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CynergisTek (CTEK)

Participants
Caleb Barlow CEO and President
Paul Anthony CFO and Corporate Secretary
Matt Hewitt Craig-Hallum
Avi Fisher Long Cast Advisors
Michael Potter Monarch Capital Group
William Bremer Vanquish Capital Partners
Call transcript
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Operator

Welcome to CynergisTek's 2020 Fourth Quarter and Year-End Earnings Conference Call. Today's conference is being recorded.

Joining us today from the company are Mr. Caleb Barlow, President and Chief Executive Officer; and Mr. Paul Anthony, Chief Financial Officer.

and formal made like webcast on regarding financial the that remind including begin others, future statements among some the results we presentation, to I'd everyone those are Before forward-looking. prospects industry call and to risks by cause and statements such materially forward-looking conference a are differ expects, would, subject identified believes, actual will may, of use could, of to These forward intends, described be and or those the could in looking anticipates, can call. results uncertainties terminology that as similar from number expressions, the or Certain the of these will risks be filings. SEC in and in uncertainties detail are greater described company's

obligation Given forward predictions not may as I'd any future as events should or listeners and time, looking results this a such anticipated. turn of Barlow. on occur to of Caleb its under whether or no new result expressly CynergisTek statement the and to that and any information, are future obligation reliance the call should uncertainties like statements forward-looking not At which statements, place risks over is recognize update disclaims undue to otherwise. the alter

Caleb Barlow

you XXXX and with of to it's now. be is all talking great us, behind

we anything your home, the refine is company entire as hospitals about new changes, the down continue the and directly do difficult instead, is outside that for what made room COVID-XX this is not about doing of up slowed not of our healthcare data. patients, institution As breach like, penetrated means Last ransomware exception. treat of the strategy. been immediately, corporate no put protection almost from concept to network pandemic. saw is when impact is of business did it And abruptly, losing the now stop accelerated was stop of Telemedicine patients. market, started It on our heavily norm that elective And have a look just longer to and time, the patient XX-years, likely procedures tied locked this how versus to we our hold working, the normal care. year, working clients five asking, is frontline provider becomes on a in and be our the what healthcare to this and by we business

started offerings and As a in services that relevant back, demand customers few. assessments, entirely our compromise pull post-COVID we to just clients, and innovate validation, would name to be new access by privileged develop management security

our of our deals with expansion medical announcement of benefits signing We clocking deal adjacencies start adjacencies time, to Department and and system, resources. a in large at well the We an a of and also health with the continue University. processes, close are in healthcare, strategy a deal, markets the base, market, in a healthcare, new rebound door Health of diversification of with and saw leverage In expanding QX, large highlighted and regulated expanded that services relevancy with our addressable of deal skills, including with that started to we to the a while Health. Public volumes demand, January saw our large existing professional our can we technologies to announcement new of and Health And existing academic of in We State our including our Fairview focus the State which system. same the data on our we Ball Logitech. a across we see Valley contract opened with and saw started clients be in pandemic, services, the the protected in assigned our $XXX,XXX during the close logo real to

shot booking and in more diversified for we in manifested a our began late over budget and growth that the year, itself revenue also us in that at pipeline us a arms, in get free been up, and XX% for and a their healthcare accelerate business our as the XXXX. a well optimistic presold in makes to QX, And workers the increase, opportunistic vaccines and become well, quarter increase positioning to pre-pandemic conditions. this to first Now, available, will saw which return first have

framework or Industrial billion Defense the foreign a this making the third-party in vulnerabilities this moving you ago, story headlines to want not theft my That requires all means To the the year, by $XXX and healthcare. up Industrial the meet as all exfiltration, is the to Unfortunately, a the next security I your regulations, maturity of you recognized beyond first a win market has in U.S. contract. In Industrial adversaries of remediation see We and So, talk well, consultants Investor by in no defense Defense the evidenced requires also for estimated is opportunity as times part strong. assessments company Defense emerging and not To a it for is a than unlike handle unclassified a that’s prepare, strategy, about opportunity with the call, billions threat, acquisition Cybersecurity cybersecurity government three about a expect breach, it assessors, vendors opportunity of has This and today the data Certification, to to. American are, next will years. assessment contractors, in and expand securing Model Base. we big XXs to information. model over cyber-attacks the to recent be the over year other Defense that be that years, a depth, we it. the the have requisite services, both assess been self-assessment saw healthcare, few several SolarWind's Base rigorous States that requirements, known and initiative, year been United alone both unusual, which it's comprehensive small diversification I likely as loss Base, require believe army we opportunity but assessments We opportunity exchange Military we talked security my Simply just thousand if at we the CMMC. core to on which the Maturity XXX,XXX more Microsoft secure losing property. and most ago, and to has to CMMC but positioned breadth It’s month. of uniquely of we to controlled the address are not be teeth. real five intellectual put, from will you believe the over do the capitalize XXX,XXX new

today, are completely and that's supplier government a an independent, advantage. not we are We

in what our U.S. employees use where XX% military All current With of can is identical have and to control. have U.S. training we CMMC XX assessors of qualifications, already approximately the already we citizens, frameworks Most and intellectual resources enter fully with healthcare, position, believe that are in to existing them nearly this process importantly, we once required allowing meet veterans. property certification up, market us place, automation, capabilities. in we the and are quality including opens leverage

security with background process, is not procedures, a an checks significant. posture CMMC enhanced of controls, people, training, credentialing, required new organization trivial our assessor becoming with along and is a Now

of approved to the a first assessment one third-party be as organization. companies are We

organization, to we months one provisional the this The in critical which consulting of have us process, conduct review deals, are we the helping underway, CMMC step announce to is program. already a Department provide for the a us today continue next And initiative. security the work consulting posture. our to few We government of It next first of assessor I XXX ranks. And for and already our have will begun suppliers the authorizing now. ready prepare is certified represents closing of want in do that to our have Defense over

Our believe growing over baseline of along call and and focused the strategy us go-to-market get twofold. is customer industries signs at higher in diversification in that effort, our efforts CMMC With turn to the a let we seeing me much in rate Paul. strategy. recovery. with that, new are remain the growth than also investment our can But We we healthcare,

Paul Anthony

Thank was to budgetary costs, improve pullback reaction customer respond about efforts constraints. during to numerous pandemic. to you, threw included at constantly the us to all Caleb. efficiencies and reacting reduce market This due year the what This

last approximately an strong years. our XX% down of result from expect we in as were impacts XXXX. are from our bookings we QX experienced our point, revenue. signs a As with two And pandemic QX, presold seeing Caleb the year, QX But the a we XXXX the rebound in increase low over of to revenue highest be said, of

balance a of $X.X emphasis the show we $X issuance takedown received ATM majority and We shares. that some will $X.X under contracts. we of cash, in that lag Given of quarters, have This ended our expect $X.X price It million in closing was forgiven. by the and bookings at million average in of in can included million year total take X.X Program, done of on the cases an million our with in registration. several issuance eligible to our under resources debt and loan financial net time a numbers. long-term the still $X.XX that shelf the Protection million of share the the the we be recurring our From revenue revenue will perspective, some sheet Paycheck

of over losses Act, pandemic. standard our million. due that due expect by QX, of from in we Backbone to or our which the from million from services revenue We in Margin new year increase consulting million possible, Gross Professional due financial impact this $X exceeds are renewals, to compared of as was business, was lower XX% was to QX. XXXX, QX was in $X.X pandemic, to million, revenue prior synergistic Backbone. to are had $X.X million pandemic. decreased revenue to QX. Outlined this due to decrease which lower third-party again reduction extent a point at than XX% to lower some it $X.X projected, where from X% $X.X XX% canceling Again, in and $X.X customers from it a services CARES back also the result the expecting of million customers XXXX, managed increase to due improved tax related for result by an relief net and from to customers up carry available as of a $X.X directly a year to million disclosures, pullback revenues million the $X.X in services, delaying we use offset the decreased but The to reduced this

to increase for period to is million gross of I 'XX. in marketing highlights, and activities. by do revenue $X.X for lower expense the start is suspended and shapes with we in to by Backbone. $X.X to compared in made employee As some get We million this XXXX, QX, period and improvement improve reduction into XXXX, to to reduced restrictions. rebuild to was headcount million Sales to as permanent and how expense quarters, million $X.X the decreased the pandemic, to couple COVID-related $X.X reaction taken over to the We to reinstate in the reductions up. as for operating due to increase G&A increase expect expenses costs The market team we sales expenses for our XXXX mentioned efforts, our we due while margins decrease This react going margin to last that in in we to XXXX, offset benefits as do the back investment see support reaction my same same XXXX, looked staff in million decreased due travel but compared in QX, marketing were we'll go as decrease stock-based temporary XXXX, lower to travel of additional $X.X we full expense and for the million $X levels, to headcount the and expect to 'XX. comp. part lower

amounting During the and quarter, to $XX.X did impairment non-cash we million. a goodwill record intangibles

creating for capital the bullish incremental a be reconciliation for floor non-GAAP supporting to non-GAAP and of release Full The beyond prepared Our through information concludes of long-term to accelerating discussion our small came in in infusion shareholders, $X.X and GAAP million initiatives funding year and found capital. a the mind out $X.X growth of step be subsequent prospects We're any the 'XX million earlier. with QX earnings was and company, QX, adjusted on questions. EBITDA plan. these $X.X highlighted the in current for would a please XXXX. for for the This the the raises million Operator, ATM compared year. to QX, for QX, XXXX, this today. strategy during with financials and Caleb loss open that was can remarks financials value growth his

Operator

Certainly. first Matt Capital Hewitt of to Craig-Hallum [Operator And go Instructions] we'll Group.

Matt Hewitt

are you nice free up for few to Thank a I bit afternoon. taking hear questions. questions. it's And things Good to little starting that guess the here. a

on off, said part could you the bit First if Maybe Why helpful. started additional size, a you versus would you to that little deals. evaluations of detail CMMC opportunity, be regarding Any help some close timing? consulting? provide these

Caleb Barlow

Sure.

all, Matt. thanks the question, for asking of First

for can to out bureaucratic. in very new consulting enormous a Matt, And, But advantageous. that's Okay, we to and ourselves. and of so things space. be you what that. folks it is financial just that's we security initiative, at It's amount companies this initiative. go an a really in a company, enormous of the CMMC hurdles here go today had not rigorous, through the it's are going I'm doing lots amounts and unusual in make all work. work, place. solutions there reality to through. explain and are went We help actually And, place bias this preparing Sarbanes-Oxley a prepare The look not it's of way money second in multiple go audit these We proven the policies And to procedures through detailed. It's why that have And, is is slow have to for it's documentation. and and this unlike government to in put an we're

control evidence is to place and have each to that of forms have properly. multiple working in prove You

So, that now. there. authorized closing work And started deals to we're right do we actually

credential to the side, there kind out important that what's the that's that. to one of We're other and DoD do doing the there's work people most cleared during the provisional do period. by On trained been actually XXX authorized And the is had today assessments. there to the first companies have of be hurdles this their authorized that only

actual our waiting one have assessors DoD more are the before the staff. of of security on our assessment for We this open those we up now posture. is What will widely,

will other completed, wave is So, first then and now, security soon that are as open the that of through us as now. and companies that the the assessment up leading going in assessment actual

So, work, be to, hours building I to literally the hours prep vary involved need of documentation, time work, anything from deals somebody a few comprehensive I what's think, from, can XXXXs of understand consulting help these the the could really of here hey, I which need work.

Matt Hewitt

it. Okay. Got

So, for more in? start as QX, we like thinking far these as will layer when timing probably revenues that should to QX, from this is about be

Caleb Barlow

The It that. We're starting is when this behind going XXXX government starts that the we're was will the little in would calendar year. require I to it CMMC to a to I think see is revenue contracts heat through actually up when say contractors the now. approach for bit looks up, certification. initial like really government this process opening have

there's this go that got much step, every as you, to steps competition as you tell to out a is hurdle every of remember weeds to I'll Now, we this also go in space. have lot through, cumbersome to and

become that just I be further are we of into that the more a the and this. get lot and handle more this, bullish to sophistication realize of fact to able it, going companies So,

Matt Hewitt

it. Got

maybe maybe couple given some will obviously, And new, there Microsoft assume a walk see and close bit. things free to elective those? impact, the some year, the the I here got in the on quickly, to like you've Okay. of reflected starting improve a it ago. how of pipeline financials? pause be situation start side, And having up. an as budgets which are being procedures started to on hospital little to through, -- have vaccinations how the to happening to start were would some are put But see you even sounds which last do start then that a Maybe opportunities, and healthcare weeks of of anticipate And we we able

Caleb Barlow

those it budget opinion had saw here, opportunities of that delayed what the that lift spent obviously So, left as happened had year in people, QX during QX. a in been my

challenges procurement think work teams, extra the almost from as every the We out that recalibrating of finances and overall, coming see hurdles may to with financial we things starting through of of see they really pick definitely forward to are to the and starting as return. actual go. budgets case, look kind pandemic. other In I buyer side some is still there, But see we the ready we're up.

to have defenses, insurers significant, exceed QX risk to looking remediation this And systems the ransomware The targeting hospital also were was saw other incident. in sight of down. due just going in cases, longer there now ransomware. they the hospitals able the a We somewhat they're $XX costs they're in recognition going don't not I systems. of their up million. lose case late well this attention thing cyber realizing, think two in is many show no very open entire of those that the were many not be impacts to catastrophic are some And to if case, a stay from that at but to Adversaries real

Matt Hewitt

Interesting.

for question last one Paul. maybe And Okay.

you where I million you. bit were of So of QX, to recovering maybe little QX ramp QX, for you here those the year-on-year? up a start course in and million of clarification, call help closer you expenses just $X.X at And 'XX. fiscal for maybe million think in are 'XX. sales that marketing off your Or of of was example, are QX? you about the year? Or about Thank in to talked over talking a remarks, point ramp the you bit to versus about the in us of go starting prepared little just that in $X.X kind expenses think see to 'XX? Will $X.X from in getting down and QX talking

Paul Anthony

to and for to expecting run is to in relates QX ramp looking of marketing, that the the back. specifically QX as 'XX. And be it We're back that's what we get Yes. sales and same as QX rate the QX This up there into to really QX that's we're numbers about exactly right. to number. saw

Matt Hewitt

Okay. Got you. Thank right. All it.

Caleb Barlow

Matt. Thanks,

Operator

question next [ph]. come Jeff Bash of Our Fintech will from

Unidentified Analyst

Paul. Caleb, Hi,

Caleb Barlow

Jeff. Hi,

Unidentified Analyst

your business would have and Is I a questions as What's of a for up. defense between in of my a company XX/XX? as achieving What what came distribution hope few is for years space? the your interview couple housekeeping or to Paul, guess your see? you first industrial you'd like the goal image it healthcare like

Caleb Barlow

assessors, to sound a thing although very question, of like you healthcare if animals. those great Jeff. in I on different our almost reality the think say side, we first government, of identical people's I The our first reactions remember It’s put it's the mean, is, most work. in one seat yourself two

So, lot even though it's a same of government, moving thing we're we the more into today. do

in I are that this there say way the roughly that so let's States, equates X,XXX-ish consolidating systems look at are United to to slowly the X,XXX rough math, hospitals is even less. and Here's it, about down

suppliers. the military particularly addressable in other just of over which we already the in suit. security, are which pivot there's the interest of our leveraging systems. If side, healthcare, to their homeland are the adjacencies model in we and XXX,XXX they for obviously government, providers, military. think So to contractors, kind signs is parts that's X,XXX healthcare, There then of your And government that's U.S. market in to strong same

the the to as share think what, done market larger side. So, nice thing And, do addressable market at a initiative. the in healthcare I'd side healthcare I job XX, is, the providers. of decent like XX same the part times CMMC on than the government capturing market we've a here on addressable

Unidentified Analyst

down rate view That suggests, vastly growth your I could higher the Is a presume, roads. be that with assessment? your fair

Caleb Barlow

I contracts to decides of your this government. five that There to a they -- of Well, initiative. me this program the And the vendors rate all contracts have this back yes XXX,XXX significant. the to through is the way. pace if government to going have its this lot only is holding and come quite down put that in number I the let's get that said I thing would to through. is a it Jeff, growth question, underneath we next to think do it put think And are here say from is They the case, that, of hurdles to want the could get years. be love

Unidentified Analyst

for Great. point rules $X.X by if Paul. a color forced they twice former And including Caleb, the I the view you pay suggests a the acquisition, understand right. much that might draw have that million more Paul, that write right been the declined management, have a to as the where to not Could couple a off? for price, casual stock of driven it, off which to on it from questions should on having means as housekeeping little have just you're conclusion the give accounting us review CynergisTek write I

Paul Anthony

Yes.

You most, accounting yes. understand better the rules than

of So, itself price in where analyses and did. to The Jeff, more stock and take us in put detail a business definitely position steps the you're we had that in the -- absolutely require we right.

to value what end comes the to. year In our a for we barometer cap ultimate to market at had the as fair of use conclusion, came the addition, our we

a to year So, do with up. the we the ultimately end ended at are really of price had we -- share that the where lot

Unidentified Analyst

is, sure. almost thought your it to but all still loan, was $X.X time? reasonable Okay. be I case, you or that period all the million to written the within question of I are going And other be off PPP a was expecting of

Paul Anthony

We expectation. all the That's paperwork our the with SBA. submitted

process. put that last recommendation then fill requirement, and the necessity the addition SBA, bank size of the their the was the given and we submission out that forward to given the their loan the the Our have has they questionnaire, did authorized minute part so to

right me And so hole it’s a in submission then now. and to it’s black really

Unidentified Analyst

very Okay. Thank you much.

Caleb Barlow

Thank you, Jeff.

Operator

Advisors. have Avi Fisher Cast of we Next Long

Avi Fisher

quick questions. count with share What for we today? Paul. as revenues And Two Thanks where Caleb. today? is questions. Hey, taking presold of Hi, are the my

Paul Anthony

where from share we million. $XX.X we the In outstanding announced got $XX.X million in presold. And an count XX-K then

Avi Fisher

it presold the it today, was is the is the of than at end So, through higher year? where are we

Paul Anthony

It should quarter. closed haven't the don't have Yes. But -- don't final numbers. I be. we Still

Avi Fisher

you mean, done at got XQ, what Okay. that with almost it I here prepare And year-over-year. say we're if XQ looking you looking said I if you're to down XX% remarks, at

Paul Anthony

For from revenue in QX. past, down the XX%

Avi Fisher

From QX?

Paul Anthony

XXXX. Correct. QX, From

Avi Fisher

Okay. More of client single than was And is you I XX%. renew client. that? who most a you a by, You talked driven client or didn't from a this either about mean, that most of it got

Paul Anthony

of to large A drop the client specific reasons. presold budgetary revenue they from our cancel in time, had and a due drop when the to managed percentage client, was in largest the at services

Avi Fisher

just you So large cancelled that previously of of a again, that clarify, because talked percentage to is this decline client about. a

Paul Anthony

continued Correct. year. renewal this and contract The was first for of Cancellation go through quarter the the expansion. forward

Avi Fisher

or That guiding client a first due is sequential XX% includes decline. 'XX, for that sounds were little client? It confusing. XQ, you that quarter to still At that to the

Paul Anthony

does. It

went base the through this -- correct. QX have of We business year. That's

Avi Fisher

a a you lot client bit decline? Can issue more cancelled little big talked the of why has seen And there. do about such If not Caleb of because that on broadly large speaking, who this decline? it's elaborate a we

Paul Anthony

of full a wasn't revenue. quarter It

still extended that so first renewing trailing -- just occurred periods. cancellations business, They they upon may So occur through for cancelled. they that's had be number the quarter. one we and of the have Those had didn't this cancellations revenue a additional of They and wouldn't again, things off throughout the year. tailing or off the indicated we date

Avi Fisher

non-renewals Have they come they back? indicated them, any for that that that cancellations of will that business these are has now improved

Paul Anthony

cancelled, those have had point Not not we at that this seen actually them. for

have we we -- delays back seen delayed side and have have those renewal. who ultimately come those For seen

Avi Fisher

just participating trying I'll elaborate? talked some over. it seems what companies but and to businesses that talking a I'm They're you're massive cybersecurity a of talked the And understanding properly, the have of about you rebound dynamics get hospital Thank you, turn to approach just isn't your the and in to space. for competitors Can in healthcare But, I a in of I've question other some than that you. so you what quick be your space. space healthcare XXXX. you, not to in the an smaller about that cybersecurity rebound working aspect healthcare are seeing? then in

Caleb Barlow

I pick Avi. that's think we're mean, seeing up. I not mine, absolutely your conclusion, things

only system we imagine middle in pandemic. seeing are you when many start them the before that an last a in but back, many to fact, through hospitals locked asked year. of mean, does barely can not take saw or the have of hospitals, think up I with ransomware treat in you November budgets come seriously, month, Multiple us I during of healthcare patients security of having a for XX entire went that pandemic.

I'm very headed in seriously, starting to open So, And has budgets bullish that the whole very security we're where dynamic changed and think I over up. they're starting XXXX. take to are

Avi Fisher

in be expect, the of will So that for point the you brief, year? XQ low guess, I revenues

Caleb Barlow

business, of trailing, the right. Yes. it's was because you've here I mean, revenue the always services challenge on got managed

of was worked the up had So when its out down, March, that everything hospitals where we were heat in through closed this elective just the quarter. all trail clear April, and May, to their of in pandemic, getting way beat surgeries,

So, in of the you're a the that lot of through way ways, seeing its work tail system.

Avi Fisher

for your questions. you Thank Okay.

Caleb Barlow

Thanks, Avi.

Operator

Monarch next come Michael Our from Capital. of Potter will question

Michael Potter

guys. Hey,

Caleb Barlow

Michael. Hey,

Michael Potter

Good tone to be seems improving.

to to hearing good with that hear. going next to We're more of certainly seeing last Do this the want XX, you anticipate we're contract kind start activity XX-days? pickup health So, signings off. about systems. I on the They follow-up theme, over Caleb. just can't put

Caleb Barlow

on the right the at is this the mean, on end I math Yes. simple quarter. of

to the successes on is start here now, regroup we can imagine, you we every of the over to want get we out the and how And our wall So, about as right focus month. doing everything we'll then the can got. end talk before figuring deal

Michael Potter

is through, Okay. of an our if than have it Considering how the we gone company more rather that of shareholders it'd have doing. indication later what be great was sooner

be they of to do they're And in regards policies? something anticipate script of more are write that to to requirements mentioned in perhaps, cyber-assessment systems. health in seem a to getting require are some in to regards the you You your -- insurers involved order these the now the going

Caleb Barlow

It's very timely question. We started and with ski things. signs

over So from. get policies, insurance, they've when last they call when where breached, see we of flurry obviously, or breached. get some a And, to coming cases renewing didn't been in insurance months with understand involved if we about it's questions also us I and started clients the

we've And before talked seen actually So with authentication, we in detection place. they that specific out factor calling have a to we out started the and seeing endpoint is in now digging not that underwriters. in same that seeing contracts. solutions with underwriters call never some rigor response, be that seen historically that these out called are What like multi expect things we're we're

been specific to The other some significant in have very healthcare thing space, XXXX. in there is, insurance payouts the

So, the things. no I the and require am process by signs on expert I'm that starting and in seeing insurance, all underwriting the but means they're specifically is insurance to

is aware SolarWind's that, a to to what's we breach. a of to it's it's addition it are companies, reasonable I chain very XX,XXX we mean, and supply that insurability honestly the start posture allowing of going client. a it on companies and this is drive where even moving form in more probably issue. staggering, I But impacted one company provide input some requiring of to third-party that is insurance a are think either inspection,

their and a problem check in questionnaire. going concerned So, in to to chain being looking cases because here those supply be it the short-term. think significance the chain, a in. going actually that's is any out movement see do that I of supply adversaries answer people suddenly that to the pathway is supply at out is chain we're get going to the helps where we What the company today

we're to think space, year. to going that see of much up I pop and start some start see we'll definitive around requirements more to assessments to in that testing probably this start and

Michael Potter

opportunity and questions that CMMC company on couple really for the the spin what to it's that of Okay. A leverage take truly to our brand. as going to build up well, opportunity

organizations, assessment certification first of organization. and were upon that's based we the guess I having of third-party so our one certified And person one the inside XX right

Caleb Barlow

this, than there's to it's I But pieces have has provisional the an one so a in needs on more one. this have don't assessment, think we complex. individual so and program. -- based couple of gets anybody No, fairly a the individual to

check The piece, the that the certain also is had go to have a has we through last by trained and remaining our piece of certain company posture have background done. is The individuals, that security policies second validated to this procedures in and and place DoD. been have

this work. on with are go we through get of consulting passed steps us. initial the So to we here be We're to path anybody very the in the isn't from the to now And work. final do actually able at same to assessment have already And security to step group front all the assessment there DoD. the

Michael Potter

do be when you And that will anticipate concluded?

Caleb Barlow

middle the assessments already. We're done. of Well, get dealing have delays been some I with would security have there, now. done trying they've in right these to liked as been hours to We're

Michael Potter

you XX do this Okay. anticipate XX is another after days months. six days, But

Caleb Barlow

I I interaction know, May. at end the would they say talking but I's be it their completed will Yes, T’s, know in the and of the And don't to to cross think takes May. I you with how us us finished them it's long dot

Michael Potter

business go, what I to there want to us and be We truly it's Okay. to that we to in going are to potentially forward? mean, And it to train of take them And focus Or we some take in if and to the healthcare don't to train existing for ready trained train year. that have order going people we're to we then these going Are new off kind our going again, of to opportunity, is is ready bring be this to make able generate going think staff. have for to revenue. going support enormous CMMC? are people staff? the this already assessments to

Caleb Barlow

strategy. a we answer of We're Well, position, two in unlike in lanes. to very unique my can But basic all the other is, and space, this of short to your in that swim yes players a lot question here's it.

So, to forth ability lanes. I between the assessors have the move and back

get a year a able be a Now, it it certified to six I'm about here, to it's guessing months to CMMC but process. will new and fully brand will assessor take assessment, do likely probably take

up, So what and taking get into give of matriculating even experienced tooled maybe them years space. to individuals is that healthcare space, start experience, do, slowly then me the CMMC the a allows more them bring into and them those few them

So in a on lot of ways, I've got ramp. a built in

did everything. we is pandemic, thing we other The retooled during the

much every same we to in more so team done that don't is our single executive need the do And we people in met product. we've agile delivery, healthcare day. many literally Our deliver efficient what as work become scrum what an in

that then go hire we to of I advantage. huge in the so a also of And bit work, a capacity that's people. creates without least days think early does at tackle what Now, it any this, the having that CMMC can

Michael Potter

up amount Great. CMMC? aggregate question you deals many far, that value? And we then so guess on us signed for other I an we've can one the have the And deals signed dollar how give

Caleb Barlow

We early they're so we've haven't But small. that these you still about with there. I there. more in about I to more definitely talking released some And, broadly that look yet. They are talk something relatively bigger deals material as are deals mean, would be material guys see want -- when start forward still deals, to to and that be we we got

Michael Potter

Thanks, guys. good. Very

Caleb Barlow

sir. you, Thank

Operator

now And from next William of Bremer take we'll Capital our Partners. question Vanquish

William Bremer

you Good okay? afternoon, gentlemen. hearing Are me

Caleb Barlow

today? How we are can. Yes, doing you

William Bremer

fine. I'm

activity. getting Congratulations contributions on on on revenue CMMC adding already. question to the Just last some

I foremost. first and think that's

some sum they multiyear projects idea an can that you'll platform simply on? Secondly, just us deals? certification a give from of is structural initially? the you be lump Are it Or

Caleb Barlow

Great question.

so you is, but short it's explain complicated, So the asked, it. I'll answer

get your that the There's So controls to ready, to two work test get the think of actually as this documentation parts. these all work. or upfront

the call say lanes in coming just swim No validating, can prove what other you in a company can do and that you side consulting. what then both client. on you say, auditor doing Much do do you and like And assessment. it. you Let's do is actually financial the in same the

to you're you're have auditor, consultant you So, client. the either your or lane, a pick and the

to that in well, decide certified six one, bid whole got because consultant, their the go want I on might on bunch later, techniques. to evolving, win changing a a continues and security security back geez, you're you it's go when bad add go And are contract, that's contracts you to months of at is government level remember, if is a and new work provisions. constantly upfront, guys three, a get not formula, likely significant level and perpetuity, Now, I a

able to do CMMC certification. you there's be that that So work maintain to have to always

your if longer-term in of is it So arrangement of lots relationship work. with consulting remediation client with lane, is a a and that likely lots work, renewal

done, the needs assessment really you when be lane, in work. client, you in that's If that way. only are work of or any the are guidance the providing a from prohibited of kind particular once type with to brought And assessment were support done you and along

who I to that swim a be because of certainly in mean, But Now, the redone those that level an some every to So, to be in they lanes. it on the or But important money might if assertion certified two the want level strongly the will say think strong let's level my the a I levels, that rather is three never as of we're the has they one business it's has in be assessor? to assessment often, years, trying and are and strengthen someone side. consultant, to assessment fully would of go to lead you to to three consulting repeat And, kind consulting business. is done done both decide this bring part in business, four. more move that's lines. from

William Bremer

the markets familiar do cyber are groups adjacent in-house IT and to on they with the Okay, good certifications? color then there. And educate this you need this? are Or

Caleb Barlow

to been a it's he to in comment channels do social a what this procedures we my respond sure or that? for the training own is They've of needs rewrite team. with talk one media policy posts to HR, had time morning information marketing for do Today, business Paul's year. business being last he's aware. march social every if security marketing, every the team, make impacts entire updated. someone How of on they should finance. This all do to a our force and government single become to You our changes activity, procedure, had media It of it? accidentally in to a

case a to certified. this. is I going business is, ready So, of any guess to it’s that work get the short lot answer the for that's to And be

William Bremer

are peers are time others aware And this correct that at how have now, traded, you publicly wrong that me I'm of? if many this

Caleb Barlow

Okay.

There's this a of order win government suppliers got all there's massive pop to here. to you this companies to XXX,XXX be those, break in will roughly required shops mom government contract, the So ways they're contractors. two and to that from very into and pass way small government up

the In gone in that effectively two are forward companies have this terms program. of and there lanes

be an or do to there's have up assessor, up into Third-Party several and can to then work, Certified stepped XXX can that CXPAO lane. call Assessment sign that which and sign You a what Organization. consulting you companies And they be is

last three, most or own of you contracting, those not of people. at everybody went we around of I their often but that when applying that. on find the are four going their found have organization. as infrastructure to and as the XXX, maybe XXX on five security out organizations we the look that mix, they're reality think, and were in many number But own, And there think is, requirements was, this, certainly to the shops, the is operate very in to -- was I what probably it's that reality are because small government the

may to is of under be the these certified many one operating And evolving their leverage umbrella operate ability to big of a underneath feet them organization. we with we're in the is contractors a at as that our that's thing another business this hands entities, company of as our this umbrella. So, looking that's other XXXX and models

William Bremer

I it's a Okay. this? And upon these to pricing, question question margins of I difficult the both just last how on is divisions? the look answer. my on But broadly, How know do

Caleb Barlow

then that want add touch and some I'll Paul, you commentary? to on

Paul Anthony

effort, at expecting least this the this -- in early difference any mean, point-- in between different expecting types a Yes, necessarily the at we're not margins we're of… CMMC

William Bremer

well The quickly. wins with these your leverage you sort here are same, interrupt just margins government as I then much me agencies, guess the let marketplace And pretty correct? can in of

Caleb Barlow

I not sure, mean. I'm followed what you

Paul Anthony

Yes. the I'm sure not I'm question. sorry. I understand

William Bremer

does with on land you to be bidding the will start ones other these you Once help DoD, it that contracts you on?

Caleb Barlow

Oh, I thing. of should let one so, say, clarify me all, first

contracting We actually to party contracting with is not and are the directly are be that approved. DoD, assessed we with directly the looking

is done you if authorization, for So, a set up this that was CMMC a to our the work. nonprofit accreditation will, they're group body, do called

about probably imagine think example relationships. you're prime what is I sub of the talking So, a biggest

So government there making say. some for aircraft, engine let's you're is

subcontractors. Well, subcontractors when You CMMC operating say bid you that let's three, the minimum are means might that level information level. contract, XXX, have that controlled be and of any of at touch to requires to XXX contract that on a all that a going you that have

it relationships side, that way. assessment be is this hoping we're opportunities sub things this drive on So, the will either see happen, very we'll consulting think because one prime business, or interesting of evolve, side, the the how repeat might those to of

subcontractors a your ready up date know say, to let's contract that your time. work have scale of for and you're in with October, in you you the XXX, companies prime that get XXX, want to is If coming all XXX

William Bremer

and I your right. over given the markets just base that say, in sales you're in that's seeing. the quicker fair on business with the Is And in what to general past? close contracts team, it some time occurred six one the last marketplace your one, than to All last with adjacent months, think cycle healthcare has

Caleb Barlow

and VP I about sales talking our this yesterday. literally just Yes, was

an just noticing to put that or really this, demand on opinion I what optimistic, up own My have starting been we know change We seriously. pent security really waiting pandemic, take that of the the in a the product this I we've have cautiously don't all to yet, is And to acceleration because for and data healthcare, yet. of seen don't I’m there. actually are definitely they're

the to change sea happen. I think starting is

close at in that the because that's next takes to seen again in question the think frame me time But deal. thing watch. a an the I quarter, least Ask definitely reduction important it we've to short-term,

William Bremer

appreciate you. Okay. the I for you Gentlemen, it. thank time. Thank

Operator

And hand session. over this the closing any concludes remarks. Caleb I ahead. now please for to it Barlow, go Caleb, will question-and-answer

Caleb Barlow

you all, of of Alright. you supporters first asked and doing Thank questions to be of all to there long-term here. thank Well, what we're continue that you.

I was year and I similar still but Most a ago. of more for as as for work a can everything could that much to investors scrums year growing all learn And resources, position. much become we And years our support every XXXX, across this delivery about get ongoing forward and want earlier, was I thank that think back entire our our But single XXXX. In used your mentioned you ago, to year to addressable but our as a smaller this if challenge what a our our property to skills. that in our business. meets on day opportunity. we we and to business, Thank kind let's employees, partners intellectual new this to importantly, real the looking closing, now at infrastructure, a on well was demand. also efficient expand now just operate this a our market leverage executive that than now this And retool, conditions we with focused meet we improving capacity. organization lives. larger improve, we're we will And we're about today team than were it opportunity. of well look knew personal we team, And our time an we you.

Operator

your This call. you today's for concludes Thank participation.

disconnect. now may You