ICAD - Earnings call transcript Q2 2022

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Operator

Good afternoon, ladies and gentlemen. And welcome to the iCAD, Inc.

Second Quarter 2022 Earnings Call. [Operator instructions] It is now my pleasure to turn the floor over to your host, Tony Takazawa, Director of Investor Relations. Sir, the floor is yours.

Tony Takazawa

Matthew. you, Thank everyone. Good afternoon, for XXXX joining iCAD's you today us conference call. quarter earnings second Thank for

On today, our Chief Executive Officer. the President Officer; our call and we have Steve Sarno, Interim Financial Stevens, Chief Stacey and

results subject turning in based remind that differ on on expectations, to may the iCAD's, Before would today. circumstances. These forward-looking are be everyone call current Stacey, we over these I to the from forward-looking changes like expectations. making call will Actual uncertainty statements and to statements materially and are

reflect For actual call. Exchange for also our that filings this the see release and that financial could after note any may no certain list events information with of of believes factors way measures. to view revise the iCAD refer our operating Management Commission. results the meaningful today's investors or date I provide that would performance to of cause to circumstances non-GAAP and and the please to update obligation company. reflect differ, they Securities measures undertakes the U.S. conference these or press statements management

the earnings You With measures at the to can that, of non-GAAP a end Stacey. of I'll find GAAP the Stacey? to reconciliation our call turn over release.

Stacey Stevens

consistent many across for have The market environment current and Thank over and around industry quarter our the seen results the comments and good with granularity been for quarter XXXX. potential with on companies reporting. areas then you, begin I our of we the how company afternoon, further level second affects what key healthcare experiencing Tony. customers. of And some the and is high everyone. the will I this the focus have market remainder discuss provide environment will last

to While overall recession inflation, future such also are customers uncertainty challenges other remain. continuing supply to and improved threat range chains access and of respect and affect a the budgets, concerns as There with rising are has staffing current capital critical of shortages customer to economic that customers.

pronounced to customers improvements more carefully, such This ultimately increasingly productivity of be a doing decisions, demand it. The with shift for of our models and driving demand and monthly While upfront our procurement, in strong in continues are have a of ease purchasing still as operational spending. lieu positives subscription months, business costs. marked other They're financial lower as other of and models exciting and we model with operational and measurable is are technology and in perpetual many business a associated factors licenses. in accounting the range subscriptions, traditional for seeing beginning increase recent for so compelling

add technologies trials easier capabilities enables of that reduces subscription not it to assessment personal customers acquisition. cost ongoing It customer barrier adopt method, long- solution, these be have can means Risk, customers typically and well gain expensed offers a as Subscription offer to clinical or can easier license greater makes and new by for to easily also have is they is to customer technology us recurring include as improvements, which generally typically customers, value the billing, ability such upfront clearly one-time opportunities after algorithm the option the And proof-of-concept This the too this revenue to lower new sooner, outlays. it more which firsthand. with payments they customers process. to uncertain what only value term offers our also can is avoid accelerated lengthy it a rather to entry predictable a approval our sale. The this annual ProFound than capital costly which our risk without quickly AI functionalities extends as access monthly stream. and also budget are which First, far upgrades, for capital performance them for much experienced of customers as

shift As at in I option we previously expected report order QX. than we the expecting discussed, pleased rapidly anticipated a more the that subscription market earlier am grown model this to in this subscription we to faster has And growing the customer and interest testing than meet accepted rate. this were in year. deals began in demand, monthly

US this our of QX. began in in X/X model, the a under fact, number In in well new came business of quarter deals as as European which

While customer. revenue acquired more been license these anticipated, if can more significantly was And of software Overall, than long-term there's across and history had of new to to shift benefits long spectrum the QX. in their generate revenue of moving originally than perpetual term model our we lower companies customers they in short And of subscription customers businesses a shareholders benefit than QX compelling. the the a a the industries. making are

healthcare preparing of is shift rate the our us necessary. for others, these to large position recurring accelerating shift the the for planning better to a healthcare rapidly, and model, be and customers term, company time this of At years realm XX% it this months for reportedly compared our in it the longer a greater base the long create it models year. generating to customer per at installed we and adoption revenue fast iCAD, dynamics anticipating believe the and propel growing type Although, been of taken appears will occur sustained configuring accordingly, in as in success towards business ahead. continue over even for is as We offerings business have to

transition. clear, of benefits do perpetual typically While model overcome model smaller a but to time move recurring the subscription are a relatively a have is to monthly model subscription to revenue payments. previous that hurdle predictable larger they revenue This as a impact move make the business as to license long-term software one they from short-term this companies reported

the experienced becomes phenomenon of this and model reported XXXX. the revenue in of business. a of subscription the the the of While of begin by XX revenue immediately, reported the of all sale we At of benefits optics challenge year, as the model And first subscription proportion larger reported halfway point of the is our half there subscriptions. the was impacted a the introduction

half Density over Risk were these and remaining our ProFound Solutions. AI and were the of mix Just

the this the short While is much of revenue, these There's will recurring to in first in term, their long-term half than higher. and XXXX. XXXX generate contribute customers optics value the therefore revenue the more customers in lower acquired And now recognized reported of we of typically at we lags recognize shipment typically which also revenue Subscriptions the of recognize with on Unlike upon how six shipment. installation, perpetual eight by are weeks. license, a difference a sale where in we the to timing subscriptions. revenue

installed QX in majority the the subscriptions So our in quarter. as they of not fully recognized been yet late have

patient confident continued are these addressable and are we improve the laying helping Not customers right success our relationships, path. reap market, expanding access are that and the However, benefits on streams from continue and total revenue predictable we only ahead. expanding years the will groundwork we we for long-term care, to months in technologies, to the

market meet of XXXX important mentioned rest plan to more for on the currently by of technologies, our leverage experiencing expanding an continue beyond and business, inflection to aggressively I the customer ways in and opportunities, robust we flexible of point strength powerful these call, our to offering access portfolio are our we our solutions targeting needs. As throughout broader to solutions last

by turning $X.X including result impact iCAD’s including Now I OUS detection I $X.X the deals on when again, not including up a model subscription faster number Therapy overall, million, business OUS US the from $X.X quarter described total of from of the This markets. XXXX. to the side challenging million on IORT provide ramp by impacted granularity We compared was QX. were QX mentioned environment. the our million, and impacted slower somewhat revenue a was and of Steve managed generally subscription US revenues ramp XX% these than on decrease in and IORT expenses elements. business, earlier. and the will subscription less relative more the factors Detection side well the market QX expected the both significantly the revenue the was to a of cash burn the in of impact both deals. to Not primarily

strategy, Breast see detection critical of staffing market continue have with world introduced workload, a from one months, customers of complete offers high partners in based teams, burnout. challenges overcome of who increasing volume model. and and positive personalized breast is a we recent facing These including Regarding are risk multi-vendor the today, solutions and leading for hospitals to to quarter, for solution Arterys, some business, AI short operational of technologies sales partners and AI our portfolio some physician serving most including evaluation. class suite as demand performance our clinical We of shortages assessment performance pleased across offer In were triad along desire imaging solutions our to pressing new detection, the as models grew. full of cancer iCAD’s positioning cloud superior our flexibility, term variability our singular breast today performance a unparalleled density performing who

more products using a And we of of also customers interest marketplace trio the in is helps differentiated increased products This density We products, offering. with for and clinicians outset. penetration the own. unmatched the new suite full these new customers value each compelling us on suite the opting at and our offers risk While of patients. to into to its with a complete are among seeing proposition improve the believe product strategy an

in As these to the more patients. world benefits more clinicians of technologies facilities, use about practice, are employ the we and physicians clinical they real learning offer

case attendance featured in which earlier, only and as is ProFound also Our profound radiologists AI, presented brought daily. to have been AI technologies all are and series, using several clinicians record life demonstrate Powerlook three Assessment These to life impact by studies this profound changing find having who it insight our truly how on impact cancer latest not Density concept ProFound webinar the but experts compelling case it using patients. Risk had leading studies

Using Additionally, XXX,XXX their next in models. at that in for traditional individual higher supporting grow findings a world's had cancer the or breast from Medscape, total of the and evidence negative screening risk risk last and largest in article on XX% more X.X the short-term media study In had Technology a personalized This study original outlets, that of from subsequently such peer next suite at US new health up quarter. risk reviewed million. women the clinicians found so reaching developing breast news. than from news Fierce of The the of risk multi indicator Karolinska studied, audience risk as was help than XX regimens ethnic compelling model guidelines, more general offers took Breast screening. XX continues risk their times population. sites. screening critical were the that Biotech cancer this picked also accurate trade of four consumer body compelling covered dozens than Day, ProFound more and based research Translational who an almost than individualized a covers women AI AI risk note, of and trade content Medicine can cancer of media actionable Influential information media published patients is screen with developing year AI News ProFound ProFound before potential lifetime Health Imaging this times journal to AI risk supporting Researchers Institute our study Science with involving a

progress including available market made penetration other our enterprise and to the broader level of quarter, also address our initiatives optimization, ability We improving across customers. major salesforce last

pipeline fact, larger enterprise of time customers any in other at In is history. than today's

is one make yet performing Although, in the QX. is one revamp our these beginning impact. new are of to our team these team of positive members highest salesforce some of sales With not new complete, hires of new ranking reps a

our in our are to have and and territories in salesforce team of additional just our continuing hires remained with realized rebuild not the their hires new territories some We QX, impact QX. yet open fully we in began new members of some as

fully strides in market. made penetrate to recently our We efforts have also the more broader

base with our While mammography sell limit supply of are may gantry XD installations, new struggles to seeing chain continued installed into selling current we success into systems. large makers’ some opportunity the

broader differentiated moving System a For success QX, competitive is we market example, technology. iCAD’s City. really Health at who forward expect great sales enterprise This the opportunity Kansas in saw a We we technology as Luke's this St. won order see superior leverage and procurement of account, in value and flexible targeted our we in options. efforts, large continued

customers. is These generally opportunities. strategic with of longer-term to enterprise the plan opportunity aspect a represent our level larger they important customers partnership better as of needs Another key address represent installations very

for opportunities, grow world order total secure is the institution our pleased same QX and also of the of in I to renowned spoke particularly another We call. opportunities this continue to models QX percentage demand strong on were these types segment. a As large from in academic operational about

Now segment our the turning to was our QX. business, led in expected which therapy improved dermatology revenue sales, depressed from a as by

positive. QX Xoft dermatology demand quarter. of of business This dermatology segment our just and gain environment for they experienced revenues recall, to really the QX, And user remains during initial is financing. starting the restructuring one will End you and we As the completed the impacted high were are partner versus improved partners has their while in QX reimbursement technology by momentum.

up pending with an of which recurrence outstanding has rates. updated follow expanded results of completion in nearing year clinical data the skin now five terms publication are of data, We body on

Our second expect we more robust the XXXX. half in ramping are up of results and partners

clinical progress will the also and remain the into trial technology patients brain optimistic continue this this deadly on cancer. We European to new have expect the with our of technology studying in use about QX. sites cancer We add our trial multinational in impact to treating

Sarno, Next, both to roles models. including our and drive of he companies introduce would model increased a perpetual to from served his SaaS work who brings Steve public for to technology appointed and team forward selected Steve experience We companies model. together continue and I the CFO at previously as business, in Steve a in transforming based organizations, like scale to shareholder experience May, welcome software company our SaaS enhance tremendous the We base a as Interim Steve? expertise amount offering private CFO value. to team to was in we look specifically as continuing to and Steve our

Steve Sarno

good everyone. And Stacey. afternoon, you, Thank

an subscription as we the over time. Stacey minutes revenue on model. a to impact understanding of discussed, business revenue reported I an perpetual/ As hybrid to growth our a how have positive our everyone that walking simplified our for affect example. few will ensure revenues while subscription transition subscription of a To through business will we spend has expect

needs license license in As you that makes may is sale, owns perpetuity. A purchase to know, perpetual onetime the and customer software, with right use the the payments essentially software in a that use to a payment to renew end, to different to subscription makes at for the right customer in ongoing continue order subscription its the use the it software. software, to the

We the today's month, of have compare subscription a revenue included a per we assumes a per year as example license six And within a help perpetual the In two over slides hypothetical from press the model release $X,XXX streams cost to perpetual subscription revenue model. The costs license versus model example that illustrations, an illustrate profile each is period. or $XX,XXX. year. $XX,XXX

recognized X represent that section pricing. these of expected revenues, example, of just revenue type did right there for no each is licenses license use There has sold as in customer the the additional one $XX,XXX. license all upon year revenue that perpetual the the and sold January not on examples We our only license year. or revenues each software. actual each from And perpetual are also one the In sale, year. the is that to the delivery there assume that of is of Note is

revenue year sold $XX,XXX subsequent a in In per total For be the one one year. two subscription In portion year revenue of is assumed the $XX,XXX there year. each is to in example, the over and for sold subscription or that additional year. year therefore one recognizes $XX,XXX year, subscription, year year, the $X,XXX revenue in at is time second term is recognized is the license The $XX,XXX. per license three again each month,

from sold one In in subscription addition, year earned another $XX,XXX The subscription subscription the representing therefore second each year year was earned revenue total of subscription $XX,XXX, the date. $XX,XXX in two to recognizes revenue.

original to more renew of year three. than license it's that revenue estimate And this year year is rate. that desirable additional a the example, that In at a to in makes of be license. four, the one is its main renewal Following would driver an perpetual of the subscription XX% recognized on assumed feature $XX,XXX

year key and As subscription a through the out two you should There takeaways see from perpetual licenses can outperform illustration. six, going are renewals model. this

First, the long to model renew. subscriptions of the value greater term subscription than be the license potential a revenue has as significantly perpetual

model, point inflection the a that it less is model in adopting second than subscription an until years is of would perpetual is The been takeaway few have under reached. revenue license first

perpetual should the begin the revenue exceed to Beyond point, subscription the revenue. inflection

the lower, same sold that of when is Although, perpetual early differences the licenses number delivered. the recognized key subscriptions and are is from revenue the licenses

are time. While generally subscriptions recognized over

customers As Stacey increasingly that are more option. for ability of a renewals, model mentioned towards over expressing a interest products recurring because greater stable a in to subscription revenue earlier, our in time believe iCAD greater for subscription through benefits revenue moving significantly subscription model the represent we contact. the are will sell we a with the and through potential stream other customer And

customers date While represent our better patients enabling discuss revenue stream we for much benefit to relying most additional to the have up their and customer up on to outcomes. will always customer year. than This an better every renewals clinical didn't maintenance maintenance access and as their ongoing software, and illustration, simple our sign that subscriptions, a in

model it ended model better to each XXXX. revenue understanding in offerings, decline earlier million, will from expect sale reported this on the time. business you than illustration or from recognizes for software, the a the our hopefully $X.X portion but second the in short have total revenues not we As subscription second interest our of for assist perpetual that our will will in million, a quarter in term, difference XX, and of I’ll AI basis, our X.X% see licenses, GAAP our of summarize impact June we or transition our revenue. our XXXX. $X.X quarter financial results less Well, the we subscription On the a revenue now how decline a a over less outlined of the expand were quarter of from

of was versus from Within Our QX detection our XX.X% up was segment last XXXX. million, detection, year. up million, QX $X.X $X.X product revenue revenue $X.X million X.X%

portion million, up of $X.X Revenue customers and detection $X.X COVID the revenue takes to the to weakness of we or US of business in outside we've QX is XXXX. $X.X versus have the financial prior earned elected that appear as million some revenue international Our received Therapy at versus customer than Services was segment customers in the to outside up the result seen shortfall the about the revenues business cash down $X that of of million is US almost by million, over as time down was XX.X% the due our were XX% XX.X% down service take US, therapy been therapy some distributors legal was XX.X% title at for more year. $X.X point of Also million the severely the year-over-year, and recover. distributors. to A the have some XX.X% but a impacted product products. $X sequentially begins the revenue year-over-year. million

gross ago the the On million. XX a second percentage quarter revenue the were profit dollars gross quarter of from an basis, XXXX of achieved points for basically second Moving year QX QX XX.X%, flat gross at of with basis was XX.X% profit XXXX. increase in a profit, our $X.X in our to of

expense, remain supplies. from product services and engineering the environment, outside mix mainly for therapy to this increase With expenses was About expenses ago. managing from operating million, with committed other coming year inflationary between We regards $X.X to in and administrative $X.X and operating XXXX’s of increase the general detection a an to the the due related highly million of quarter half X.X% half development to people Total especially and expenses. increase representing segments. in

returns We are the greatest supporting our efforts, we investors and in committed for investing yield to which outcomes development in and will research growth. revenue believe

$X.X million in was $X.X result was million, loss $X.X quarter ended of the June of XX, representing versus $X.X year, XXXX, increase discussed. the million million the operating of $X.X operating increase or for million QX expenses Our increase an the previously X.X% last

million On loss loss and share, a GAAP diluted or and per our $X.X Our GAAP basis, loss basic the quarter the main per loss QX and $X.XX extinguishment or compared diluted year for net of diluted for the of QX was loss $X.XX share on net XXXX. compared difference driver million, million debt basic loss net in net $X.X with diluted $X.X was $X.X loss million share or the loss non-GAAP The XXXX. due with share, and QX to a non-GAAP or million, for a $X.XX $X.X in basic quarter a of for basic of a our of second ago. of in of $X.XX a per of of was

Our of quarter a million was EBITDA this a QX versus adjusted loss year $X.X ago. non-GAAP million $X.X

the quarter-over-quarter to added June XX, Cash million XXXX to cash depreciation, and cash and $X.X of $X.X back million at of XXXX. during used of a at compared used million inventory. and for $X.X as first mainly less usage and of items, to stock- decrease The net second usage equivalents XXXX XX, the based million cash due to QX equivalents the related decrease $X.X sheet mainly as of accounts $X.X million of smaller million payable compensation, $XX.X was to of in net in was cash $X.X such non-cash compared million the quarter million, balance amortization cash loss and $XX.X sheet, of $X.X XX, June quarter and of cash equivalents and December balance XXXX, $XX.X we XXXX. million, Moving had million,

million million a of outstanding March XXXX. $XX.X As June with year versus $XX.X XXXX, XX, million and ago of XX, receivables as of $XX.X

XXXX. This lead now over Tony decrease back the And like our actively are Q&A. concludes to turn accounts second of the I our working to call presentation. half the to highlights to receivable We would outstanding in of financial the

Tony Takazawa

lines Thanks can open the for we questions Steve. a lot, up Matthew, please?

Operator

Instructions] Per first [Operator question Your Hallum. Craig coming is from Ostlund from

Per Ostlund

but to kind subscription Thanks. the Stacy, would where question seemingly way not going of involving I of appreciate number there's subscription sales I kind customers I to perpetual that that's answer that model. I'm because And handicap of that considering can try the that customers. And revenue that were wouldn't where the the know fair, shift any can think But modeled detection to this and some the the every or and we And model others single in shift Hi, not know modeled for if kind curious it's Good perpetual. to be that all very those and everybody. us model we precision, of know I of coming answer accelerating you're the interest that quarter? where of we logical, want frame I the plan was just most But appreciate think in to afternoon, there I'm kind I color think question on it. way Is time. can where asking any this because be had not quarter?

a might what if quote on unquote, numbers to looked the trying was environment. this normal Just get like a perpetual handle have

Steve Sarno

that would be? not being difficult for of selling hypotheticals the price the and but Tanks assumptions, timing question. a there kind licenses, average It's because some what make of to them, of that, in bound And those sort Per. answer answering of there's the we're it'd licenses which lot thing. be number those able to of really really of Sure, of

essentially they're around state look well. not can't, I of there's pro half would included So that in of the selling the can know make that say have we the that it's, then price. did think ancillary, be kind I the XX licenses the more amount, licenses dollar average licenses would I higher the that of Stacey you'd have your and the as year, number first those licenses, of own assumption all some are to

Stacey Stevens

XX assessment So we you I about just half the sold, is selling it, mixture those density way density were licenses, a right, what think if the average is price risk assessment, look that you license is. and AI a to right. an and another that half. at one over know, of ProFound of Per, that ProFound And, of AI as that half about And subscriptions think other were risk half carry and can about

that subscription other got is thing a The I of is as how script, in that from into timing consideration very right. different resurrect you the we said perpetual, to take

as as perpetual the customer don't recognize where in our subscriptions, revenue on long at installed we we from leaves So site. right, it the dock, it's quarter until it recognize the

So the really, of to next likely first was any right. quarter, month And case quarter, certainly until in get not the an the right. we in going order unless from the we're QX, recognize customer subscription revenue that that

second quarter. not more of recognizing part because the came subscription, we're in under in So the later nearly what QX in of of the timing the business coming

Per Ostlund

yes, appreciate it's the word use I that And Steve, know I with rife hypotheticals. hypotheticals. your very fair. that's all Okay, of

people had And it just hearing so question. I a because caveat I number that's why I there somewhere where I going modeled? the the the fair versus not think to of it bears seems came candidly, of that be really like folks think I I being again, is And number know it notion in myself the like had it's, that where the between. in it answer don't is

yet model? arrived as situation are offering that's prepared about talked about you've have of interested a suite how a a the and well? bundled that at folks you're talked extent makes And curious remarks at having kind that in pricing you subscription you're products, bundled where the to customers, if to pricing past in that interested you bundled sense. it customers being in when positioning in you offering? are So And your of point the in a subscription, Stacy,

Stacey Stevens

a thanks, great Per. question. Yes, It's

that right. So is the what say launched QX, pricing I in would we bundled

first force that with the full going our bundle. really we was in out quarter it So were

out bundle to there, to so way I it success but to we so forward, at begin ProFound right positive to are going our getting at in But right, a from customers the a that's right, measure see really bit quotes are the trend, are timing. we significant the early and is getting attached of quotes one now in right that is to cycle have also look only out QX. not kind to who with little increase be and it's results that And have it density risk that look and quoted think, sales we it's door AI, a of will seeing we half and the that from due our overall least

to to our add-on format we want are going actually of if to right. convince of it, But have portfolio into competitive new a customer they're and paying about now, package other model, of because added it's add lot risk, specifics portfolio, that a a going enhancements performance to more not monthly in pricing they The that density get easier full the it's value is into get easier right. payment. the we have full that only full as workflow and the sort the on And the for subscription subscription, customers clinical but they're right, the reasons, as won't thing a and to

its just be on will way think opposed as another where part. for selling that's and So AI own more the packaging to more most portfolio the entire we ProFound

Per Ostlund

and good. then very more, the cede one ask I will Okay, will I floor.

one Stacy, word realignment as So quarter, I was something you being salesforce the about think away. last the I hire think talked

sounds several prepared open. or like territories multiple today's in at are it talked You least remarks still about

hire and to So this actually was or is an out still carve maybe more get territories monitor one the try opportunity ground? to more on boots the away

Stacey Stevens

a so it's been right. mixed of really a little Per, Yes, bit bag,

attrition have quarter of in open of had territory, for salesforce. did quarter. majority have in majority seven out the last we a time with the we operating the of reps at only right? quarter major health we the And subsequently call, go we rep did issue, were QX actually one really in some the So one with the the So

but And we're build challenging so working we're territories, really very market environment, back now those operating to a right, right. in

expect we talent an in we that not attrition So of go be right? right? a there right. initiative, this I pipeline sourcing that is to be and our sales That's forward, talent fixed ongoing could building as say And going project, environment more would

of of it industry, today, call. have at positions, open that always absolute we rep, ones to So different in territory, the ongoing finding that continuing look spoke a very best talent right if best we're even in the we're right, it’s in with, something way still, one industry. about superior from create I territories decide looking one to still for But or to though right. bring an we're on may the we're the And look not talent, sort and a different going find process as done some at right, new potentially QX the the that talent to in be carve but we we

Operator

from question is next coming from Your Marie Thibault BTIG.

Sam Eiber

go you Hi, for model. maybe the the Eiber think color just months. accelerated a this on think about as the subscription is all we Sam taking maybe and of Marie, here maybe good mix it And that. This details seems about how have questions. should obviously on and we like And past follow on couple the Steve, afternoon, appreciate everyone. basis, really Stacey I things can really the here, forward of theme appreciate But

should to macro on we some maybe continue pressures capital these as persist expect So budgeting, here? of that

Stacey Stevens

detection going are be to example, And the Those business, business. we're overall where There going for not we do situation our expect right. increase, fits right, are it our we to licenses, have switch. are right? which entire our where XX% today a OEM business, see for arrangements our contractual It's of areas about those light arrangements into with to contractual partners. represents So model. OEM of business Sam, continue not a this certain And parts to

but think we business that quarter. portion our fact, deals in model, So be to right. continue largest the biggest still will to this And then are every the to licenses, of of very are go we interested it increase some we as enterprise and expecting forward continuing in

we that But a So also it's timing those, come our of under will business our perpetual is of it what substantial hard know to upfront. increasing. know percentage to going do will will still that say, recognized license depending there's in be be part the continue that be. that we on And to it

Sam Eiber

start that metrics? that, you we becomes then one helpful. gets maybe business, top just part quarterly of will that maybe on that's of more the bigger to And a out Okay, report broken as as see be

Steve Sarno

we'll wouldn't would consider something probably a before that my year. it it certainly the once certain And thought consider probably and we over gets It's threshold. the be, of end

Sam Eiber

really Okay. interested deal, know, maybe subscription large is type try just this And of the to really it more to that alluded then this Stacy salesforce to just into? enterprise in customers going that just the those more is is out one we maybe customers tap more, of and are new kind

Stacey Stevens

So much each one in least I more so about board. capital of at what is on enterprise lot subscription algorithm worry the But constraints, There's right workflow seeing the would right. the customers our new that a to interested of critical of products under Yes, not more definition one are in attractiveness single games, customers of and model. the no we our the trending across it's really right? bit the some of is getting customer staffing say the every There's major distractions are model, what we longer to And this to efficiency some budget now than track a ever, wanting with established the benefit right. gains term, a right? having still really have clearly the focusing a particularly and improvement at of right, with relationship and as for subscription launching is right. record And the in as that towards more really from engage year, that clinical enterprises company shortages,

long-term has to market definitely track a with right, so a that that direction. industry the accelerating just lot that of commanding is and company the right a in share, the locking has there's relationship record in an trend with established So in attractiveness,

Although, there to smallest very are from the all different are types very of largest. this choosing customers categories of the who

Operator

next Frank Street question Lake from from is Capital. Takkinen coming Your

Charlie Montang

Takkinen. quarter, me. DERM partners the our question Hey What remain this It Montang one the case? guys, is contributor last Frank be this does forward? solid DERM on or of for Hey, growth status one of underwent is restructuring. Charlie sounded partners, a this a And partner And also going for there, like this just could partner? one of you guys’

Steve Sarno

Yes.

particular financing business initial complete with referenced we us on the an So do that QX did in partner did QX. the round call, and

system. started half user and really the demand here the right, really just think And expect relative strong there one is we're also very is getting point for another to partner. the back to well, growing However, accelerate as we end that that of important in dermatology our partners I

that So a kind to we a share agreement source of the is and works that right. right, our way then some and with sell unit it and in customers, with some four of our And we're are who end we maybe some right. our the user get five help even dermatology of into them to years find were customers now or that, revenue the comes from our of joint craft venture partners, these seeing technology, to back treatment. ago, service they And the who and deciding dermatologists, treating

that getting seeing has reimbursement treatment. interest in attractive, increased is to stabilized that competing Now to other competitive are back relative and is we treatments, and

the dermatology dermatology the the of improve couple direction, we So of to still think go on bit see segment year the second further and we side, there's expect made a the quarters. rebound quite step half room business the in next over the but to in right of a even did

Operator

question is Francois Brisebois coming from Your from Oppenheimer. next

Francois Brisebois

thanks Hi, for taking the questions.

obstacle would here. And guess -- how to Just is subscription? rest state maybe we the take point from license basically steady expect a long to to XX% licenses long transition is be couple last? of I is switching business how Just of the what biggest can in and where the what subscription? customer -- this do to a get What the

Steve Sarno

those I obstacles, probably these selling getting as to And out gain and a then number time people to where obstacles, biggest the And there's we licenses. I've mean, also is a used just just slow. momentum when transition, training available of tends of lot there perpetual will this us of it perpetual there before, of as sell think selling I one that time. Sure. seen the over over out have think start salesforce to usually it

it. we're in are early we and about of closely, very optimistic the but it So monitoring stages it

Stacey Stevens

I only that I note position our right. unleashed And to that this deal, were But absolutely. to deal component didn't important our from was one underneath right. sales we growing the is think us, in terms we market, right? some of the So licenses, right? not of weren't be as at did know team this Yes, we after And kind even saw to least almost And models. in these customer of demand, demand we in think to iCAD, We operational yet there some even quickly. offering option realize an right. that I was the subscription, fully Because offered ground respond go QX, of it's was to perpetual customers we invited of for perceived shifting had there the have right even deals, where

We make at the through right go were did point the still but QX, after. upfront So trying pivot in license. pretty our team sales rapid having revenue, really of a not perpetual we maximize still to revenue,

will as didn't opportunity QX we right. much in we quarters, as So and now after subsequent go

never really We're we to otherwise. able us broader we're market, where customers the going win to optimistic in it's to would think otherwise, compete going to I addressable It's allow been than we about this. So right. open up deals going sooner to would have

to of business this is without subscription be incremental we able model. And definitely win would to that not going some the be absolutely

Francois Brisebois

OEM Okay, the licenses partners that? great and someone Why for like mentioned would reasoning more. a you that license? What's prefer

Stacey Stevens

through of for work it so OEM partners an that's business today, more we're that see XXXX. But have it license their them, and business and contractual time, change right? That not where operational It's the with of now, our the we really for maybe to in as the just and changing we our changes software OEM right? hardware could have transfer with the We'll With right? for to to could arrangements the surd right, bundle the customer. question over road sell then that. that don't they I a preference, change market OEMs, that prefer partners, of represents That transacting may our down model, it way

Operator

Yale from from Laidlaw. coming Jen is question next Your

Yale Jen

Good purely just the Hi, And you? -- this the thanks point? of you ProFound the do in AI ProFound the is at afternoon, one subscriptions I have also are recent taking that, have how question risk and that questions. first for or AI in terms

Stacey Stevens

Yes.

subscriptions of So about QX, and half them were half if of you the other and look that XX sold those ProFound in software density the at risk. AI, were breast we subscriptions density,

to we expect that risk those there So of in And overall forward. we a continue go as QX. as some in total the to is percentage of grow subscriptions

Yale Jen

Another follow forward up pay? become terms So except pushed to service forever, subscription they revenue, question would going the be giving fee of here that need use all is, the to almost custom new that versus additional is in they software service can customers perpetual perpetual licensing? prefer model or

Stacey Stevens

bought bundled mix, one attachment subscription we right? a product the bit to the I right? it the we subscription service model that's annual working of our XXX% of payment, of comes when is So not right. model. In in that on the right? past attachment like in it don't Everyone to because drive service option have that an Yes, gets takes But perpetual service will to have or customers been actually, see into a all service, those customers, we fact, get little and would we a of full who all to service mean, had in does may what It's license contract. out an the it not rate area may higher,

Yale Jen

about the logic one Thanks. you maybe and Okay, to last base at any this is penetrate been as moment, you updates the talk at into have this mentioned point have about. can that try and you system

Stacey Stevens

high installed penetrating pipeline I were we've that. than competitive deals the both of And terms significantly lot we as where pipeline look at deals digit of competitive in of is forward, in the it's increase double look deals I think from it seen we've way area our actual would even a saw growth an gantry. looking at going closed, going we higher and to QX terms I the our closed QX in attached to that mean, forward forward. is Yes, success, The and base the that characterize

So I regard. good to that very we're continue. some making And in expect progress that we think

Operator

back I our the Stevens hand go to session. concludes will That now for Thank you. closing conference remarks. Please ahead. Stacy Q&A

Stacey Stevens

operator. you, Thank

not have So completed chance me, the a my the and in now change had iCAD, are making long-term of enthusiastic evaluate potential. to that honestly in our that full as in accelerate of really more the strategy will opportunities I the front I about us. long-term be progress of having growth the could greater generate we CEO are to for and first fully company now summary, quarter strategy

create a long-term the recurring on business who customers very to business We transformation of stages early revenue. that of the a really going is side installed in are large detection of can generate base our

While at time more to the same life being patients. to able saving our to technology accelerate access

the enhance look with team cancer any work deals We breast to access to that such And all great we and quarter point company's every of so drive tools risk assessment, Thank breast working more business, shareholder a for are who substantial And team passionate our I set history. and as value. towards goal talented have continue forward larger our detection cancer. of absolutely advanced patient updating at are is scale to thrilled next I of am to our in mission. AI and you a night. most our increase about the and you have

Operator

event. gentlemen. and ladies you, Thank This today's concludes

your time. participation. disconnect day. for at may You And have Thank you a this wonderful

iCAD (ICAD) 11 Aug 222022 Q2 Earnings call transcript