after the call's completion and remain in effect for 90 days. This call can also be accessed from the Investor Relations section of our website. Before we begin our formal remarks, we need to remind everyone that today's call may contain forward looking information regarding future events and future financial performance of the company. We wish to caution you that such statements are just predictions and actual results may differ materially due to certain risks and uncertainties that may pertain to our business. Speaker 100:01:47We refer you to the financial disclosures filed periodically by the company with the OTCQB over the counter market, specifically the company's audited annual report for the fiscal year ended September 30, 2023, as well as the Safe Harbor statement in the press release the company issued today. These documents contain important risk factors that could cause actual results to differ materially from those contained in the company's projections or forward looking statements. Altigen assumes no obligation to revise any forward looking information contained in today's call. In addition, during today's call, we will also be referring to certain non GAAP financial measures. These non GAAP measures are not superior to or a replacement for the comparable GAAP measures. Speaker 100:02:39However, we believe these measures will help investors gain a more complete understanding of results. A reconciliation of GAAP to non GAAP measures and additional disclosures regarding these measures are included in today's press release. With that, I'll now turn the call over to Jerry for opening remarks. Jerry? Speaker 200:03:02Thanks, Carolyn, and good afternoon, everyone. Thank you for joining us for today's call. I'm pleased to share our 3rd quarter fiscal results as well as to provide you with an update on our business progress. After my overview, Joe Hamblin, our Chief Digital and Transformation Officer, will expand upon our business execution strategies and operational excellence initiatives. Carolyn will then present an in-depth review of our 3rd quarter financials. Speaker 200:03:28Earlier today, we announced our fiscal Q3 2024 revenue of $3,300,000 which was approximately 2% lower compared to our prior quarter, generally due to a decline in our legacy business. On a positive note, our 3rd quarter operating income was $68,000 compared to a loss of $241,000 in our fiscal Q2. The reduction of just over $300,000 in operating expenses is a direct result of our operational excellence initiatives. On our last call, we committed to achieving profitability by our fiscal 2024 year end. I'm happy to report that we accomplished this objective 1 quarter earlier. Speaker 200:04:11I'll now turn to a discussion of our business transformation initiatives. 1st, revenues from our legacy on premises PBX business declined quarter over quarter as expected since we no longer provide enhancements to our on premises PBX systems as we have a new cloud based unified communications platform. Many of these customers have therefore chosen not to renew their software maintenance contracts. We've also had a few customers elect not to renew their contracts for the cloud version of MaxCS, also based on our legacy PBX platform, which is admittedly lacking modern unified communications functionality. These issues are resulting from the fact that our new Max Cloud UCaaS or Unified Communications platform has taken longer than expected to get to full release date due to a few nagging technical issues. Speaker 200:05:02Those issues have now been addressed. And as a result, we are finally beginning to see some traction with Max Cloud. Although the MaxCloud revenues have not yet fully replaced the decline we've experienced in our legacy PBX revenues, we are confident that this will soon change going forward. The same issues have also impacted the timelines for Pfizer to begin migrating their legacy MaxCS customers to the new MaxCloud UC platform. But with those issues now behind us, Fiserv has committed to begin their customer migrations from our legacy MaxCS to the new MaxCloud UC platform, which will generate additional Max Cloud incremental multi revenues. Speaker 200:05:47As I mentioned on last quarter's call, Fiserv is still on track to launch our groundbreaking new conversational AI IVR solution in October. This new solution includes significant enhancements and functionality along with higher pricing, which therefore will also begin to contribute to new incremental monthly cloud revenues. Shifting to Altigen's solutions for Microsoft Teams, that business has been fairly flat in the last few quarters as we have not yet been able to introduce a viable contact center solution for Microsoft Teams. However, just last month, we were able to introduce our new core Engage for Teams contact center platform. We've already signed contracts with several customers and have quite a few pilots taking place now with new prospective customers. Speaker 200:06:34Early indications are that this will prove to be a very successful commercial endeavor for us. Our consulting services business has continued to grow primarily as a result of the expansion of our business with the Connecticut Department of Transportation. In addition to that, we are gearing up to go after new customer logos, principally focused on AI and digital transformation services. I'd also want to clarify the role our consulting services business has in our overall business strategic planning. I'll start with a brief background. Speaker 200:07:11We initially acquired ZAC Consulting in May 2022 to increase our Microsoft technical expertise, to extend our capabilities to deliver custom communication solutions and to drive Altigin Software sales into ZEC's customer base. While the acquisition certainly improved our Microsoft technical expertise, it also set us back as many of the companies Zach represented as ongoing customers had either ceased doing business or were in the process of doing so at the time of the acquisition. The result was, as reported in prior quarters, a much lower than anticipated contribution from the ZAC Services Group. However, when we brought in Sherik Shaikh to run the ZAC Consulting division in November of 2023, along with the signing of a major contract extension with the Connecticut Department of Transportation in December of 2023, that situation began to change. Today, our consulting services business is not only thriving under Sharik's leadership, but we are also now converging the technical resources on the consulting services team with the Altigen Software Solutions team. Speaker 200:08:20This is particularly evident in our AI initiatives in which companies first want customer solutions built for their unique needs, then want Altigen to enhance and maintain those solutions in a monthly recurring managed services revenue model. We're set up to do just that. With that, I'll now hand the call to Joe Hamblin to provide additional color on both our software solutions and consulting services lines of business. Joe? Speaker 300:08:49Thank you, Jerry. Good afternoon, everyone. Earnings call, I outlined 3 key operational initiatives that we were going to be focused on that it helped enable our company to scale and compete in years to come. Those are operational efficiencies, financial stewardship and product delivery. So in the operational efficiencies area, we made significant progress, to enhance that area. Speaker 300:09:18We completed our back end automation for our legacy products, allowing our existing customers and partners to streamline their account management access. Additionally, we rolled out an enterprise billing center that enables these customers to access their online billing information much more easily and readily available to them. The team has also laid the foundation for the first phase of our solutions delivery portal by updating our product catalog and mapping out our end to end business processes so we can begin the automation process that allows us to scale rapidly. This will allow us to automate product ordering in Phase 1, which we will release at the end of August. And then we will quickly move into Phase 2, which will focus on the product provisioning piece, allowing customers to come in and access our site with a very wizard, simple to use friendly user interface that allows them to provision themselves. Speaker 300:10:17On the financial stewardship front, we continue to drive costs out of our business. As I mentioned last earnings call, we reduced our operating expense by $250,000 on an annualized basis through headcount, data center and associated licensing consolidations. And the migrations to the lower and migrations to a lower cost underlying SIP carrier. As Jerry noted earlier, we actually realized 300 ks from those efforts. During our fiscal Q3 performance, we achieved an estimated annualized savings of another $590,000 These savings stemmed from the completion of our hosted data center modernization and consolidation effort and the migration of SIP services over to our new providers platform. Speaker 300:11:04Keep in mind, we've only 1 third complete on that. We'll finish up the other 2 thirds of that migration by the end of this fiscal Q1 by the end of our 1st fiscal quarter. And I want to just note that having a strong financial stewardship will remain as a core part of our company DNA as we continue to transform our business and we start to grow. Now let's talk about product delivery. The 3rd pillar is a key pillar in the product delivery space. Speaker 300:11:38As both Jerry and I have discussed on previous calls, improving the delivery of new products and services is essential for us achieving our financial performance goals and driving new incremental revenue streams. This begins with growing our customers and revenue with our MaxCloud UC platform. While MaxCloud is GA for both Altigen and Fiserv customers, we needed to enhance our UC client with some critical modern workplace capabilities before we could scale out to the market with a true launch. These enhancements are nearing completion and will complete and clear our quality assurance process in time for the fiscal New Year. Additionally, we are targeting the introduction of a new Max Cloud, CCaaS platform, enabling customers to add omnichannel capabilities to support their business needs. Speaker 300:12:32More details on this will be shared soon. In parallel, we will launch core engage for Teams contact center. As Jerry mentioned, we already have signed contracts with several customers and have numerous pilots underway. Core Engage for Teams contact center will support our customers throughout the entire team's journey from PBX migration services to teams direct trunk routing using our best in class SIP services to Microsoft Teams call queues and finally to our full omnichannel contact center solution including reporting and call recording. Let's talk about Fiserv's progress real quick. Speaker 300:13:12Again, as Jerry mentioned, Xcloud UC Migrations are starting this quarter. We've already have our user ID validation and biometrics fraud detection currently in preview with our initial POC customers. IVR, our natural speech recognition tool will be delivered in October as promised. And also in Q1 of the fiscal new year, we will deliver IVR text to speech, during the Q1. And then finally, let's touch briefly on the Altigen Technologies consulting services. Speaker 300:13:54And I really this team has really performed well and continues to grow. Again, thanks to Sharik's leadership and that whole team coming together. High level, this team works directly with customer business units to design, develop and deliver business process and system solutions. We continue to see quarter over quarter revenue growth and our goal, as Jerry stated, will be over these next two quarters is to attract new customers and enter into new engagements. So to summarize, our transformation process is well underway. Speaker 300:14:31We continue to improve our performance every day. From my vantage point, the headwinds we have faced are beginning to fade. However, we still have a lot of work to do. The team is motivated, we're engaged and we're very focused. So glad to take any questions you might have we're done here. Speaker 300:14:48But with that, I'm going to turn it over to Carolyn for the financial review. Carolyn? Speaker 100:14:54Great. Thank you, Joe. I will now present the key financial highlights for Q3 FY 'twenty four, keeping in mind these comparisons are on a year over year basis unless otherwise noted. For our fiscal Q3 results, we reported total revenue of $3,300,000 compared to $3,400,000 for Q3 2023. Total cloud services revenue for Q3 was approximately $1,700,000 down 13% from $2,000,000 in the same period last year. Speaker 100:15:24Meanwhile, our services revenue increased by roughly 25 percent to $1,200,000 from $1,000,000 in the prior year quarter. Gross margin for the quarter was 61% compared to 63% in the same period last year, reflecting a decrease of approximately 200 basis points year over year. This decline was mainly due to a shift in our revenue mix towards higher professional services. On both a GAAP and non GAAP basis, we reduced our operating expenses in Q3 to $1,900,000 an improvement of roughly 15% year over year. This decrease was mostly due to lower headcount related expenses. Speaker 100:16:09GAAP net income for Q3 was $62,000 or 0 point 0 $0 per diluted share. This compares to GAAP net loss of $183,000 or negative $0.01 per diluted share a year ago. On a non GAAP basis, net income was approximately $200,000 or $0.01 per diluted share compared to non GAAP net income of $40,000 dollars or breakeven EPS in the same quarter last year. As noted, this increase in net income was primarily due to the aforementioned reduction in our OpEx. Moving to liquidity. Speaker 100:16:48We ended Q3 with approximately $2,000,000 in cash and cash equivalents, up 23% compared to the preceding quarter. Our working capital increased to $2,000,000 from $1,800,000 in the previous quarter, representing an 11% increase. In closing, we are pleased with our Q3 results, which are in line with our expectations, and we look forward to updating you on our progress in our next call. Now let me turn the call over back to Jerry for closing remarks. Jerry? Operator00:17:36And Jerry's line is still connected. Jerry, please check your mute button. Speaker 200:17:41Okay. Thank you. Thanks, Carolyn. Sorry for the delay. To summarize, we are making progress with sustainable business initiatives. Speaker 200:17:49We first shored up and are now growing our consulting services business. We've also made great strides toward achieving our operational excellence objectives with demonstrated tangible financial results. Our next major milestone, which we've been working on for some time, is to improve our ability to monetize our software. Achieving this objective has actually proven to be a difficult task, primarily due to the fact that Altigen had to go through our own digital transformation process. This process involved not only transfer forming our legacy on premises hardware and software products to modern cloud native all software solutions, but also required us to transform the entire company from business systems to infrastructure to personnel. Speaker 200:18:37And as you've heard from Joe Hamblin, this has been his number one objective and he's made great progress in that regard. Today, we are on the cusp of realizing the returns from the investments we've made in our key business initiatives and fully expect the financial results to follow soon. So with that, I'll ask the operator to open the call up for questions. Operator00:19:00Certainly. At this time, we will be conducting a question and answer session. The first question is coming from Mark Gomes from Pipeline. Mark, your line is live. Speaker 400:19:46Hey, gentlemen. Congratulations on reattaining profitability. Do you expect to maintain profitability is one question. The other is, when do you think we can expect to start seeing the top line resume sequential growth? Thanks. Speaker 200:20:09Yes. Thanks, Mark. Yes, we do expect those impact expect the savings to continue as we're actually doing a much better job of streamlining operational expenses. Yes, the top line, as you know, I've been actually promising we're going to be growing top line for a little while now. And I think we've overcome and I really think we've overcome these various hurdles and challenges and the just one more thing, objections, so we can start kicking in some real business here. Speaker 200:20:40One of the keys obviously is Fiserv with some of the new products that they're going to be launching, but it's not we're not just a Fiserv company. It's also my commentary about having a Teams contact center product that we can count on that people like and will pay for is also going to be very significant. So Mark, I expect here pretty soon this quarter, next quarter, we're going to start seeing I can't say how big it's going to get, but I do expect to start seeing tangible incremental revenue increases on a quarter over quarter basis very soon. Speaker 400:21:15Okay. And then just kind of looking at that you guys have made substantial investments in R and D for a company of your size over the last few years. So as you go into monetization, kind of what's kind of scale of revenues do you think you might be able to achieve with the products that you have kind of ready or near ready to go? Are we still looking at some of what you presented in the investor presentation several months back? Speaker 200:21:46Right. Okay. Yes, thanks for referencing that, Mark. Because it's a tough one without giving a forecast, but those numbers stand with us. And what we talked about was at the Planet Microcap Conference, We expect it to be within 5 years between $40,000,000 $60,000,000 with $50,000,000 at our midpoint. Speaker 200:22:09We showed the various categories we expect to generate that revenue and it's Fiserv is a chunk of that. We didn't really count on a whole lot from our UCaaS platform because it's a very crowded market and the remainder made up was made up with our Teams solutions, which we feel darn good about now as well as our AI solutions. So right at this point, yes, I think it's hard to say we're on track because it's just a couple of months later, but we think we're going to achieve those numbers. Thanks, Jerry. Operator00:22:44Thank you. The next question is coming from Maj Soodan from Veo Investing. Maj, your line is live. Speaker 500:22:53Thanks. I just have one question. You've talked about this switch to a new SIP provider. Can you give us an idea how much you're going to save on that? And has that even kicked in yet? Speaker 500:23:04Is that part of the your kind of operational excellence numbers you've given in terms of how much money you're going to be saving moving forward? Speaker 200:23:14Yes. Good question, Moshe. Joe, can you tackle that one? Speaker 300:23:17Hey, Moshe. Yes. So Moshe, some of those numbers are baked in. We're only about a third way through that migration. And it's a 2 pronged play. Speaker 300:23:26One is, it is a cost cutting effort for me. But in addition, it's also a wholesale SIP trunk play for me. So, it will help us on top line growth, but it also helps me on the bottom line expenses. And again, we've I can give you some ballpark numbers here. But roughly, we've probably taken out, if you look at my run rates, I'm going to be somewhere in the neighborhood of 64,000 is what it was costing me in January. Speaker 300:24:04And now I've gotten that down to 29,000 and I'm about a third of the Speaker 200:24:09way through. Great. Thanks. Operator00:24:13Thank you. There were no other questions from the lines at this time. I would now like to hand the call over to Jerry Fleming for closing remarks. Speaker 200:24:22Yes. Thank you. And thank you everyone for participating. And I can tell you guys, short term, we've been focused on let's get our house in order, right? Long term, yes, we're absolutely focused on top line revenue growth. Speaker 200:24:35That has been happening, while we're working on the short term initiatives that have made improvements in our financial results. But we are 100 percent focused on increasing this top line revenue and driving shareholder value and look forward to reporting on our next call our progress in that area. Thank you very much. Speaker 100:24:53Thank you, everyone. Operator00:24:55Thank you. This does conclude today's conference. You may disconnect your lines at this time. Thank you for your participation.Read morePowered by