Pareteum Corporation
Q4 2018 Earnings Call Transcript

Published: 13 Mar 2019

[Operator:]

Good day and welcome to the Pareteum Corporation Fourth Quarter 2018 Financial Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Laura Thomas, Investor Relations. Please go ahead, ma'am.

[Laura Thomas:]

Thank you, Schneid, and good afternoon, everyone. Thank you for joining us today for Pareteum Corporation's fourth quarter and year ended December 31, 2018 earnings results, analyst and investor conference call today. With us today are Hal Turner, Pareteum's Founder, Executive Chairman and Principal Executive Officer; Vic Bozzo, Chief Executive Officer; Bart Weijermars, Chief Executive Officer of EMEA; Denis McCarthy, President; Ted O'Donnell, Chief Financial Officer; Rob Mumby, Chief Revenue Officer; and Patricia Hume, Chief Marketing Officer. Earlier today, Pareteum released financial results for the quarter and year ended December 31, 2018. If you've not yet received Pareteum's earnings release, please visit Pareteum's Investors page at www.pareteum.com. Following management's discussion, there will be a Q&A session. During the course of this conference call, the company will be making forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934. The company cautions you that any statement that is not a statement of historical fact is a forward-looking statement. This includes any projections of earning, revenue, cash or other statements relating to the company's future financial results; any statements about plans, strategies or objectives of management for future operations; any statements concerning proposed new product; any statements regarding anticipated new relationships or agreements; any statements regarding expectation for the success of the company's product in the U.S. and international markets; any statements regarding future economic conditions or performance, statements of belief and any statements of assumptions underlying any of the foregoing. These statements are based on expectations and assumptions as of this date of this conference call and are subject to numerous risks and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Some of these risks are described in the section of today's press release titled Forward-Looking Statements and in the public periodic reports the company files with the Securities and Exchange Commission. Investors or potential investors should read these risks. Pareteum assumes no obligation to update these forward-looking statements to reflect future events or actual outcomes and does not intend to do so. With that, I'd like to turn the call over to Mr. Hal Turner.

[Robert Turner:]

Thank you, Laura. Thank you, Ted. Good afternoon. Welcome to all who've joined us today for this call from around the globe. We thank our many teammates for their sales, their business operations expertise and the exceptional financial results that will be discussed today. It is these teammates and their constant collaboration on everything that's the basis for our remarkable successes. Teammates, it is your constant support of each other and for our customers that is the basis of Pareteum's success. You demonstrate daily that we are dedicated to happy customers and their journey with Pareteum. So a simple thank you. We appreciate it. Today, I'll begin our call with a topic that's very important to me personally and professionally. I hope that as I go through this that you will hold these points I'm about to discuss in the same degree of importance. It's a question that I often ask myself and it's this

[Denis McCarthy:]

Thank you, Hal, and good afternoon, everyone. I'd like to spend a few moments going through our key financial measures for the fourth quarter. During the quarter, we generated adjusted EBITDA of $2.3 million. Adjustments to EBITDA include stock-based compensation of $247,000 and acquisition and restructuring related costs of $5.2 million. The majority of these adjustments are non-recurring in nature. We generated non-GAAP earnings of $2.3 million or 2 points - $0.02 a share per weighted average share in the fourth quarter and $6.4 million or $0.09 per weighted average share for the three - for the 12 months ended December 31, 2018. This is a reflection of the strength of our core business. We generated $14.3 million of revenue in the fourth quarter, and our gross margins were 63% in line with expectations post the Artilium acquisition. Speaking of the Artilium acquisition, the strength of our fourth quarter results were bolstered by that accretive transaction. In the fourth quarter, Artilium contributed $5 million of top line revenue, and we generated positive EBITDA and operational cash flow. Also in the fourth quarter, the NOI synergies from Artilium obtained have already met the targeted synergies for 2019. Although work remains to fully integrate the companies, we are pleased with the disciplined approach taken to ensure that there is no dilution to our stakeholders and financial results. Pareteum has exceeded our prior guidance for revenue achieving a 101% organic growth over 2017, and including Artilium growth of 139% on a year-over-year basis. Our key performance indicators continue to exceed plans, connections, which is our term for subscribers, devices and the connectivity usage have grown over - to over $4.6 million at the end of the fourth quarter. 36-month contractual revenue backlog converted into live production incremental monthly revenue, where there was 97% of schedule conversion for the fourth quarter on attaining an average over 100% for the year. Revenue per employee was $415,000 at the end of the fourth quarter, an increase of - from $233,000 over the same quarter last year. We expect to continue to exceed the industry expected averages for annualized revenue per employee per year on a go forward basis. In addition to these KPIs, we're very pleased that in the last six months we've attracted research coverage from Northland Capital, Craig-Hallum, Lake Street Capital and Maxim Group, a testament to the strength of our growing business. Subsequent to the end of 2018, we've closed our acquisition of iPass also expected to be accretive in the first full quarter of consolidation. We've closed the iPass transaction as Hal mentioned on February 12, 2019. In that announcement the resulting proxy and investor deck, we identified the material cost synergies available, which made the transaction accretive, net of the transaction fees and restructuring charges. Note that we will continue to report adjusted for onetime transaction of restructuring fee is going forward. To ensure that there's proper focus on the ongoing operations of our business alongside our strategy to pursue acquisitions that are both accretive - to both the creative to earnings and adjusted EBITDA. Upcoming Q1 will bring results will include partial, approximately 45 of the 90 days consolidated results of the iPass and Pareteum combination. Reduction of headcount and highlight of key - some of the key employees that we've retained. Highlights of the financial statements include $19 million of cost and expense synergies related with the first calendar year after the close of acquisition, of which $11 million have been achieved through headcount surgeries. Pro-forma combined 12 months revenue north of $19 million, pro-forma adjusted EBITDA with synergies of $18.2 million for calendar 2018. In addition, we continue to focus on backlog conversion. And as Hal mentioned, iPass brings us an additional 75 developers and cloud personnel, which are instrumental in deploying that backlog that we had at yearend of $615 million, as Hal mentioned, has now grown to over $800 million. In the absence of doing iPass transaction, we would have had to hire and train these additional 75 employees, which would have required more time, money and risk than we had achieved through the acquisition. We remain committed to growth and while we currently have no plans, any potential future capital is expected to be used for growth activities both organically and strategically through acquisitions. Finally, as we mentioned during our last call, we are decidedly a growth company. With the addition of Artilium, we now have over 4.6 million connections. In addition to the customers, as Hal mentioned, this is a leading indicator for our growth. Those connections come to us through our global connectivity network. Our connections continue to grow organically and today are greater than 10 million after the iPass transaction. With that, I'd like to yield back to Hal Turner for closing.

[Robert Turner:]

Denis, thank you very much. And I'd like to now discuss our plans and provide guidance for 2019. It's very simple. As Denis just said, we're a growth company. So as we introduce our guidance for 2019, I'd like to just remind everyone this is under the context of forward-looking statement. It is based primarily on the strength of the accelerating growth in schedule and anticipated connections which are connected devices and their growth including connectivity usage and monthly recurring revenues. These revenues are expected to continue acceleration in the latter part of this year, because of our 36 month contractual revenue backlog, which provides significant visibility into Pareteum's future revenue potential. So with that, our 2019 revenues expected are between $105 million and $115 million. Our adjusted EBITDA and operating cash flow, net of the restructuring and acquisition or transaction fees are expected to continue strong growth through midyear 2019, absent any further strategic activity. Our 2019 EBITDA and cash flows, this is very important, are expected to turn positive by midyear and to be positive for the full year herein, absent any further strategic activity. We expect 2019's revenue to grow in a range from 225% to 260% year-over-year. This growth in revenue is expected to well-outpace the market's growth by more than 4X. And that market growth is projected by the Gartner group with [Cpass] [ph] growth of 50% compounded annual growth between 2016 and 2021. I'd like for all of you to take comfort and be very, very focused that our business plans are aspirational and they're very big. We're playing to win. We play to win every day and we're all in sales. So it's important for me to share a few additional quick comments on how we operate our business. We operate our business daily with a management business case. That management business case significantly exceeds the initial quarter's guidance that I've just given you. Also, we have an extraordinary business case, which incents everybody in our whole company to achieve materially higher revenues than are even contained in our management case. Finally, the operating management case and the extraordinary aspirational case, either meet in the case of the management case or exceed greatly in the case of the extraordinary case the SEC required iPass tender offer projections, which were used in setting forth our acquisition of iPass and contained revenue projections' view that was based upon fairness opinions of our advisors and was used by our Board in the acquisition consideration. As we move into the year and with our sales pipeline exhibiting favorable results, which is expected, plus our 36 month contractual revenue backlog sales, which are expected to grow and our conversions which are expected to accelerate, we will update you on our revenue guidance on a quarterly basis. Now, we will open up for the question-and-answer portion of the call. Denis and I are joined by Ted O'Donnell, Vic Bozzo, Bart Weijermars, Rob Mumby and Patricia Hume.

[Operator:]

[Operator Instructions] Our first question today comes from Mike Latimore from Northland Capital Markets. Please go ahead. Your line is open.

[Mike Latimore:]

Great. Thanks a lot. Yeah, excellent year and looks like an awesome foundation for this year. In terms of - I guess, Hal, I just wanted to clarify your adjusted EBITDA guidance. Can you just kind of run through that again? I didn't quite catch the - kind of how you characterize adjusted EBITDA guidance for the year?

[Robert Turner:]

Okay. So the adjusted EBITDA guidance is that it will be positive and it is growing through the middle part of the year. In the middle part of the year, we will turn EBITDA positive and we expect to be EBITDA positive for the full year at the end of the year, presuming we don't do any other strategic. So bottom line, adjusted EBITDA is positive and growing. And we effectively burn off the transaction and the restructuring charges by midyear and move to positive EBITDA is what I'm saying, same on cash.

[Mike Latimore:]

Sure, yeah, excellent. Thanks. And then, in terms of the gross margin, obviously, really good gross margins with Artilium in the fold. How should we think about kind of gross margins for the year, if you want to give some guidance there?

[Robert Turner:]

I think our gross margin is pretty much - we noted to everyone that as Artilium came on with IDM unit, which is a messaging unit, it brought more usage into the equation for gross margins. And that's what really was the prime contributor from our reduction of gross margins, from roughly 70%, 71% into the 63%. But we're very happy with 63%, I want you to know. Now, as iPass comes on, iPass also brings additional usage. So we're expecting those gross margins to dip may be lower into the 60s, not much lower than the high 50s. And we see pathways through cost reductions and efficiencies to increase those, but we think that the margins will stabilize in the high-50s to low-60s. Denis, would you like to add to that?

[Denis McCarthy:]

Hal, I think you nailed it. The projection for the year as we outlined in November, with the inclusion iPass was for the high 50s. And, as Hal mentioned, working hard to improve that, surely the usage factor is again Hal mentioned with IDM and iPass driving that decrease from where we had that.

[Mike Latimore:]

Fair, makes sense. And then, I guess, you said we have Bart on the line. I guess Bart's been here now for a little over a quarter. So I'm curious, Bart, if you have any comments on kind of what you're seeing in terms of benefits of the combination between Artilium and Pareteum. And in particular, as you go after kind of prospects and customers, what kind of value are you seeing by having a combined platform now?

[Robert Turner:]

Bart?

[Laura Thomas:]

If you want to make sure it's off mute, Bart?

[Robert Turner:]

Mike, I'm sorry. Apparently, Bart has been disconnected. I apologize. Without putting words into his mouth, I'm going to ask Vic, who has spent the Mobile World Congress with Bart to answer that, please.

[Vic Bozzo:]

Yeah, thanks, Mike. Thanks, Hal. We've seen just tremendous cross-sell and up-sell opportunities. So Artilium had a strong focus on the retail front and enterprise model. And as you know, we had all of the back-office as well. So the cross-sell and up-sell of adding messaging and adding the enterprise front-end into our CSP market, and then the reverse of that adding our CSP in core mobile assets in. We're seeing opportunities coming at us whereas last year we had to pick up the phone and dial we're seeing a lot of inbound.

[Mike Latimore:]

Great. And, I guess, just one last one…

[Bart Weijermars:]

Sorry, I just dropped out there, but…

[Robert Turner:]

Bart, you're back.

[Bart Weijermars:]

I would be able to add one more thing if you like?

[Mike Latimore:]

Yes, please.

[Bart Weijermars:]

Just to say that, what we've seen is that with the combination of the products and the actual ability to deliver globally is actually a big plus that we see is paying off and is actually accelerating our ability to selling in much larger geographic area that we had before. So we're really excited about the company.

[Mike Latimore:]

Okay. Great. Thanks a lot. Good luck for this year.

[Robert Turner:]

Mike, thank you. Much appreciate it.

[Operator:]

Thank you. We'll now take our next question from George Sutton from Craig-Hallum. Please go ahead. Your line is open.

[George Sutton:]

Thank you, guys. You're going to hit that rare screen for people screening for 250% or better revenue growth, so congratulations.

[Robert Turner:]

Thank you.

[George Sutton:]

I wanted do address the distribution capacity as it stands today, obviously, you're signing a dramatic amount of new business with relatively few people. And I want to see how much that's expanded with the acquisitions and with additional hiring?

[Robert Turner:]

Okay. So I'm going to turn to Vic. And within Vic's organization, obviously, Rob Mumby, who runs our key core communication service provider piece. And then we have Christine Braelow, who runs the enterprise piece. And certainly, we also have Rob, who joins and running the IoT and Smart City spaces. So Vic you want to talk a little bit about your organization, your headcount as well as your customer advisory team that has been put together.

[Vic Bozzo:]

Sure. So we've separated our business into three segments

[Robert Turner:]

Vic, you might also mention the service delivery team that we've built around Joost for global conversion of the backlog and how that's working, because it obviously goes hand in hand with the distribution capability and ability to recognize revenue.

[Vic Bozzo:]

Sure, along the pathway to revenue we have - I mentioned the account management team, which takes over post sale and really looks for cross-sell, upsell customer satisfaction. But before that, it happens, early on in the sales process before the sale is even complete. We have a global service delivery team that gets involved and is really responsible for deploying the backlog and that teams been built up again across from the legacy teams. And we've really created a global partnership between sales service delivery and customer advocacy for each customer that comes into our pipeline.

[George Sutton:]

That's super. One more question, obviously, the ability to convert the backlog of revenues is very key, are you mentioned 75 additional developers. Can you give us perspective on the challenge that you have and in terms of getting that backlog to revenue? And - or are these enough developers are you planning to continue to grow that part of the team?

[Robert Turner:]

George, I'm going to give a high level comment and then turn to Bart on that. In the macro view, we are finding some of our sales are requiring, some development to make the software to what the customer expected it to do, so that's like a change request so there is some fair amount of that. There are also some elements of the customers in their commercial distribution, which are impacting how quickly they have ramped. On balance, we've been above 100% in aggregate although we were 97% on revenue for the fourth quarter. But let me turn to Bart, who manages that function for us globally. And I can tell you, we have team huddles daily at every level focused on one thing, collecting revenue, getting the customers, contracts, excepted in billing. So Bart, can you give some further comment.

[Bart Weijermars:]

Yes. Thank you, Hal. I think, you phrase that's correctly maybe one more thing to add there is one of the items, where we obviously have a dependency as well as when we do connect to local networks in different countries in the world, where timing is a bit dependent on the actual excess network that we're connecting to. But overall, I would say, what we have been doing in the last couple of months, it's really pulling all of that together and making sure we have a smooth team and process that's going to address these projects in an efficient manner and in a way that we can actually make sure that we do proper implementations, and use that same structure going forward as well. So we're confident that we can get implementations running as we grow as a company.

[Robert Turner:]

And George, the 75 developers are certainly adequate for what we need, and as Denis mentioned, we would have had to have gone out and recruited and hired developers. And there would have been training in orientation time. And one of the beauties of the iPass acquisition is, these developers were already doing this effectively for the SmartConnect software in the iPass software, so there was virtually zero ramping time. So we'll clear out these change requests get the little bit of a hurdle I would say in the backlog conversions now. And this is probably about another four to six weeks to unleash if you, and then it's business as usual. So we think, we're well covered on the technical side.

[George Sutton:]

Great job, guys. Thank you.

[Robert Turner:]

Thank you, George.

[Operator:]

Thank you. We'll now take our next question comes from Eric Martinuzzi from Lake Street. Please go ahead. Your line is open.

[Eric Martinuzzi:]

Thanks. A couple of backward looking questions first, and then a couple of forward. As we look at Q4 that I'm interested to know what is the Artilium contribution for Q4, if you were able to track that. And then, I've calculated 2018 pro-forma kind of Pareteum plus Artilium at $50.4 million, and I wanted to know my math is correct?

[Robert Turner:]

Denis, you want to drive that one, please.

[Denis McCarthy:]

Sure, Hal. From a top-line perspective, Artilium was $5 million from an EBITDA perspective, but roughly $300,000, Eric, and there's a breakout. I believe that you can see in the financial statements that will now be issued coming here shortly. And I'm not positive, Ted, if we put that in the press release or not, but it certainly that will be a breakout in the 10-K. And then the second part of that question on the backward looking, can you repeat one more time?

[Eric Martinuzzi:]

Yeah. I saw the 8-K filed this afternoon, I think, based on the 8-K filing for the pro-forma that we come up with about $50.4 million on a pro-forma combined Pareteum legacy plus Artilium legacy, and just wanted to know if that sounds right to you.

[Denis McCarthy:]

That does, right. And then, I would also point out that just but on our - at quarter annualized $56 million - north of $56 million on revenue, but that's correct.

[Eric Martinuzzi:]

Okay. And now to the forward looking side. I'm just curious to know if you guys have, obviously, made a couple of pretty substantial investments here with the Artilium acquisition as well as the iPass acquisition. Have you seen anything amongst your competitors, and I'm talking about the legacy MVNE competitors, so ASPIDER, Effortel, Plintron, Teleena; any reaction amongst your legacy competitors to do something similar to what you've done with your two recent platform running moves?

[Robert Turner:]

Yeah. They're selling themselves to bigger players. So Teleena, of course, acquired by Teleglobe; Transatel acquired by NTT; ASPIDER acquired by KORE Wireless. So we see our competitors taking their platform and technology to bigger players with broader platforms and broader distribution in global networks. That is exactly what we're creating, and hope to be a magnet for some of these other players. Denis, do you want to add to that?

[Denis McCarthy:]

Yeah. I would also add that, I think, there's a movement that we started in the last year for competitors to be focusing more on virtualization. I would say that KORE with this acquisition of ASPIDER is probably the one that we see the most. But certainly consolidation in the space, and a changing dynamic on how the services are provided, it is the team, and we do believe that we've got many competitive advantages, but one is that we certainly may believe to do that much sooner than our competitors had.

[Eric Martinuzzi:]

Okay. And then lastly, you gave a metric in the press release to talk about your revenue mix in Q4 between the software defined comm platform, the MSP and then the super API. Where do you expect that mix to be not for the full year 2019, but by Q4 of 2019?

[Robert Turner:]

Vic, have you look to that with Rob Mumby in terms of the revenue breakout. I know, it's going to be above 50% on the cloud platform.

[Vic Bozzo:]

Yeah. We've certainly begun tracking it, and we see it's hard to out - let's say outstrip the CSP business, because obviously, it's so big as it is today. But we see IoT, it's really taking a big leap forward. Now clearly there is more volume in terms of wireless connections there, but the connections are at a slightly lower price, because of the nature of that market. So I would see between IoT and enterprise then becoming very close to the size of the CSP. But I think, the CSP will be generally over 50%.

[Robert Turner:]

Eric, there's a new slide in our deck, which has been uploaded to the website, which deals with the addressable market and the product breakout. Patricia would you like to comment on that to Eric's question.

[Patricia Hume:]

Yeah. Certainly - sorry, Hal. Yes, the addressable market, we've done a lot of work to take a look at the three segments, and what you will see is that we've broken it out by enterprise, where we're looking at the unified communication as a service market we've looked at the CSP market both from an MVNO as well as an MNO perspective. And then finally the IoT space, and I guess, the net-net of what you'll take away, when you take a look at the slide is that we are in a wonderful space as it relates to a business that is in a hyper growth area, because the market is rich and the market is growing from the CAGR perspective. And we feel very confident with our go to market offerings that we can address that market across all three segments, and take our fair market share.

[Eric Martinuzzi:]

Understand. Congratulations on your acquisition with Pareteum.

[Patricia Hume:]

Thank you so very much. I'm enjoying it.

[Robert Turner:]

Yeah, we're glad to have her. She knows what she's doing. Eric, anything else?

[Eric Martinuzzi:]

No. That covers it. Thanks.

[Robert Turner:]

Thank you. Much appreciate it. Ted?

[Operator:]

Thank you. We'll now take our next question from Allen Klee from Maxim Group. Please go ahead. Your line is open.

[Allen Klee:]

Yes, good evening. You've had a slide in your presentations, where it takes the contracted revenue backlog and kind of shows how it'll go over the next likely rollout over the next three years? Are you able to kind of give a stab of how you would think about that based on where it is at these levels?

[Robert Turner:]

Denis maintains our 36-month contractual revenue backlog spreadsheets and analysis. So I'll turn to him for more detail on that. Denis?

[Denis McCarthy:]

Yeah. With the - thanks, Hal. With the addition of iPass, the 2019 number will be roughly in the $115 million range and as we look at our guidance relative to that. As we've got very good comfort in our ability to close roughly 80% of that, I would say 75% to 80% of that within this year. I guess, how alluded to it just a moment ago, when he talked about some of the risks in terms of getting contracts off the ground, and Bart also layered down there, so things that it certainly cause delays and/or after implementation things can cause delays in terms of subscriber ramp. So as we look at both of those risk factors as well as certain revenue recognition risk factors, we are comfort to in that 75% to 80% range. As we rollout into 2020 and 2021 on the $800 million number, I don't have the exact figures. But we see roughly 55% growth from 2020 over 2021 and then another 40% growth on 2021 over 2020. And I would just close by saying that, as we look at that growth and the continued sales we expect over the year, as well as the presumption that we've said many times that our contracts generally have about 15% of revenue in the first year, and 30% of revenue in the second year, and 55% in the third year. We expect to again push that 2021 number to that same 55% growth by the end of this year that you're seeing on 2020 over 2019 in that model, in the backlog model.

[Allen Klee:]

Is there a reason to think that in like the second year or the third year, your conversion rates could be higher than 75% to 80%, because you've had time to prepare for it?

[Robert Turner:]

Denis?

[Denis McCarthy:]

I think in - yeah, I think in general the risks remain in terms of implementation risks and subscriber ramp. Often asked this question now and from a subscriber ramp perspective, certainly, there's nothing dearer to one of our customers than their subscriber base. And if you look at some examples of that in the U.S., where Verizon migrated to 4G, it took nearly four years for them to roll out 100% of devices to their 4G network. This is in some ways a similar migration to new technology. And our customers take their time. So I think both from an implementation perspective is you'll find, you get into the implementations, and as Hal mentioned, customers look for a feature that they didn't quite delineate as a requirement in the sales process. And we work hard to make sure that we're delivering exactly what the customer wants. And then, again, that subscribe ramp. I think we see those risks remain. Certainly, we will get better as a company at deploying more than we do, the better we get. But I think as a general rule, I wouldn't suspect that we would feel a lot better than that at the beginning of any period.

[Allen Klee:]

Okay. Thank you.

[Robert Turner:]

Allen, I would just add to that, that we've been - Allen, I just want to add one thing to what Denis said, we've been very fortunate so far. We've had virtually no bad debt associated with the customers in that 36 month contractual revenue backlog. But that certainly by the law of large numbers is going to change. There's going to be some. We haven't had anybody go out of business yet. Somebody will. We haven't had any competitive takeaways. That's certainly possible. Now, we work hard to fight against that. And so far, we've been right at 100%. But we also recognize that these are real challenges as we go forward. But we're doing our very best to stay at or above 100% on the conversion.

[Allen Klee:]

Thank you. My last question is a clarification on your comment of - that you believe you could exceed the projections that were in the fairness opinion related to the acquisition, could you just clarify what years you were referring to that you believe that you could outperform?

[Denis McCarthy:]

This year, 2019.

[Allen Klee:]

For - okay. Okay. Thank you very much.

[Denis McCarthy:]

Yeah.

[Robert Turner:]

You're welcome.

[Operator:]

Thank you. [Operator Instructions] We have time for one more question. This question comes from John Nobile from Taglich Brothers. Please go ahead. Your line is open.

[John Nobile:]

Hi, good afternoon and thanks for taking my questions. Some of my questions have already been answered. But I just like to know the new credit facility, $50 million credit facility. It's said to enable mergers and acquisitions. Do you currently have any prospects on your radar screen that you could talk about?

[Robert Turner:]

So the credit facility was used primarily to pay down and pay off the existing iPass debt and give us better - certainly, better terms. It also gives us cash on the balance sheet for what we consider to be some potential smaller tuck-in acquisitions that bring either particular IP to the portfolio or service to the portfolio, which will help us on the mobility side. And while we don't have anything that is certainly imminent like tomorrow, we continue to look. And that facility gives us the ability to act on that with the greatest respect for our equity, in other words, using a little bit of debt here and there to augment some of our capabilities. And that's really what it's for.

[John Nobile:]

Okay. So sometimes to basically digest the Artilium and iPass, so we're looking at obviously much smaller acquisitions than those two, correct?

[Robert Turner:]

Absolutely. These are - again, I use the term tuck-in and these are very small acquisitions relative to everything we've done so far and relative to the size of the company now, and in terms of how we're evaluating and looking. But it brings product technique and capabilities that we need. So, again, it's always in our mind. We like to take the viewpoint that we - what we build ourselves we sell, what we use we buy, and everything we look at is on a buy versus build analysis. So that's what that credit facility is there, to give us eminent flexibility to quickly act, should we need to.

[John Nobile:]

Well, thank you for that clarification. I just have one further question. Just in trying to get a better understanding, could you provide some examples of the cross-selling opportunities that are presented with the acquisition of iPass?

[Robert Turner:]

Yes, absolutely. I'd like to turn to Rob Mumby for that, please. Rob?

[Rob Mumby:]

Yeah. Hi, thank you. Well, there are number of opportunities that we have that are cross-selling. And that we've formally closed the acquisition of iPass, it's only added a lot more interest with some of our traditional CSP customers to incorporate iPass' Wi-Fi and additional technologies into what their offering is. And that in some cases, and in one particular instance, we have a customer that's an MVNO and they're from a Board standpoint has effectively mandated that they'd like a Wi-Fi roaming capability as part of the service they provide to the end-user. So we're seeing this all over the globe and feel like there are fantastic synergies between both our legacy platforms at Pareteum and iPass' Wi-Fi offering.

[John Nobile:]

Thank you.

[Rob Mumby:]

That makes sense?

[John Nobile:]

Yes, yes, no, I just wanted to get some specifics on that. Thank you for that.

[Robert Turner:]

Thank you, John.

[Rob Mumby:]

Yeah, so just an addition that we - yeah, we came off of Mobile World Congress. And there are a lot of very intertwined conversations that went on in over 100 meetings we had there. So it's a very busy show for us and a lot of opportunity on all fronts. So thank you.

[Robert Turner:]

And, Rob, if I'm not mistaken you and Christine will be at the Enterprise Connect Show next week?

[Rob Mumby:]

That's right, yeah, big show for enterprise and look forward to talking to a lot of the iPass enterprise customers and prospects, mainly about Wi-Fi, but the additional MVNO enablement and messaging capabilities that the legacy Pareteum side has to offer.

[Robert Turner:]

John, thank you.

[John Nobile:]

Thank you.

[Robert Turner:]

You're welcome. Ted?

[Operator:]

This concludes today's question-and-answer session. Mr. Hal Turner, I'd like to turn the conference back to you for any additional or closing remarks.

[Robert Turner:]

Okay. Thank you. We appreciate everybody being here today. As we close, I just want to reaffirm our mission is to connect every person and everything, and it never stops. Now, with Artilium and iPass in, Pareteum is one team. We possess the products, customers love it; services, customers love it. We possess robust and growing markets. And we've got a team of people that are energized passionate and committed to our company's success. I describe this as a BFN strategy, a Big Fat Network. It's our BHAG. It's our Big Hairy Audacious Goal. We expect to dominate the field in our markets. It will be seen in our view that the way as - it will be seen that way as the availability and the cost of network access becomes something that gives us a massive strategic advantage through our cloud platform and how it's globally connected. Pareteum envisions our world every day. We imagined what it will be and we're delivering it now every day. This helps us create our happy customers and here's how we do it. First and foremost, our customers trust Pareteum. Our solutions and platform create a competitive advantage for our customers. We are doing what we say we will do and we're doing it when we say we will do it every time. We let the record speak for itself. Results do count for us. And we're constantly pursuing creation of a term I use a lot, happy customers. We do it through thoughtfulness, contemplation, doing the right things for people and customers, kindness toward our customers, their employees and our teammates. And we deliver experiences, not things. We're in the constant creation of positive surroundings and we're seeking solutions. We have goals for our customers, and they for us. We share and look forward to our results as do they. We all stay in our lanes, doing what we're best at individually. We're following our playbooks in a highly disciplined manner. So, ladies and gentlemen, thank you all for listening to us today. We look forward to updating you on our Q1. And also late in May, you'll be getting notifications. We're going to have our first Analyst, Media, Investor and Customer Day in New York, which will be the first of a number of cities we visit this year. So thank you all very much. Bye-bye.

[Operator:]

Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.