Enghouse Systems Ltd
TSX:ENGH
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Enghouse Systems Ltd
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Good day, and
thank you for standing by. Welcome to Enghouse's
First
Quarter
2022
Conference
Call.
At
this
time,
all
participants
are
in
listen-only
mode.
After
the
speakers'
presentation,
there
will
be
a
question-and-answer
session.
[Operator Instructions]
Thank
you.
I
would
now
like
to
hand
the
conference
over
to
your
speaker
today,
Mr.
Stephen
Sadler,
Chairman
and
CEO.
Please
go
ahead.
Good
morning,
everybody.
I'm
here
today
with
Vince
Mifsud,
Global
President;
Doug
Bryson,
VP, Finance;
Todd
May,
VP, Legal
Counsel;
and
Sam
Anidjar,
VP, Corporate
Development.
Before
we
begin,
I'll
have
Todd
read
our
forward
disclaimer.
Certain
statements
made
may
be
forward-looking.
By
their
nature,
such
forward-looking
statements
are
subject
to
various
risks
and
uncertainties,
including
those
in
Enghouse's
continuous
disclosure
filings
such
as
its
AIF,
which
could
cause
the company's
actual
results
and
experience
to
differ
materially
from
anticipated
results
or
other
expectations.
Undue
reliance
should
not
be
placed
on
forward-looking
information.
And
the
company
has
no
obligation
to
update
or
revise
any
forward-looking
information,
whether
as
a
result
of
new
information,
future
events
or
otherwise.
Thank
you,
Todd.
Doug
will
now
give
an
overview
of
the
financial
results.
Thanks,
Steve.
Financial
and
operational
highlights
in
Canadian
dollars
for
the
three
months
ended
January
31,
2022,
compared
to
the
three
months
ended
January 31, 2021
are
as
follows:
Revenue
achieved
was
CAD 111.1
million
compared
to
revenue
of
CAD 119.1
million.
Results
from
operating
activities
was
CAD 35.7
million
compared
to
CAD
40.7
million.
Net
income
increased
to
CAD 21.6
million
compared
to
CAD
20.6
million.
Adjusted
EBITDA
was
CAD 38.6
million compared
to CAD
44.5
million.
Cash
flows
from
operating
activities,
excluding
changes
in
working
capital,
was CAD
38.7
million
compared to
CAD
41.7
million.
Revenue
for
the
first
quarter
of 2022
was
CAD 111.1
million
compared
to
revenue
of CAD
119.1
million
in
the
prior
year.
While
revenue
for
the
first
quarter
of
the
comparative
year
had
mostly
returned
to
pre-COVID
volumes,
it
represents
the
tail
end
of
a
period
positively
impacted
by
an
influx
of
COVID-related
demand
for
our remote
work
and
visual
computing
solutions.
Revenue
for
the
quarter
was
also
negatively
impacted
by
CAD
4.4
million
as
a result
of
foreign
exchange
compared
to
the
prior
year.
We
also
continue
to
experience
a
shift
toward
cloud
offerings,
particularly
in
the
cloud
– in
the
contact
center
market.
Net
income
for
the
quarter
was
CAD 21.6
million
or
CAD
0.39
per
diluted
share, compared
to
CAD
20.6
million
or
CAD
0.37
per
diluted
share
last
year.
The
increase
in
net
income
is
a
result
of
lower
costs
and
higher
other
income
despite
lower
revenues
relative
to
the
comparative
period.
Adjusted
EBITDA
was
CAD 38.6
million
or
CAD
0.69
per
diluted
share,
compared
to
CAD
44.5
million
or
CAD
0.80
per
diluted
share
in
the
first
quarter
of
2021.
Enghouse
closed
the
quarter
with
CAD
214.8
million
in
cash,
cash
equivalents
and
short-term
investments,
compared
to CAD
198.8
million
at
October
31, 2021
with
no
external
debt.
The
cash
balance
was
achieved
after
making
payments
of
CAD 8.9
million
for
dividends
in
the
first
quarter.
Enghouse
remains
focused
on
its
long-term
growth
strategy,
investing
in
products
while
ensuring
profitability
and
maximizing
operating
cash
flows.
As
a
result,
Enghouse
continues
to
replenish
its
acquisition
capital
while
annually
increasing
its
eligible
quarterly
dividend.
Yesterday,
the
Board
of
Directors
approved
the
company's
eligible
quarterly
dividend
of
CAD
0.185
per
common
share,
an
increase
of
16%
over
the
prior
dividend,
payable
on
May
31, 2022
to
shareholders
of
record
at
the
close
of
business
on
May
17, 2022.
This
represents
the
14th
consecutive
year
in
which
the
company
has
increased
its
dividend
by
over
10%.
I'll
now
turn
the
call
back
to
Mr.
Sadler.
Steve?
Vince
will
now
give
some
operational
highlights
of
the
quarter.
Thank
you,
Steve,
and
I
appreciate
those
of
you
that
are
making
the
time
to
listen
in
to
our
Q1
conference
call.
As
Doug
has
communicated,
we
continue
to
generate
good
operating
income
and
positive
cash
flows.
This
quarter's
EBITDA
was
CAD 38.6
million,
34.7%
of
sales.
And
we've
been
consistently
around
the
35%
EBITDA
mark
now
for
more
than
two
years.
Gross
margins
were
once
again
above
70%,
and
our
revenue
in
Q1
was
consistent
with
Q4
with
overall
revenue
being
CAD
111.1
million,
which
was
negatively
impacted
by
just
over CAD
1.1
million
due
to
foreign
exchange
compared
to
Q4,
and
we
were
negatively
impacted
by
CAD
4.4
million
compared
to
Q1
of
last
year.
During
the
previous
quarterly
conference
calls,
I
already
covered
the
growing
shift
to
the
cloud
when
it
comes
to
the
contact
center
market.
This
shift
is
clearly
occurring,
and
we
do
expect
this
to
continue
into
the
foreseeable
future.
And
although
we
have
responded
to
this
move
to
the
cloud
by
making
several
investments
in
product
and
engineering,
we
remain
committed
to
our
strategy
of
growing
a
highly
profitable
business
by
running
a
lean
and
nimble
sales
and
demand gen
organization,
focusing
on
high-margin
business
and
managing
our
cost
to
be
in
line
with
revenue.
This
outcome
generates
positive
cash
flows
from
operations
that
can
be
deployed
on
acquisitions.
A
key
differentiator
for
us
in
the
market
stems
around
providing
our
customers
choice.
Enghouse
remains
one
of
the
only
companies
in
the
contact
center
market
[ph]
and
video
(06:08) market
that
offers
choice
between
private
SaaS,
multi-tenant
SaaS
and
on-prem.
This
offers
our
existing
customers
the
opportunity to
upgrade
the
cloud
when
they're
ready
and
is
also
attracted
to
certain
segments
of
enterprise
customers.
We
are
seeing
growing
orders
being
signed
for
our
SaaS
cloud
offering
for
contact
center.
In
Q1,
we
signed
CAD 3.5
million
of
SaaS
contact
center
orders,
which
was
one
of
our
largest
orders
in
terms
of
orders
signed
in
the
contact
center
space.
Revenue
of
these
deals
are
recorded
over
the
term
of
the
SaaS
agreement,
and
therefore,
all
this
revenue is
deferred
into
future
periods.
[ph]
Vidyo
(06:52) remains
an
important
part
of
our
business
and continues
to
be
focused
on
the
telehealth
and
enterprise
verticals
that
are
looking
for
security
such
as
defense,
courts,
legal
and
finance.
Our
[ph]
video
(07:05) engineering
group
has
recently
developed
three
new
products,
including
Unified
Communication
as
a
Service,
our
Cloud
PBX
and
[ph]
video
(07:13) patient
monitoring.
With
these
new
developments
and
the
growing
intersection
of
Contact
Center as
a
Service
and
Unified
Communication
as
a
Service,
we
believe
the
outlook
for
[ph]
Vidyo
looks
positive.
Vidyo (07:24)
product
revenue
was
down
from
Q1
2021
due
to
the
remaining
orders
driven
by
COVID,
but
was
consistent
with
Q4 2022.
This
quarter,
the
Asset
Management
division
improved
relative
to
Q4,
increasing
revenue
from
CAD 46
million
to
CAD 49
million,
which
was
up
6%,
and
this
group
continues
to
focus
on
telecom,
government
and
transit
companies.
And
these
sectors
are
not
experiencing
a
significant
increase
in
demand
for
cloud
or
SaaS.
However,
we
do
expect
that
this
cloud
shift
could
occur
in
the
future.
So
we've
made
investments
in
preparing
our
software
for
cloud
adoption
in
anticipation
of
the
shift.
And
a
number
of
our
SaaS
applications
have
completed
their
cloud
readiness
requirements
over
the
last
12
months.
IPTV
is
one
example
that
we've
done –
we've
already
done
the
cloud
lift
and
we've
been
selling
it
for
several
quarters.
And
now
have
signed
over
CAD
3.2
million
in
SaaS IPTV
orders,
which are –
will
be
recognized
in
future
quarters.
Our
transit
business
has
started
its
expansion
into
the
Americas
market,
and
during
Q1,
we
signed
a
Master
Framework
Agreement
with
the
California
State
Department
of
Transportation,
which
provides
us
access
to
300-plus
transit
operators,
and
they
now
have
the
ability
to
purchase
our
automated
fare
collection
solution
under
the
terms
of
the
Framework
Agreement.
We
hope
this
will
materialize
into
revenue
for
us
in
the
automated
fare
collection
market,
and
spark
further
expansions
into
other
states.
Just
on
a
final
few
points.
Q1
represents
over
100
consecutive
quarters
of
positive
operating
income
and
cash
flows
for
Enghouse.
We
have
a
track
record
that
demonstrates
our
ability
to
adapt
to
continually
changing
market
trends,
product
life
cycles
and
economic
conditions,
while
remaining
profitable.
As
we
have
announced,
Doug
Bryson
has
decided
to
retire
from
Enghouse.
He
has
been
here
for
93
of
these
100-plus
quarters,
which
is
an
amazing
accomplishment,
and
I
wanted
to
thank
Doug
for
all
that
he's done
for
the
company.
It's
been
great
working
with
Doug
over
the
last
four
years
since
I've
been
here
at
Enghouse,
and
I
wish
him
well
in
the
future.
[ph]
Thanks, Vince (09:49).
Let
me
turn
the
call
over
to
Mr.
Steve
Sandler.
Thanks,
Vince.
A
little
bit
on
acquisitions.
We
are
actively
reviewing
opportunities
and
continue
to
search
the
marketplace
for
opportunities
that
meet
our
financial
criteria.
We
continue
to
focus
on
capital
deployment
during
our
due
diligence
remotely.
The
acquisition
pipeline
continues
to
improve
and
with
the
decline
in
tech
values
in
the
public
markets,
we
are
seeing
more
opportunities
that
meet
our
financial
payback
criteria.
As
interest
rates
increase,
taxes
rise
and
government
stimulus
is
eliminated,
our
ability
to
deploy
capital
is
expected
to
improve. We
remain
committed
to
executing
our
historic
strategic
business
model
and
discipline,
which
we
believe
will
add
shareholder
value.
I
would
now
like
to
open
the
call
for
questions.
Thank
you,
speakers.
[Operator Instructions]
Your
first
question
is
from
the
line
of
Daniel
Chan
of
TD
Securities.
Your
line
is
open.
Oh,
hi.
Good
morning.
I
just
want
to dig
into
the
IMG
segment
a
little
bit.
Revenue
this
quarter
is
now
below
what it
was
pre-pandemic
in
Q1
fiscal
2020.
And I think
you
had
a
number
of
acquisitions
over
the
last
two
years
as
well.
So
can
you just
provide
some
color
on
whether
organic
growth
in
IMG
is
declining
relative
to
your
pre-pandemic
levels?
And
if
so,
what
may
be
causing
that?
Okay.
I'll
start
there,
Daniel.
It's
primarily
related
still
to
[ph]
Vidyo.
Vidyo
(11:37) in
Q1
of
last
year
still
had
some
COVID-related
orders.
So
most
of
the
decline
is
in
– on
the
[ph]
Vidyo (11:48)
side.
What
about
when you
compare
it
to
two
years
ago
before
the
pandemic
started,
before
you
got
that
bump?
It's
still
below –
like
IMG
in
general,
still
below
that
level?
You
also
have,
I
guess,
on
top
of
that,
what
Vince
has
talked
about
moving
to
SaaS,
which
means
rather
than
take
your
revenue
upfront,
you're
spreading
it
over
three
years.
So
we are
basically
in
that
second
year
of
that.
So
that
also
adds
to
it.
Another
major
factor
is
the
exchange.
US
dollar
and
Canadian
dollar
has
moved
a
lot
and
the
euro
as
well.
So
you
got
to factor
in
exchange.
I
think
last
year,
that
was
CAD
13 million
impact
on
our
revenue
line.
So
there's
a
lot
of
factors
going
into
it.
I
think
the
IMG
side,
certainly,
we are
looking
to
improve
it.
But
right
now,
there's
a
lot
of
factors
that
are
showing
up
in
the
numbers.
Okay.
Thanks
for that,
Steve.
And
then
if
we
dig
into
the
hosted
and
maintenance
revenue,
you
mentioned
in
your
filings
that
you're
continuing
to see
some
attrition
in
your
existing
customer
base,
particularly
around
[ph]
Vidyo (13:01)
as
they
continue
to right-size.
As
discussions
now
move
towards
reopening
and
moving
back
into
the
office,
how
are
your
discussions
with
customers
going?
Is
there
a
line
of
sight
to
where
this
levels
out?
That's
a
hard
question
and to
know
what's
going
to
happen
and
what's
the
reaction
after
people
don't
totally
work
from
home,
come
back
to
the
office.
So
it's
difficult
to
say
where
that
is.
Again,
there's
a
lot
of
factors
that
go
into
it.
I
think
right
now,
one
of the
factors
is
we
still
do
on-prem,
as
Vince
talked
about,
as
well
in
the
cloud,
and
the
cloud
picked
up
during
the
pandemic
because
people
aren't
going
into
offices.
You're
not
going
in to
set
up
the
systems.
Is
on-prem
going
to
come
back
a
little
bit
because
it
is,
in
many
ways,
more
economical?
There are
several
factors
there.
So
I
– we're
preparing
for
whatever
happens
because
we
do
both.
So
we'll
just
have
to
wait
and
see.
I
had
no
good
forecast
for
you
on
that.
Okay.
That's
fair.
And
then
good
to
see
that
you're
getting
traction
on
the
cloud.
You
mentioned
you had the
strongest
bookings
in
the
most
recent
quarter.
Can you just
remind
us
what
is
the
uplift
in
revenue
per
seat
we
would
see
as
customers
migrate
from
an
on-prem
maintenance
license
to
a
SaaS subscription?
I
recognize
that
license
revenue
will
decline,
but
just
wondering
what
we
could
see
in
the
hosted
and
maintenance
segment
as
you
make
that
migration.
Yeah.
Like,
as
you
mentioned,
Daniel,
so
when
we
sign
an
on-prem
deal,
you
get
the
software
recognition
upfront
and
then
you
get
a
bunch
of
services
revenue
to
implement
and
integrate
it.
Yeah.
When
it
comes
to
SaaS,
it's
the
other
way
around.
We
implement,
do
all
the
integrations
and
then
the
SaaS
revenue
kicks
in
on
a
per
user
per
month
basis.
So
that's
the
way
the
rev rec
happens.
And
you
end
up
with
more
long-term
revenue
under
SaaS.
Margins
are
around the
kind
of
70%
range.
So
we
can
keep
our
margins
at
that
target
level.
We're
at
the
high
60s
at
this
point.
So
that's
essentially
how
it works
relative
to
on-prem.
Okay.
Thanks.
Your
next
question
is
from
the
line
of
Paul
Steep
of
Scotia
Capital.
Your
line
is
open.
Hey,
morning,
folks.
Vince,
maybe
just
to continue
where
you
were
going
there.
Just
remind
us
on
the
contact
center
side,
are
you
typically
signing
three-year
contracts
with
the
clients?
Because
I
just –
I
guess
I'm
looking
at
the
deferred
revenue
and
you
called
out
a
couple
of places
in
contact
center
and
in, I
think,
in
networks
signing
some
cloud –
or
sorry,
yeah,
IPTV,
some
cloud-based
deals.
Just
trying
to
see
how
that's
being
recognized
maybe
into
deferred,
so
we
can
sort
of
get
a
vibe
of
the
transition
of
the
business
over
time?
Yeah.
Sure.
So
we
normally
do
sign
three-year
deals
for
our
SaaS,
whether it's
IPTV
SaaS
or
contact
center
SaaS,
and
it's
normally
billed
annually
in
advance.
The
billing
typically
starts
when
we
finish
the
implementation
and
integration
work.
And
then
we
bill
for
the
year
annually
in
advance.
And
then
when
it
comes
on
anniversary
[ph]
bill,
we
bill
(16:33) it
again
for
the
next
year
and
the
year
after.
So
you
don't
get
three
years
of
deferred,
you
get
one-year
and
then
it
renews
again
in
the
following
years.
Does
that
answer that?
Yeah. No,
that
does.
I
was
just
looking
to
sort of
get
a
sense
of
– we
know
we
get
RPOs
from
other
people
and
wanting
to
see
how
that
was
sort
of
building
or
how
we
should
start
thinking
about
that
over
time.
It
sounds
like
still
early
days,
but
the
comments
help
us
sort
of figure
that
out.
Yeah.
Maybe
the
other
point there is on content
– sorry.
Go
ahead.
The
other
side
is
you
got
to
realize,
it
doesn't
show
up
necessarily
always
in
deferred
revenue.
Sometimes
it's
quarterly,
sometimes
in
advance,
sometimes
afterwards,
but
you
really
can't
tie
it
to
deferred
revenue
that
well.
Perfect.
And
then
maybe
on
the
cloud
transition,
do
we
have
a
sense,
and
I
know
you
tried
to
answer it
with
Daniel,
but
maybe
we
try
it
a different
way.
If
we
think
about
that
cloud
transition,
how
have
you
thought
about
sort
of
modeling
out
your
base
maybe
shifting
over
the
next
five
years?
In
five
years,
should
we
think
that
you've
made
the
full
move
to
cloud?
Or
no,
we're
going to
let –
we're
going to be sort
of
[ph]
be more
coded
than
that (17:48)?
Yeah.
Like
I
mentioned,
so
we
offer
three
solutions
to
the
customer.
So
you
can
purchase
from
us
a
private
cloud,
which
is
dedicated
for
one
company.
We
have
multi-tenant
cloud.
We've
stood
up
for
cloud
nodes
around
the
world
and
then
on-prem.
So
when
it
comes
to
how
the
whole
customer
base
will
transition,
we'll
see.
But
we're
seeing
definitely
more
opportunities
for
both
multi-tenant
and
private
cloud
relative
to
on-prem.
So
our
opportunity
pipeline
is
now
heavier
weighted –
getting
much
heavier
weighted
towards
cloud
for
the
contact
center
business
relative
to
on-prem.
And
then
we
have
a
fairly
big
existing
customer
base,
and
for
them,
we
have
a
program
where
we
can
migrate
them
to
the
cloud.
So
they
can
use
the
same –
if
they
want
the
same
products
they're
using
today
with
us,
just
in
the
cloud.
So
we
do
have
a
cloud
migration
program
for
existing
customers
or
they
can
move
to
our
multi-tenant
cloud
products.
So
we
give
all
this
optionality,
which
is
fairly
unique.
It
sounds
like
it's
kind
of
a
trivial
differentiation,
but
it's
actually
quite
important
to
customers
to
give
them
this
choice.
How
it
ends
up
at
the
end,
I
guess
we'll
see,
but
we're
offering
all
three
at
this
point.
Okay.
[ph]
That helps (19:19).
The
other
impact
you
have
with
people,
if
you
look
at
competition,
et cetera,
is
a
lot
of
the cloud
players
are
trying
to,
call
it,
a
land
grab.
In
other
words,
they
don't
actually
make
much
money.
So
again,
that's
another
thing
to
factor
in
why
people
are
moving
more
to the
cloud
right
now.
Will
that
be the
same in
five
years? Or will
they – prices
be
going
up
after
they
got
their
land
grab
and
then it
changes
the
dynamics
a
little
bit?
Right
now,
it's
pretty
good
for
customers
in
the
cloud
and
the
SaaS
type
model,
but
over
time,
it
may
not
be
the
case
because
to
be
good
for
customers,
how
long
can
companies
lose
money
and
do
that
as
they
try
and
do
that
land
grab.
Yeah,
and
we
don't
do
that.
So
our
approach
is
unless
our
deals
are
good
economically,
we
don't
take
them.
So
we
don't
do
the
land
grab
and
lose
money
model.
Got
it.
Actually,
maybe
to
take
the
next
one,
that
would
be
directly
for
Steve
on
the
M&A
side.
Steve,
where
are
you
standing
these
days
in
terms
of
– we've
seen
other
folks
who
might
have
more
traditionally
just
bought
on-prem.
Is
there
a
shift
or
a
focus
on
your
side?
Is
there
a
bias
maybe
now
to
just
buy
more
recurring
revenue
cloud
operations?
Or no
open
for
business
as
always
on
both
sides?
We
tend
to
look
for
both
sides.
The
major
factor
for
us
is
getting
a
return
on
investment
for
our
shareholders
over
time.
Right
now,
you
can
guess
on-prem
is
probably
better.
And
if
we
can
buy
on-prem
and
convert
them
over,
that's
a
pretty
successful
model.
So
again,
we
look
at
both.
Some
of
the
–
in
the
cloud
and
SaaS
type
opportunities,
they
have
been
crazy,
i.e.,
and
you
see
them
coming
down.
You
look
at
companies
like
Five9,
you
look
at
Zoom,
they're
all
in
half,
and
they
still
aren't
making
money.
So
as
long
as
they
can
get
financing
for
the
losses,
it
makes
it
tough.
But
I
always
find
that
day
of
reckoning
comes.
So
we
do
both.
But
we're
looking
for
opportunities
in
both
areas,
and
we
always
compare
what's
the
value
for
money
we're
getting
for
the
price
we
pay.
And
then
we
also –
if
we
get
customers
on-prem,
as
Vince
talked
about,
we
can
move
them
over
to
the
cloud
when
they
want to
move
there.
So
it's
two
factors
when
you
do
acquisitions,
price
you
pay
as
well as
the
business
you're
getting,
and
we
have
to
always
look
at
both.
Last
one.
I
think
I
know
the
answer,
but
I'll
ask
it
anyway.
Steve,
is
there
any
thought
to
maybe
lowering
the
hurdle
rates
to
strategically
pick
up
more
SaaS
business
versus
what you'd
look
at
for
a
hurdle
rate
on
on-prem?
Or
I
think
I
know
what
that
answer
is
going to
be,
but
I'll
leave
it
there.
Thanks.
It
really
doesn't
matter.
I
mean
if
SaaS
is
going to
make
some
money,
over
a
period
of
time,
you
discount it
back,
discounted
cash
flow.
You
guys
do
this
all
the time.
And
if it
makes
sense,
we
do
SaaS.
If
it's
prem,
we
do
prem
and then
we
figure
out
how
we
can
add
value
on
top
of
that.
So
we're
not
going to
pay
up
for
SaaS.
It
doesn't
make
sense.
We
are
seeing
SaaS
companies,
smaller
ones
that
do
meet
our
financial
criteria
because
it's
not
quite
as
hefty
as
it
was,
let's
say,
six
months
ago.
So
yes,
we
look
at
both.
Are
we
going to
pay
up?
It's
just
a
matter
of
getting
our
return.
As
long
as
the
profits
and
our
cash
flow
are
up,
we'll
pay
up.
If
they
aren't,
we
won't.
Again,
over
time.
Fair
enough.
Thanks,
guys.
Your
next
question
is
from
Scott
Fletcher
of
CIBC.
Your
line
is
open.
Hi.
Good
morning.
I
want to
ask
about
the
pace
of
M&A.
With
your
comments
that the
pipeline
seems
to
be
expanding
and
some
valuations
coming
down,
is
there
a
desire
to
sort
of
really
accelerate
M&A
and
to
maybe
– or
would
you
prefer
to sort
of
avoid
multiple
concurrent
integrations?
Based
on
what
we've
done,
I
would
say
we
want
to
accelerate
M&A
because
we
haven't
done
as
much
as
I
would
like,
but
we
want
to do
them
at
the
right
return
to
shareholders
over
time.
We're
not going
to
rush
to
do
it.
We
don't
have
a
mandate
to
spend
a
certain
amount
of
M&A
due
to
M&A
in
a
year.
What
we
try
and
do
is
do
the
right
deals.
And
over
time,
we
found
that
it
works
out.
But
we
have
added
some
resources
to
our
M&A
group.
And
certainly,
we
would
like
to
see
more
M&A
or
capital
allocation
done
to
add
value
for
shareholders,
which
we're
working
on
doing.
Okay, thanks
Scott,
just
on your
question
in
terms
of
doing
multiple
integrations.
If
we
get
two
deals
done,
we
have
the
ability
to
do
that.
We
have
invested
a
lot
in
systems
and
integration
approaches.
So
we
can
handle.
Okay.
That
helps.
And
my
second
question...
[indiscernible]
(24:47)
...just
to
add,
the
way to add
that – to
answer
that
is
a
lot
of
financial
work is
done
on
M&A,
and
we
do
a
financial
team
separate
ones
in
Europe,
North
America
and
APAC.
So –
and
they've
all
now
done
a
deal.
So
they
know
how
to
do
this.
It's
not
like
the
first
one
they're
doing.
So
we've
got
a
bit
of
experience
to
do
the
integration.
If
we
get
a
bunch
in
one
area,
we
just
have
to
manage
that.
And
you
can
spread
it
out.
You
can
have
closing
dates
that
are
different,
et cetera.
I
don't
see
that
as
the
problem. I
see
getting
more
good
deals
done
as
both
an
opportunity
and
a
challenge.
It
has
been
a
challenge,
and
I
think
it's
going to
be
quite
an
opportunity.
Okay.
That's
good
to
know.
Just
another,
maybe
more
minor
question.
Sales
and
marketing
costs
as
a
percentage
of
revenue
have
sort
of
been
around
20%
for
a
few
quarters
now.
Should
we
be
expecting
a
ramp-up
as
economies
open
up
and
you
can
sort
of start
doing
more
in-person
selling
activity?
So
I
mean,
I'm
not
sure
where
you
got the
20%
from.
I
think
you
got
SG&A
in
there.
So
that's
not
just...
Okay.
...sales
engine.
So
it's
all
of
that.
And
then
on
your
question,
is
there
more
face-to-face
meetings
happening,
there
is
a
bit
more
happening.
It
happened. It
started
in
this
quarter
a
bit.
So
there
are
more
face-to-face
meetings.
So
there
is
a
bit
more
travel
costs,
but
it's
not
significant
yet.
Okay.
Thanks.
And just
to
add
to
that,
as
we
said
on
the
last
call,
we
expect
any
increase
in
costs
for
travel,
et cetera,
again,
in
that
line
that
SG&A,
we
think
a
reduction
in
premise
costs
will
offset
it.
So
I
wouldn't
expect
you'll
see
costs
going
up. I
think
with
the
change
in
premise,
we're
going
still
a
hybrid
work from
home.
I
think
you'll
see
savings
there
offset
any
extra
costs
in
sales
and
marketing.
Thank
you,
presenters.
[Operator Instructions]
You
have
a
next
question
from
the
line
of
Paul
Treiber
of
RBC
Capital
Markets.
Your
line
is
open.
Thanks so
much,
and
good
morning.
Just
in
terms
of
the
product
portfolio
in
contact
center,
are
you
now
at
the
point
where
you
basically
have
100%
parity
with
the
features
and
offerings
in
the
cloud
versus
your
on-premise
offering?
Yeah.
So
there's
two
answers
to
that
one,
Paul.
So
we
can
take
your
existing
on-prem
product
that
you're
using.
And
we
made
a
lot
of
investments
in
the
last
12, 18
months
to
be
able
to
move
that
to
the
cloud.
So
you're
at
exact
feature
parity.
You're
using
the
exact
product.
If
you
were
an
agent,
you
wouldn't
see
any
change
other
than
using
it
through
a
browser.
So
that's
one
model.
If
you
go
to
our
multi-tenant
cloud
product,
depending
on
what
you're
using,
the
features
may
not
be
exactly
the
same.
They
might
be
stronger
in
some
areas
or
others.
But
we
have
a
whole
team
getting
our
multi-tenant
cloud
product
much
further
ahead.
So
you
can
at
least
keep
future
parity,
but
it
depends
on
which
products
you're
currently
using,
whether
you're
at
parity
or
not.
Okay. Thanks.
That's
helpful.
That
makes sense?
Yeah,
yeah, yeah. I
think
I
was
referring
to
the
multi-tenant
offering.
Do
you
see
– and
you
mentioned
a whole
team
getting
the
product
ahead.
Do
you
see
eventually
in
time,
the
multi-tenant
version
being
the
one
where
you
lead
with
new
features
and
becoming
the
more
innovative
offering
over
time?
Yeah.
So
the
way
we're
organized
on
our
engineering
group
is
around
building
components, cloud-based
components
that
all
the
products
can
use.
So
you
don't
end
up
with
a
component
like
an
AI
component
as
an
example,
that's
different
in
the
on-prem
product
versus
the
multi-tenant
product
versus
the
private
cloud.
So
we
have
these
shareable
components
that
we're
sharing
across
all
the
products
and
having
the
engineering
teams
more
kind
of
in
parallel, working
in
parallel.
Okay.
Makes
sense.
Just
a
couple
of
finance
questions
around
the
impact
of
cloud.
And
just
starting
there,
the –
you
called
out
the
CAD
3.5
million
in
new
cloud
orders.
Is
that
equivalent
to
new
RPO?
And
then
if
you
did
disclose
RPO,
what's
sort
of the
cumulative
cloud
backlog
or
RPO
that
you
currently
have?
So
the CAD
3.5
million
was
signed
orders
just
in
the
contact
center,
SaaS
piece.
So
it
didn't
include
SaaS
orders
in
other
areas
like
in
our
[ph]
Vidyo (30:03),
for
example.
In
terms
of –
that's
the
value
of
this –
of
the
contracts
that
are
typically,
like
I
said,
somewhere
between
one
and
three
years
in
duration.
So
that's
the
contract
value. Does
that answer
that
question
or...?
Yeah.
And
then
if
you
look
at
cumulatively
over
– like
since
you
launched
in
contact
center,
how...
Yeah.
...- what's
the
cumulative
orders
that
you've
seen?
I
haven't
disclosed
that
number.
But
it
is...
Okay. But
the CAD
3.5
million
is
a
record
high
and you
expect
that
trajectory
to
continue,
is
that
a
fair
point?
Yeah,
that's
a
quarterly
record
high,
yeah,
exactly,
for
the
contact
center
side.
Okay. And
then
just
lastly,
just
a
question
on
Ukraine
and
Russia.
I
think
there was
a
disclosure,
one
of
the
acquisitions that
you
made
that
there
was
–
you
might have
had
an
office
in
the
region.
Can
you
just
provide
an
update
on
that
region
if
you
have
any
still
employees
there,
any
revenue,
any
transactions?
Yeah.
So
in
the
Ukraine,
we
have
57
engineers
that
are
external
contractors.
So
they don't
work –
they're
not
employees.
They're
working
for
a large
systems
integrator
that
we
partner
with,
focused
primarily
on
engineering. All
of
them
are
safe.
Some
of
them
are
no
longer
in
the
Ukraine,
and
we
wish
their
families
well,
obviously.
In
Russia,
we
have
a
very
small
amount
of
business
in
Russia.
Okay.
Thank
you
for
that,
and
I
will
pass the
line.
Thank
you.
Speakers,
I'm
no
longer
seeing
any
other
questions
on
the
queue.
You
may continue.
Okay.
Enghouse
continues
to
have
a
very
strong
financial
position,
as
Doug
has
outlined,
to
execute
both
our
capital
allocation
strategy
and
our
internal
growth
business
strategy.
I
want
to thank
you
for
your
patience,
and
we
look
forward
to
talking
to
you
next
quarter.
Thank
you,
presenters.
Ladies
and
gentlemen,
this
concludes
today's
conference
call.
Thank
you
all
for
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