Quorum Information Technologies Inc

XTSX:QIS

Earnings Call Transcript 2020-Q1

[Operator]

Good afternoon. My name is Amy, and I will be your conference operator today. At this time, I would like to welcome everyone to the Quorum Technologies Information Q1 2020 Results Conference Call. [Operator Instructions] Mr. Maury Marks, you may begin your conference.

[Maury R. Marks, Founder, President, CEO & Director]

Thank you, Amy. Good morning, and thank you for attending Quorum Information Technologies' Q1 2020 Results Conference Call. Quorum is a leading provider of leadership in customer management software and value-added services to the automotive industry.Assuming you've all read the press release we issued after markets closed yesterday, today we will provide you with a financial and operational overview of our Q1 2020 results and an overview on how we are navigating in the current COVID-19 environment. We will then open the floor to your questions.Marilyn will now begin with our forward-looking information advisory. Marilyn, please go ahead.

[Marilyn Bown, Chief Financial Officer]

Thank you, Maury. Good day, everyone. Thank you for being here with us today. I would like to remind everyone that certain statements in this presentation and on our call are forward-looking in nature. These include statements involving known and unknown risks, such as the risks related to COVID-19, uncertainties and other factors outside of management's control that could cause actual results to differ materially from those expressed in the forward-looking statements. Quorum does not assume any responsibility for the accuracy and completeness of the forward-looking statements and does not undertake any obligations to publicly revise these forward-looking statements to reflect subsequent events or circumstances. For additional information on possible risks, including risks related to COVID-19, please refer to our MD&A dated December 31, 2019, located on the SEDAR website.Total revenue in Q1 2020 was $8.5 million, a 16% increase over $7.3 million in Q1 2019, but a decrease of 2% from the $8.7 million achieved in Q4 2019 due to the impact of COVID-19 on operations in March 2020. Gross margin was $3.9 million or 45% of total revenue in Q1 2020 compared to $3.5 million or 47% of revenue in Q1 2019 and $3.8 million or 43% of revenue in Q4 2019.SaaS revenue in Q1 2020 again reached new highs coming in at $5.9 million, a 12% increase from $5.3 million in Q1 2019 and a sequential increase of 1.5% from $5.8 million in Q4 2019. SaaS revenue growth for Q1 2020 slowed compared to Q4 2019 due to the COVID-19 pandemic, which delayed on-site installations and training services in March 2020, both of which would have resulted in increased SaaS revenue. SaaS gross margin remained consistent at 66% in Q1 2020 compared to 66% in Q4 2019 and up 1% from 65% in Q1 2019. SaaS revenue represented 70% of total revenue in Q1 2020 compared to 72% in Q1 2019 and 67% in Q4 2019. Quorum's annualized SaaS revenue run rate is now $23.7 million.As we were expecting, BDC revenue in Q1 2020 that only came in much stronger than Q4 2019, but was also our highest BDC revenue quarter in history, increasing by $800,000 to $2.1 million, a 60% increase from $1.3 million in Q1 2019 and a 21% increase from $1.8 million in Q4 2019. BDC gross margin also rebounded to 11% in Q1 2020 from negative 2% in Q4 2019 and closer to the 12% reached in Q1 2019 as staffing issues were resolved in Q1 2020. BDC revenue represented 25% of total revenue in Q1 2020 compared to 18% in Q1 2019 and 20% in Q4 2019. Annualized BDC revenue run rate is now $8.5 million.Services and onetime revenue decreased by $262,000 over Q4 2019, primarily due to the impact of the COVID-19 pandemic, which delayed on-site installations and training services that were booked for 2020 -- for March 2020. Total operating expenses before financing costs, tax, depreciation, amortization, stock-based compensation and foreign exchange for Q1 2020 were 35% of revenue as compared to 37% of revenue for Q1 2019.Sales and marketing expenses in Q1 2020 were 13% of revenue compared to 14% of revenue for Q1 2019. Sales and marketing expense for both Q1 2020 and Q1 2019 included costs associated with the NADA convention. The NADA expense for Q1 2020 was $385,000 as compared to $374,000 for Q1 2019. Going forward, Quorum will reduce the data expenses by moving from 2 separate NADA trade show booth to a single one Quorum booth, which should result in a savings of approximately $100,000.In previous quarters, salaries and benefits expense and general and administrative expense were reported separately. In Q1 2020, salaries and benefits and general and administrative expenses have been combined as general and administrative expense and comparative periods have been updated. General and administrative expenses for Q1 2020 were 20% of revenue compared to 20% of revenue in Q1 2019. The increase in total general and administrative expense in Q1 2020 is due to the increase -- due to an increase in consulting fees, new hires that joined the corporation from Q2 2019 to the end of Q1 2020 and also due to less government assistance. Adjusted EBITDA was $883,000 in Q1 2020 compared to $759,000 in Q1 2019 for an increase of $124,000.Adjusted cash income, or ACI, was $52,000 in Q1 2020 compared to $38,000 in Q1 2019. Our customer rooftops totaled 1,027 at the end of Q1 2020 compared to 971 at the end of Q1 2019. In Q1 2020, our average recurring revenue per rooftop, or ARRPU, increased to $1,922 compared to $1,816 in Q1 2019 and $1,902 in Q4 2019.At the time of this conference call, Quorum has applied for all available COVID-19 related relief funding in both Canada and the U.S. We are currently awaiting the processing of our applications for the Canadian emergency wage subsidy program here in Canada. And on May 11, we received a loan of USD 86,000 from the paycheck protection plan program in the U.S. At March 31, 2020, Quorum had a cash and cash equivalents balance of $8.5 million, $12.6 million in current assets, net working capital of $8.8 million and a current ratio of $3.3 million. Long-term debt was $9 million, including the $8.1 million that we have drawn on from our $15 million BDC capital debt financing facility.With that, I'd like to pass it back to Maury.

[Maury R. Marks, Founder, President, CEO & Director]

Thank you, Marilyn. Q1 2020 was a strong start for Quorum as we continue to build on the momentum of our acquisitions of Oasis in 2019, DealerMine in 2018 and Autovance in 2017 as well as adding dealers to the accelerator platform. We also significantly expanded our product offering in the quarter by releasing the new Autovance F&I menu, Accelerator Power Lane and Q Analytics reporting tool. DealerMine was also approved as a vendor partner for the GM Canada dealer data share program and accelerator announced their agreement to build integration with Affinitiv XRM for Internet lead management for U.S. dealerships.As busy as we were on March 11, the World Health Organization characterized COVID-19 as a pandemic, which significantly changed everyone's focus. Our immediate and primary concern was for the safety of our staff. By March 20, we had transitioned all staff to work from home and all on-site training and installation activities were postponed until after the COVID-19 pandemic. The impact of the physical distancing measures that were put into place affected both our services and onetime revenues and our SaaS revenues in Q1 2020 because at the time, on-site installations and training were key to the growth of our monthly customer SaaS revenues. Later in this call, I will cover how we are significantly reducing our reliance to go on-site for future installs and training.At the time the pandemic was announced, we were also very concerned for our dealership customers as Quorum has always treated its dealerships as partners. By early April, dealership sales departments were shut down or operating on minimal staff, while service and parts departments operations had slowed down considerably. Most dealerships were in the process of laying off 50% or more of their staff and some dealerships had decided to close their doors completely.With dealership customers facing extremely difficult business environment, we made a number of key changes in early April as follows: number one, provided dealerships with a 50% discount on the monthly support or SaaS invoice for April and May 2020. This discount did not apply to any other revenue streams and did not apply to outside third-party costs such as DMS integration fees. This was a strategically provided discount because, as mentioned, Quorum has always treated dealerships as partners and because it was a short-term discount to protect long-term SaaS revenue. Number two, adjusted staffing levels across the company; number three, negotiated discounts from various Quorum suppliers.Additionally, as Marilyn mentioned, we began actively working with both the Canadian and U.S. governments for financial relief from the last revenues. In our last investor call, we talked about the detailed financial impact in April for all of the above items, and how the net impact should be close to cash flow or working capital breakeven. I am reconfirming that assuming that we receive the government funding we applied for, we should be close to working capital breakeven for April.Clearly, the impacts of COVID-19 pandemic will continue to be felt through Q2 2020 and even further into the future. Recent government guided discussions have been focused on moving toward reopening economies in both Canada and the U.S., which should allow for increased activity for our dealership customers. In fact, our dealership metrics are showing the signs of a return to business over the last couple of weeks as sales, service and parts activity across our stores has increased and the number of active system users that access accelerator has also increased.Our operational, analytical and customer revenue-generating solutions are key to helping dealerships recover from the COVID-19 shutdown. We continue to take the following key strategic steps to ensure we emerge from the COVID-19 shutdown as a stronger organization that is more adaptable to the new business circumstances: Number one, as with other industries, the COVID-19 pandemic has accelerated the automotive industry's move to a digital retail strategy, focused on allowing customers to purchase a vehicle or get their vehicle serviced with much less interaction and contact with the dealership.Quorum is innovating to meet this shift as follows: our Autovance division is building out Quorum's digital retail vision to allow consumers to purchase a vehicle online. The Accelerator division is improving our service lane product called Power Lane to allow customers to transparently receive videos directly from service advisers or technicians for possible added repairs and to then approve those repairs from their phone or any other device.DealerMine is working to scale their BDC services, which help dealerships refill their service lanes by contacting customers about more urgent repairs like vehicle recalls or campaigns. Our Quorum team is transforming Q Analytics into an enterprise reporting tool to cover the entire Quorum product suite. We believe that Q Analytics will help with cross-selling of our entire product suite.Number two, we are moving the delivery of most of our installation and training services to be web-based. This is not an easy transition for our installation services because we introduced a lot of process change in the dealership that in the past, has been best handled by being on site. Two key benefits of web-based installation and training services are that we can scale the delivery of our services faster and book SaaS revenue related to our products quicker.Number three, we continue to rationalize our internal cost base to be more effective and efficient as one company. While a major focus to date and post our acquisitions has been on product integration, we are continuing to implement our One Quorum approach to the company and are working on significant operational integration that will springboard us to becoming a more cohesive, efficient and focused organization.Number four, finally, we have completed a detailed automotive software market analysis, focusing on software solutions that would fit with our vision for the future of our product suite. We will leverage that analysis as we engage with companies and as M&A opportunities arise.I'd like to reiterate from our last call that while there remains continued uncertainty regarding the duration and depth of the disruption to our customers' businesses, we are confident that the combination of the actions we have taken to stem cash outflow, the proceeds raised from the financing in November and available government COVID-19 support provides us with sufficient resources to regain growth momentum through the recovery. We continue to analyze the market in hopes of executing our growth plans post-COVID-19 as fast as the market will allow us to and continue to diligently manage the financial impacts this may have on our business in order to maintain the longevity and stability of our operations while supporting those around us.Operator, I'd now like to open the conference to any questions from our audience.

[Operator]

[Operator Instructions] Your first question comes from the line of Gavin Fairweather with Cormark.

[Gavin Fairweather, Analyst of Institutional Equity Research]

Maury, maybe you could just provide me with an update in terms of what proportion of your customers sales departments are open. I think I saw Ontario with opening back up. I think other provinces have opened up prior to this. Do you have a number in terms of what proportion are absolutely opened and doing sales?

[Maury R. Marks, Founder, President, CEO & Director]

Yes. So I can't give you a number of who is exactly open. I can sort of look at metrics of how many deals are going through, how many users are logging into the system concurrently. I would say from the deal numbers, what we're seeing pre-COVID is we're seeing that sales are down -- last week, sales were down about 25% from pre-COVID numbers. And that was following a trend where we saw sort of increasing week after week numbers of sales. So to say it a different way, right? Sales are 75% of pre-COVID.

[Gavin Fairweather, Analyst of Institutional Equity Research]

Okay. Yes. Because I think I saw some numbers that I think April was obviously down 75%. So we've seen a really nice kind of uptick then from April into May?

[Maury R. Marks, Founder, President, CEO & Director]

Correct. Yes. And the uptick -- we've seen more of an uptick, obviously, in Western Canada because Western Canada showrooms did open or were allowed to open earlier. Ontario lagged a little bit behind, but we should see a catch-up on the Ontario side over this next couple of weeks.

[Gavin Fairweather, Analyst of Institutional Equity Research]

Okay. Great. And then you guys have been obviously doing a lot of work on your bundle. I guess I'm just wondering about kind of the ROI pitch that you make to dealers and how that's kind of received in this kind of environment? I mean, obviously, compared to the big 2 kind of DMS competitor, there's this solid ROI towards switching onto Accelerator with the expanded bundle, obviously, that value proposition increases further. How is that being received in the current environment as you think out a few quarters? Obviously, dealers are looking for ways to save money, just your thoughts around that.

[Maury R. Marks, Founder, President, CEO & Director]

Yes. So Gavin, I mean, honestly, it's an interesting environment to sell -- interesting difficult environment to sell into. Because, I mean, step number one is you have to ensure that whoever you're talking to is even engaged to want to even have a discussion about any additional products. And so assuming they're open to having discussions, assuming they feel their business is stable enough and they see a go-forward path for everything from a growth point of view, and they'll engage in conversation. Then from our point of view, then the ROI pitch for us is -- it's similar to the ROI pitch that we've had in the past. So if we're talking about Power Lane, which was formerly VIP, we're focusing on not only the metrics of how much revenue can help drive into your service business -- service and parts business, but also how the new features can actually increase that revenue pull-in. So I think probably the difference between pre-COVID and sort of where we are right now is that willingness to engage in the conversation. If there's a willingness, then, of course -- then there's quite an interest in the ROI that we can provide.

[Gavin Fairweather, Analyst of Institutional Equity Research]

And in terms of new Accelerator installs, it sounds like you're working down the path in terms of moving towards more of a remote implementation model. Do you think that, that will ultimately lead to kind of a lower cost on sell, maybe shift that ROI formula a little bit as you think out maybe 6 months?

[Maury R. Marks, Founder, President, CEO & Director]

Yes. No, it will. Yes, it would help us with -- yes, with our cost of delivery on the Accelerator side, without a doubt, and our speed of delivery. And like I mentioned in my -- in the start of this call, it will help us with booking SaaS revenue sooner. I think -- was that your question? I think I answered that.

[Gavin Fairweather, Analyst of Institutional Equity Research]

Yes, yes. And then just before I pass the line, on the BDC, obviously, a nice kind of sequential improvement in revenue and gross margin. So should we expect that to be back towards kind of mid-teens margins, I guess, then in Q2? Is that the right way of thinking about it? Like it sounds like you -- it's kind of mid-quarter that you –- kind of all that you see there?

[Maury R. Marks, Founder, President, CEO & Director]

Well, Q2 is a really hard one for me to predict. Where would we like to be in terms of margins for our BDC, if once we get business as normal running along, at that, yes, we should definitely be in the mid-teens from a target perspective. We'd like to be higher than that actually. We've just got a lot of work to do to get there. And we're -- as we've talked about in the past, I think on the last call, we've put a new BDC Director in place, and that individual's focus is really on scaling up our BDC, but also improving margins at the same time.

[Operator]

Next question comes from the line of David Kwan with PI Financial.

[David Kwan, Technology Analyst]

So Maury. You mentioned, I guess, last quarter, just tying back to Gavin's question on the BDC, that you saw an initial drop in activity and then kind of started to steadily seeing improvements as guys realize they maybe cut too much too quickly. Can you comment, I guess, on where the business is now? Is it that close to where it was before the drop by kind of Q1 levels? Or is there still some ways to get there?

[Maury R. Marks, Founder, President, CEO & Director]

No, there's still some ways to get there. Like we've probably seen maybe a 20% return or so, 25% maybe, as high as that, but there's still a way to go, yes. And then just to Gavin's question about margins on the BDC, and the reason I'm hesitant to talk about them in Q2 is we really try to manage our staffing levels and our cost structure as BDC revenues dropped off and then as they came back up again. And we're definitely on an upswing on the BDC revenue side of things. But as you can imagine, right, it's hard to manage those costs and get them perfectly lined up with revenues. We did as much as we could. So that's why I'm hesitant to comment on Q2 BDC margins. We do a lot of work to manage that, but we'll know when our Q2 numbers come out. We look forward to how well we managed it.

[David Kwan, Technology Analyst]

I guess on that note, Maury, I guess typically, unless, I guess, the BDC revenues really dropped sharply because there's obviously a certain amount that would be fixed cost. You guys should still be generating positive gross margins, right, on the BDC side?

[Maury R. Marks, Founder, President, CEO & Director]

Correct. Yes.

[David Kwan, Technology Analyst]

Okay. And I guess, as BDC picked up, you guys have probably started to hire a bit more at least kind of bring back some family you might have laid off, particularly on the BDC side. Is that a fair assessment?

[Maury R. Marks, Founder, President, CEO & Director]

Yes. We have started to hire. In fact, our first group is starting training this week, keeping in mind that, that's just another thing that you now have to go to web training for, right, is to onboard new staff. So we've revamped our whole training process. And we now onboard BDC staff from a remote web-based perspective, which should long-term help us with scalability as well.

[David Kwan, Technology Analyst]

I guess -- I know, I guess, St. John is a fairly competitive market on the contact center side. Like how easy -- are you able to get back some of those people that you had to lay off when business had dropped off? Or are you having to find more new people that you're going to have to train?

[Maury R. Marks, Founder, President, CEO & Director]

I think it's largely a combination of both, right? In some cases, it's bringing people back. Sometimes people don't want to come back. Sometimes people have gone on to a new job. Sometimes we're injecting new people in for the training as well.

[David Kwan, Technology Analyst]

Okay. That's helpful, Maury. And just a couple other questions here. I guess maybe somewhat difficult given everything that's going on and to the extent you're able to get the wage subsidy here in Canada. But like how should we be thinking about modeling your expenses both, I guess, from a direct cost or cost of goods sold as well as an OpEx perspective for the next couple of quarters here?

[Maury R. Marks, Founder, President, CEO & Director]

Okay. Well, I'm not going to provide any more guidance than what we went through sort of last call when we broke down April numbers in terms of where we had cost savings, right? So we talked last time about staff cost savings of $400,000, non-staff cost savings of $100,000 and then applying for government funding roughly related to $600,000. So does that help answer your question?

[David Kwan, Technology Analyst]

Yes. I didn't know if anything had changed kind of since then. And kind of to what extent that would apply, I guess, to May and future months because...

[Maury R. Marks, Founder, President, CEO & Director]

I don't -- good question. So I think basically, the discussion I gave last time where I detailed things, where we basically looked at the organization in April from a cash flow -- near cash flow neutral side, I think my exact comments were, our objective was to try and get cash flow neutral, in April, it was all of those moving pieces. That has remained very consistent for us. Like I'll reiterate that, that's our goal, and we're working to hit that particular goal. In May, we're going to manage as best as we can given the return of the business to our dealership. So as our dealerships are returning to business, as we're growing the BDC staffing levels, as we're sort of managing through things, I think the same economics from April generally apply at least from our own goals perspective, target perspective. We're looking to manage May similar to how we managed April.

[David Kwan, Technology Analyst]

No, that's helpful. Just a couple more questions. I guess, layering on top of that, and obviously, we've got the noise related to COVID-19. But with your One Quorum initiative, can you kind of talk about how we should think about that? How it relates to timing and kind of the financial impact of the initiatives that you got going on with that?

[Maury R. Marks, Founder, President, CEO & Director]

Yes. So David, we're not quite ready to talk about financial impact of it yet. It's been a little bit of a difficult one because obviously, COVID hit, and that took a huge amount of focus for our management team to do all the things that I talked about. We're -- make sure everybody was safe, make sure we're looking after our dealerships, we're managing our cost structure, so on and so forth. And we sort of jumped right from that particular environment right into our One Quorum approach and really trying to then more permanently find cost savings across the organization, efficiency, so on and so forth. So we're still working through that particular piece. And we're obviously looking for anything that's a quick cost savings that we can put in place, but we're also -- there's a number of initiatives in there that are longer-term initiatives that we really won't -- you won't see the benefit of our work until sort of later in 2020. When we're ready to be able to talk through anticipated cost savings and timing of them all, we will definitely talk to everybody about that.

[David Kwan, Technology Analyst]

Just a last question. Just on the gross margin side. Just as it relates to the services and onetime revenue, I'm assuming that number from a revenue perspective is going to be, at best, I guess, flat to probably down this quarter. Is it fair to assume that the gross margins would fall as well?

[Maury R. Marks, Founder, President, CEO & Director]

Yes, yes. So it is fair to assume that our services and onetime revenues will fall during Q2. And additionally, we would have done everything possible to reduce costs on services and onetime revenues and really try to minimize the negative gross margin that we reported in Q1 2020.

[David Kwan, Technology Analyst]

So I guess like from a -- maybe just looking at it from a dollar cost perspective, like how much of the amount, I guess, that you had in Q1, I think, it was around $700,000. Is that most of that kind of fixed cost then or is it -- can that number come down a bit?

[Maury R. Marks, Founder, President, CEO & Director]

It's a combination, right? It's a combination of travel to be on site. It's a combination of some different licensing costs, hardware costs and elements like that. And then there's another piece that's a people cost side of things. So obviously, any of the externally -- external costs would be eliminated in Q2 if we're not going on-site or not doing installs. And then the people cost side of things, we did everything to manage that down as much as we could for Q2 as well.

[David Kwan, Technology Analyst]

So do you think it can be like -- I know it's tough for you to say but like it can get down to around like $0.5 million or even less than that in terms of the actual cost if you shaved it out like the travel costs and whatnot in particular?

[Maury R. Marks, Founder, President, CEO & Director]

Yes. David, I really don't want to talk about the exact numbers for Q2.

[Operator]

[Operator Instructions] Your next question comes from the line of Gabriel Leung with Beacon Securities.

[Gabriel Leung, Research Analyst of Technology]

Maury, in your press release, you talked about not committing to discounting the SaaS products beyond May at this point. Is that the view that in terms of DealerMine and Accelerator SaaS fees, you'll be able to take them back to the regular rates starting in June?

[Maury R. Marks, Founder, President, CEO & Director]

So in the press release, we commented on not doing that? Or we just alluded to it, sorry. Because we're still not decided on June, in terms of what we're doing.

[Gabriel Leung, Research Analyst of Technology]

Sorry, I meant June.

[Maury R. Marks, Founder, President, CEO & Director]

Yes, Okay. So Gabe, I mean, every indication is that the dealer's business is returning. And I think if we see that continue on a positive trend, then I don't think it makes sense for us to do a June discount, but we're still a few weeks away, and we want to see that the positive trends that we've seen aren't just bumps up and then to see activity drop back off again. So we're going to keep watching for the rest of May and watching activity and watching activity levels, but -- and then we'll make a call right towards the end of May on what June looks like. And I -- sorry, what we'll do with -- related to SaaS discounts for June.

[Gabriel Leung, Research Analyst of Technology]

Got you. And have you seen any sort of meaningful churn within the base? Or anticipating meaningful churn?

[Maury R. Marks, Founder, President, CEO & Director]

We've been very pleasantly surprised that we haven't seen any churn sort of outside our normal churn level. So it's -- that's been a real positive out of this. We were quite concerned for our dealerships, and we were concerned that in some of the cases that they would have to be making choices between paying staff and paying us or in some cases, they might be closing their doors or elements like that. And to date, it's been sort of yes, reduced business levels, but dealership seem to be continuing with some level of activity, and they're all, like I mentioned before, activity levels are growing -- coming back, and it just seems to be that our dealerships have continued on with business, and it really hasn't impacted us from a churn point of view.

[Gabriel Leung, Research Analyst of Technology]

Got you. One last question for me. Assuming your SaaS and your BDC business sort of gets back to a normalized level in sort of the Q4 time frame, do you think you'll be able to operate at a higher-than-usual EBITDA margin basis relative to historical precedent, just given the cuts you've made already. And perhaps the fact that you wouldn't necessarily add back all the costs that you have cut. Is that a fair assumption to make?

[Maury R. Marks, Founder, President, CEO & Director]

Well, that would be our objective, right? It would be great if we could, through our One Quorum approach, be a lot more operationally efficient as an organization. I mean that's why we're doing a lot of that work. Yes, it's to cut cost, but it's also to be more operationally efficient. So that's one piece of it. The other piece of work that we're doing is, of course, to be able to web train on our installation and training services, which means more efficiency as well as an organization. Yes. So I mean, 2 of our sort of key initiatives that we have going on in the company are related to making us more efficient, more cost-effective and ultimately impacting our EBITDA margins.

[Gabriel Leung, Research Analyst of Technology]

Got you. One last question, actually. I saw that the software development costs hit about just over $900,000 in the quarter. Remind me again, with some of the restructuring, I guess, that you've done. Where should that software development figure fall like meaningfully below $900,000 or still you can maintain that $900,000 quarter level?

[Maury R. Marks, Founder, President, CEO & Director]

So one area for us that we have maintained or not quite maintained, but come pretty close to maintaining is our investment in the software development side. I mentioned a lot of activities that we have on the go related to really positioning our solutions so that they're more appropriate for the sort of the COVID environment and post-COVID environment. Hence, we do continue to invest a lot in software development. We probably brought our investment level down maybe 5-ish -- 5% to 10% or so, so not a lot, but a little bit of a reduction in our investment. But yes, we're still pretty focused on doing the right things from a product point of view and being that leading edge company from a product point of view.

[Operator]

There are no further questions. I will now turn the call back over to Maury Marks for closing remarks.

[Maury R. Marks, Founder, President, CEO & Director]

All right. Well, thanks, everybody, for attending the call today. And thanks for the great questions. Everybody, please stay safe out there and look forward to talking to everybody when our Q2 numbers come up. Thank you.

[Operator]

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