SMLR - Earnings call transcript Q3 2017

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Operator

Good day ladies and gentlemen and welcome to Semler Scientific's Q3 2017 Financial Results Conference. At this time, all participants are in a listen-only mode. Later, we will have a question-and-answer session and instructions will be given at that time. [Operator Instructions].

As a reminder, this conference call is being recorded.

Scientific may to contain Semler this you begin, call conference forward-looking we would remind like that Before statements. meaning, or Such words statements and here. results with uncertainties estimate, Scientific’s cause of those discussed to such by statements similar words actual as may, that a can will, expect, risks be number and such identified differ Semler from involve could anticipate, materially it of to undertakes of Scientifics’ Please obligation opinions reflect only events. this these presentation of the of any statements that or and note revise future light Semler date no result to information publicly these forward-looking as the or new in statements release forward-looking revision Semler for refer more factors of detailed Scientifics Semler these description affect risk results statements. forward-looking SEC Please and to filings a the may Scientifics’ that

Doug Now, CEO may Scientific. of introduce Murphy-Chutorian, I Semler

Douglas Murphy-Chutorian

operator. the joining providers. is provides Thank of the all and call. Semler emerging effectiveness third morning solutions growth you you Semler XXXX company that earnings improve an thank for Good to quarter healthcare

Our believe options mission evaluating intervene diseases. when customers care manufacture, chronic identify products and innovative appropriate heart and treating and customers market We assist to and our before occur. our solutions that events enable in technology preventive software and our is to like attacks are that to develop, strokes

and were the of to were of Revenue And sequential sequentially XXXX. quarterly the a third I excited compared to third QuantaFlo not the increase yet that continued QuantaFlo. in year fourth of Now of XXXX in revenue growth in orders third We fourth more our result noteworthy this XXXX. quarter orders product the $X is into grew to one believe finalized timing should at ago. in It revenue number of built the quarter end therefore another of quarter million the significant the report quarter for compared quarter am second testing number of quarter of XX% vascular orders than the grew XXXX.

Now please release that was results in refer this distributed the are to described the financial press morning. which in

to period and cost XX%. Operating XX%. engineering product expense follows, by compared per $X,XXX,XXX or X XXXX by by shares details XX%, increased penny Sales XX, development of Net XXX%. September marketing by was of and increased to general are million. the quarter-ended loss quarter-over-quarter share. compared expense expense X.X number compared Average a $X,XXX,XXX XXXX revenue XX%, grew share $XX,XXX Weighted was revenue of Other to or revenue as and administrative X.X of net the $X.XX or corresponding cost per increased $XXX,XXX which expense of includes increased increased For or loss XX%. million

third quarter sensors, to to In is of which June of Cash September $XX,XXX. in service. we areas XXXX XX-Q platforms, XXXX and of in and flow the R&D application $XXX,XXX, Semler the filed to to investment In increase soon. response invest customer enumerated third XX, be new XX, software to quarter an items projects compared continued include analytics. products of be improve data cybersecurity, cash will had As our requests

revenue average expect business. grow increasing installations, due usage of number we pricing, to XXXX of continue licensing higher recurring rest and the For our from fees, to revenue more to

similar towards a our success year in achieving during growth to as regard progresses accelerating XXXX. efforts this We directed the manner in have our

of the growth of quarter end sequential begin timing This during orders the fourth orders for numbers quarterly of mentioned, in I were should right result these the Billings third significant XXXX. will fourth quarter. of revenue installed in As at the installations continued quarter.

operating exceed growth expenses. increase We that in the in revenue also to as operating believe expect expands expenses business increase anticipated but will the the

continue a larger at from in this infrastructure costs of revenue growth place put quarter and expenses our will pace a to have base. the reached. goal soon its As associated be and third profitability more you pace we grow support at can Should see modest results revenue

a nine year terms intent words do year of of continuing achieved yet with to is million revenue Or revenue quarterly growing go. which although revenue $X.X faster months operating ever XXXX. in For sequential revenue than entire strong, the best with of we've quarter $X.X guidance formal first reiterate XXXX we in give To our growth not are million already other expenses. the the for we on exceeds revenue of

XXXX who year two, achieved of capabilities. In better year believe goals of relative number customer We ever next helping market large more Number the manufacturing the medical well accelerate capacity, now for in that testing for chronic for health one, a it And operator current installations positioned the of disease identifying outcomes profitability. establish number support the growth. market Semler plenty of deliver facilities, your care as XXXX healthcare delivery work invest and you growing diseases. the have solutions of product in prepared providers, we three, by questions. increase in and vascular plans, Number our for year-to-date and And conclude that and better in from Semler number the called cost in one QuantaFlo believe our to orders. vascular please open thank Our for health for the to third with penetration The is effective into and testing the the continue the care patients. patients lines goal four, performance in QuantaFlo wellness development. to quarter be is research We of next is growth both provide add continued could company continuing generation the from remaining we the those my and to to insurance is measures. increased book with terms to benefit in may the so room that are the believe and near-term QuantaFlo. economics We industry. government, preventive there the to further in market To to acceptance improve that patients because I quarter remarks our in we I our best revenue products our your patients care provide of and of standard this interest for mark. for a financial inventory, you

Operator

Instructions]. [Operator

Our comes first from the question line Marckx Brian Investment. of Zacks of

open. Your line is

Brian Marckx

Good morning on congratulations quarter, Doug great and the results.

Douglas Murphy-Chutorian

Brian. you Thank

Brian Marckx

that QX that that In terms well? in you think think as of in did revenue revenue, work see the quarter, I I current were some to there mentioned customization you in added the quarter that

Douglas Murphy-Chutorian

you really and/or In terms of customization or per if Brian think it into both test. fees of our revenue fee licensing breakouts fees about product usage the the

comparative the the usage was five fees the as fees ratio comparative So give quarter were third a to in in about you a while licensing quarter XX:X. times it second the

So are to what's or in if increase, our continue But the ratio contributor business. becoming same trend, that's fees will future and a the revenue we don't decrease, remain total seasonal terms usage of a know to that's periods. exactly in happening larger the essence if in

of it's from of and a continuing customization preponderance it's just matter clients coming usage not clients a greater a both So work contract. usage current a matter new by dollars and the more of

Brian Marckx

that is usage contracts assessment primarily the channel, are the and right? risk home Okay,

Douglas Murphy-Chutorian

correct. That's

Brian Marckx

Okay, alright.

of you So in still legacy versus do QuantaFlo, the sense terms a base of percentage have instrument? using what is installed FloChec your

Douglas Murphy-Chutorian

in previous the have really contributing third from usage year we're for of been from a it. fees not and start were that to it's But that small predominately people, then working The up in I us, I quarter in the revenue, And To we do we XXXX for idea my the just there. as the the this quarter. of third to they the give in to this more where the of we're those say because compared secure quarter a of of XXX,XXX that quarters they train the a machines a set lag actually to and made customers do the number came they have take would more many look But at QuantaFlo. of don't started has need with period last usage up new help, new of usage installations the that contract from you some is might have get new same And about fees that installations and in they to all it, expansion year. third continued a really that there beginning begin quarter but using a usage assume will store And of specify second growth crossover to are relatively some customers. in be people fourth new better time new don't that the the installations now. would difference. growth fingertips at at product during installations, would significantly there's perhaps to course orders seeing growth terms the most quarter the their previous just

nice there and of usage device. base of some sense a we that in of its install the is excuse beginning expand base kind me -- it's trend a now have So the just that to we these we

Brian Marckx

to you be the it related Doug your question. to growth this sounded that QX related be were maybe to what XX%, you ask that referenced XXXX mean potentially in from to making is you connection the remarks will like the implying I similar? QX what year, and QX, but in It might QX that growth XXXX going was in could prepared I'm that didn't

Douglas Murphy-Chutorian

was any implication about exceeded I that actually year. growth because making far rate think percentages don't kind this quarter-to-quarter I we've of

to the there that was an good is what was referring really kept being is trend. growth increasing that amount year I upward of So And specific towards an trend. was that trend not which though quarter-to-quarter last in increasing some

statement that, year in the the July is made the at end made where look bookings say second in in we almost that made it of take to So would quarter. at of really think you who let's that with a I Those a the late may are fees. if the of come fees same license have of have the quarter not for the when April license license end familiar if quarter example, we quarter of third the the this I we're months and or terms three installation going regards I I have done in in of I the model, it just first in at of

yet fees not any late in haven't associated if However built we installation with was because the yet. may it we September have done

that's the that number the were quarter third basis coming in I a thereafter. in bookings reflected current reflected hopefully be should the but So quarter our the of and in revenue not end at into what by mean quarter of fourth

Brian Marckx

quarters? terms you to expect you let's big headcount to your can of force say of the in in the Okay, sales the give then and to force us the force do and how next is sales expenses specific in currently couple sales

Douglas Murphy-Chutorian

force predominant XX the sales customer are not but support people direct approximately the people I'll is of Sure, selling the and people but in what those call portions service field.

grow the schedule. you and that with as general as like number heavy on So direct expensive business in think commission of terms a people installations person we some add are of will of as not which base sales in might

companies customers So work with i.e. we're are number insurance the lot are not But a doesn't direct that a support groups. selling in it we're larger going function because on small groups is or insurance medical team be take of regard. to plans our of -- really And that very headcount or large adding a we us therefore leveraging growing. the doing we and that

sales headcount are exactly in So service functions the plan the of the it where is established business. right base keep to it growing that is now much necessary unless pretty support

Brian Marckx

spend ongoing we then product you cybersecurity past, in the was kind about enhancements talked and SO -- trying just one side, some guess? you past that some a the the those should on projects feel going the maybe mentioned. expect I R&D of on product recent are to in kind forward get side on Okay, for just of the that features what

Douglas Murphy-Chutorian

I are even Yeah I projects finishing could continue expenses to and is spend. think though dollar if have would question decrease up the the think that what to these well we the will expect we

in and are infrastructure the I bigger revenue to business. support think our foundations R&D basically

and expenses upwards drift that can. in probably We that as we'll at continue we and control years. best future spend sure anything a will substantially growth happens the rate make will But lower than to revenue to probably if the

Brian Marckx

spent give as feel looks to on about CAPEX on CAPEX lease, can for you your us first XXX,XXX, it a through Okay, you about expectations the what I a for maybe think are it was instruments it half. relates and little more bit -- like the so

terms a of us So expectations can of QX of on maybe and in QX your kind that going you little just XXXX, color give forward?

Douglas Murphy-Chutorian

will cost let's Yeah, decreased this gross that of gross question, report saying the us to Well so not because words number we question, rose have is I just CAPEX Or our what the from to Obviously this margins cost right are. obviously part that is way step the XX%. business. quarter back operating revenue our to and our that really or for CAPEX other large of to margin the come take of a we XX%. XX% non-GAAP and divided that, in by revenue revenue from of the of the down margins

many is good. business. we're own that's of that reflected that So our customers their Part software hardware the provide of and predominantly in fact a

relate the to that somewhere CAPEX. So

continue I less. little probably that helps that your CAPEX it and not grow if the been numbers. therefore mostly that lower individual is CAPEX because maybe seeing we're So trend going you has to is even what That's with stable, will so anything too like us a our installation looks right our expenditure expect costing now. much if

course have to that you items change Of if revise statement. will

Brian Marckx

Okay, mean up and bit were positive a that was in cash does exterior there Doug came little that that terms balance some you as Does mean funds of that flow referenced, that you quarter-to-quarter. went the cash or in? cash

Douglas Murphy-Chutorian

loss nice it's on to I operations rather was than No, there that think was as there from their say a able be saying numbers. see can you to income

and the grow. able payable. user positive warrants it believe them. cash is the who which we some continue we So, and position some receivable a But, those and cash to forward exercise from accounts will question that other although be increase larger relatively were we key therefore that that following flow be going small the I expenses is some obviously what with think a have and was cash there hopefully operations may that there's of would defer to And accrued in accounts Brian

if the to We or continue faster the going flow if issuance, we that perhaps our dilution we're minimal the to the is will improving of in all increase we could to and able and so expenses off That some we some pay I notes on if think our stock having outstanding also is and our more. be continue, of cash and due seeing. most of in of company based we're of essence have trends expenses when our and off trends pay share believe accrue so they course interested But then valued. some not is the appropriately reduce

really So when interested we any not equity. think in of of undervalued we're kind

key shareholder in cash and the And to perspective. provide generation appropriately shareholder mode. think like We our that I So to we're believe going improve will be from cash is a sheet. we going we're use value. hopefully We cash think cow a -- balance a increasing cash to thing to

Brian Marckx

Great, thanks Doug. it. Appreciate

Operator

from comes question next Greg Our the Grave. of line

open line Greg. is Your

Unidentified Analyst

as bit do operations Congratulations having your much. questions, very about that sales the you whether or a little me quarter? today have simple by Thank you headcount you Can in a you are next tell increase talked company how quarter. people pleasing at as on employed far number and look many Couple you what very to of or sales.

Douglas Murphy-Chutorian

future of Hi probably Greg, was That question. modest total grow at this support. future on headcount the of growth to should these the of headcount maybe service year. September in pace technical bit thank representatives little for is company field probably as and XXth you about and a June The the compares The XXth XX of customer in a area XX. headcount

employing kind a using we way but headcount big company and in using of of work. the or lot a So we leverage we're not cash really are big

Unidentified Analyst

the issue be out that came question, the future? warrants how might today the other exercising, rough indication warrants us you one of be could some up dilute give and in that of there a Alright many might stock could

Douglas Murphy-Chutorian

options have and let's I that which I to shares. you look between are early a million at have I May share XXX,XXX say in numbers us of, shares aren’t considered up the see those something of believe be warrants an approximately May I or XXXX let's a price thinking to warrants you in would all would front hundred total -- I quoted would exercised, $X shares $XXX,XXX X.X numbers XXXX but if total and to XXXX. million a say of, average is we like total or In about That have there few be and excuse probably in options the That can't of if the $X to general. approximately thousand me, early were March don't X.X are equity would represent terms. of take that that by that in be me. March believe believe approximately those

we are. those but course all exercise warrants that what Of those dollars if coming Did amount into clearly have say substantial of warrants a and are those options enough. we'd numbers the I

Unidentified Analyst

At you're two in that of first XXX,XXX said coming ones might the talking so cash for next you in quarters? flow the about exercise net $XXX,XXX

Douglas Murphy-Chutorian

exactly shares. in that all of and use those $XXX,XXX then the company total including about and want Yeah, there million to and right, fully if number in you equity X.X diluted options all will from come term probably that is in a

Unidentified Analyst

Very very I appreciate that. good, much. you Thank

Douglas Murphy-Chutorian

you, Thank Greg.

Operator

showing the you in like I'd queue. turn for time further I questions to no At this the to sir, closing And call am remarks. back

Douglas Murphy-Chutorian

support. you was very performance you. our look an Thank Have for on Bye. I the forward progress and We again joining of a you day. it the you with quarter team. management continued we soon employees thank happy outstanding for rest continued and Thank where today. in nice are the and to all the joining updating thought your us of us

Operator

in the call. conclude gentlemen for does participating thank This today's and you Ladies conference.

have now disconnect. may Everyone wonderful a You day.

Semler Scientific (SMLR) 31 Oct 172017 Q3 Earnings call transcript