Zix (ZIXI) 24 Oct 172017 Q3 Earnings call transcript

Good afternoon. Welcome to Zix's Third Quarter 2017 Earnings Conference Call. My name is Karen and I will be your operator this afternoon.

Joining us for today's presentation are the company's President and CEO, David Wagner; CFO, David Rockvam; and Vice President of Marketing, Geoff Bibby.

Following their remarks, we will open the call for your questions. the remind available this link for Investor section to recorded is under like Relations made and replay of would everyone call that being the I website. company's via a

Sir, like would call Geoff turn Now, please I to proceed. over the to Bibby.

events actual the today's with conference the cause could differ to It's These could results important recent subject statements. such Factors company those forward-looking filing that XX-K materially Factors provides quarter release is most statements contained a Form After September Thank third press to and forward-looking you our XX, to issued website of our call. Wagner; Dave undertakes afternoon, performance of press are uncertainties Rockvam. note ended CEO, market that risks the section joining this statements Good in on SEC to call. available and close, the company. of caution Risk Please to in third that from the future will www.zixcorp.com. a conference The Karen. consider also forward-looking Relations materially release results XXXX, to risks. during cause and our thank Dave earnings the you, those in for results for copy statements of future this those the statements. With the we we which course you of forward-looking update obligation announcing call, everyone, of is differ Risk the actual financial our XXXX examples me our section from the note today Investor make in at quarter no that We and CFO, regarding

GAAP section be and measures in non-GAAP our reconciliation call, in performance. all non-GAAP the or financial We to be to certain from, press release, measures which of today's financial measures. encourage both website. are superior isolation to a not to can of the intended results. GAAP for you is analyzing GAAP Non-GAAP substitute measures Investor included Company's considered our when present found During Relations A in consider the we'll

Now turn to opening to his like over I with the for Wagner Dave? Dave remarks. that, would call

afternoon continued been you bundling $X.X pleased QX year-over-year, were orders of new important many today. million, margins year-over-year, that up regards. quarter Good joining X% achieved year Geoff. of up strategy. earnings XX% achievement everyone for and XX%. has Thanks, $XX.X thank an the us We and per a record revenues certainly million, with first of adjusted most share our adjusted momentum The with is our in $X.XX quarter in EBITDA

than launches quarter more ZixArchive our successful in during second increased well internal ZixProtect continue ahead On and a customer of to to ZixArchive of the customers sequential ZixProtect new XX basis, and our number the Following perform the additions. plan. XX%

to We on during sell terms testament more seeking to increasingly Entelligence from did or we In great that added partner-based while gives is of when successful strategy and deployment EMS Server solutions XX% edge with drive increase and providing of length enhances believe quarter. included behind an customers EMS results. line for to of not it of say, Messaging pleased experience this quarter-over-quarter. and of the two end-to-end saw we we are that get email customers latest put hurdles bundle with value and can customers trend consistently account go could many is schedule the continue are we of acquisition capability be strong premier new this when value lines. quarter to encryption technology existing encryption start acquired to us validation XX%, the fact. deliver vendors. a QX approximately time a the actual significantly ensure several orders year new Needless will also our at to also an fewer suite selling during product our In increased more we and fees, the our upselling we first Simply industry's revenue

renewals, We competitive also experienced was due by lesser which migrations a and customer cloud. to M&A weakness the activity driven costumer extent in our customer to by anomalous pressures to

protection mitigate and to our Our customers. the greater to decision market be long-term drive has positioning hosted value proven the enter while to also archiving right strategic threat solution these advanced pressures and our strengthening one for e-mail us

we on now these track strategy like maintaining renewal record suite. the to more how where and shareholder expect that going financials cloud-based the on we call long-term ourselves profitability on I'd to to market as update for the and commentary, will products remain best with to deliver of our Dave? value. moderate to email the focusing We I to detail our challenges more protection the will progress head Rockvam see newly well turn on it, of we're provide quarter. Dave and details are our take some seven After return an provide as over confident provide Dave's XXXX enhanced while advantage positioning longstanding into the we pillars as growth our especially

Dave, you, and afternoon Thank good everyone.

from positive to several initiatives. the As start bundling from takeaways mentioned, cross-selling encouraging quarter, our notably Dave the we and had most

our continued new very quarter pleased building on second from continue generated and in QX bundled it these momentum success into the our offerings customer in are us the set has We markets. to new up we that customer believe

last in same numbers quarter the year. financial in detail. increased third for our X% Revenue from million to to $XX.X the Turning million more quarter $XX.X

in just for QX recorded row of revenue achieved quarter XXth came our highest level still company's and the While quarterly the growth we history. year-over-year in short experienced range, solid a guidance in revenue of our revenue

rather Dave but the our technical the is be with was end and our result renewal were As a a control. out several on of mentioned, internal behind deployment procedures of sure in deployments and are accounts reporting. our quarter impacted which partner-based revenue customers delays that by schedule the To not policies

however our the in are we received pleased future. be its confident are have that results payment will and we financial that value to recognize We in

reporting also issue a second issue in partner. will that this be We're We confident fixed renewal a QX. experience with

Looking at of million nine XX% period $XX.X XXXX, the from revenue year. same to months $XX.X last the in increased million first

New primarily first increased the quarter contributions ZixProtect for year last orders million ZixArchive. $X.X to to and to The $X.X of was XX% from strong QX in from increase million year. due

e-mail very our offerings. new bundled are We can adoption This to value is rapid our strong customer offer into and by our market, these where move through strategic adoption the of we protection validating more solutions. advanced archiving customers threat early decisions encouraged

XX% the Data's revenue to XX.X% or on revenue included or our is quarter, Greenview total XXX% This profit was Similar the Our of are of ago. revenue quarter of for capturing revenue nine was months because the margin from quarter while of total XXXX. the the subscription for to the profit XX.X% not or gross gross percentage which nine of XXXX. adjusted a a $XX.X million for or adjusted total remain their the revenue anticipate last year basis yet year million for XXX% to the due month $XX.X XX% of $XX.X we gross third in XX% a we to compared first Adjusted million was XXXX. of and gross QX of dollar XX.X% $XX.X part total from period costs of down million We of nature was early improvement an in of of within adjusted the remainder throughout to Company. based range purchasing margins Revenue

of their were $X.X of expenses XXXX The last R&D quarter to a the adjusted our revenue total compared also ZixCentral third in revenue year. total million due due e-mail or the platform. a year in third emphasis ago. XX.X% Greenview our continued for quarter results year-over-year adjusted rapidly growing million with of inclusion increase service was The in to in expenses was absence Our our hosted of XX.X% particular the or solution on R&D core versus to of $X.X Data investment and encrypted increase

marketing reported adjusted of which compared was The customer in the driving expenses million to and for year. sales. renewals QX XX.X% $X.X revenue last $X.X and are or mainly targeted or quarter our Our to additions were to success XX.X% of total add-on the selling due million increase team

XXXX, of quarter G&A or is systems outside new adjusted year. our reported year revenue $X.X QX of over in Corporate $X.X due third to modernize XX.X% million to as compared VP services general and well to of million last of or administrative processes investment our addition last up Development. a total associated of in revenue expenses were total business as the the For our of XX.X% with

rate will partner year. As to GAAP company our approximately our last We for via XX.X% estimate role tax effective investments both play we mentioned of the growing objective our build call, by strategy. on our the be pivotal

NOLs. non-cash expense Our our overall largely tax is to due

forward, last On a to expect we compared $X.X third on of basis quarters. a our remain QX GAAP line per cash of the was prior the fully year. dollar $X.XX income million basis, we diluted quarter generated for Going net or which share up component X% taxes with in to of

net $X.X the $X.XX $X.X share diluted million share to nine per the For or or diluted compared income month prior period, in totaled year. GAAP million per $X.XX

as $X.X with QX share. Our last diluted net the for in the $X.XX our per third consistent of quarter reported million we non-GAAP guidance share was or well was as income adjusted fully year. $X.XX per amount period

finally, the QX $X.X XXXX, non-GAAP of totaled year. for net we period was per or compared year than fully X% And adjusted same X% an million, $X.XX amount the ago. XXXX the reported $XX.X QX our the of $X.XX higher per nine million income increase For EBITDA to of a months in was diluted last share first we million share. reported adjusted $X.X in

for last would where EBITDA our up in declined level this XX.X% we from XXXX adjusted XX% reach is percentage EBITDA QX are of we of to revenue, pick On this year a call, slightly margin total in As year. to XX% our the quarter which XX.X% adjusted mentioned today. the from that

model. is XXXX Cash model. quarter Year-to-date, that around approximately It's flow growth cash $X.X our the We EBITDA history company's have of from to our adjusted a representing XXXX and consistent quarter third million operations to from the we for flow $XX have key quarterly long-term operations for flow operating $X.X profitable the we our cash company. in model, million cash subscription note from strong metric $X.X expect which of important our to at demonstrates remain in highest deliver do with continue generated margin or to million. depreciation. million in positive our XX% our was flow represents ability within the

flow debt. a strong $XX.X million strong to us and with cash cash allows in to sheet balance Our continue no maintain

share this of our April program approved in to Directors Board year. of repurchase Turning which our

$X.XX. XXX,XXX QX, During $X.X million amount repurchased we shares an an aggregate of of share average for at price

the Under our authorized we of to forward will buybacks million program, October. subject in shares part as return board, going of bought returns. evaluate the shareholder Along balanced the current we certain also additional have continue X.X We allocation to to to strategy maximize capital purchase conditions. an are with

for normal business Our and the $XXX,XXX CapEx systems business capital purchases. costs which our project quarter included associated implementation was with

We million expect be CapEx for the year million. and $X.X $X.X to between

the $XX.X X% from September backlog million the value contracts of of last $XX which date represents XX, Our which dollar down same as million XXXX, at committed year. was was

as term with Our total our X% of These average in commitment year pricing to record were from ago. associated in shorter-term customer levels length renewal as a a offerings. two backlog decrease a a new well from last in factors due netted in decrease quarter to decrease bundled orders year's the rate

earlier giving cross-sell team year long-term customers to than number with connected are solutions. more us points velocity and this newer in success increase we us for needs of customer have greater incentive to these both our of transactions our We upsell the our select specific future customers contracts our the is the to of ever opportunities has requirements with addition The touch reducing and customers. financial and order and

last third the XX% the quarter, Looking of at recognition last to shorter-term over see ACV XX% XX is year's million impact compare value contracts $XX.X quarter, XXX our of That approximately up next as QX our XX was million, last you backlog deferred to you towards contract months. over the recognize basis XX%. points to the from totaled deferred to shift when the month revenue, of revenue At next XX% annual expect months up $XX.X year-over-year. we the or of revenue XX can the year. say Similar end or the

not a is bundled As our ACV on do anymore. reminder, because shift breakout by we of individual product offerings,

to gears and fourth the million December ending full-year of verticals. from to However and last government, ACV revenue $XX.X an increase quarter year. of was XX% from financial from Shifting services, anticipate QX to between to X% representing X% healthcare, financial perspective of industry the the compared range XX% breakdown fourth an our now our and X% other million, XX. from for from $XX.X quarter for XX% outlook We

We forecasting per non-GAAP diluted fully to are fully and be per earnings to between share share $X.XX be $X.XX. diluted GAAP adjusted and $X.XX earnings

For $XX.X fiscal we an expect between revenue revenue to XXXX. the range increase compared $XX.X to of full-year, in to represents million which million X%

be are our earnings We earnings per $X.XX be and also diluted fiscal fully for per non-GAAP GAAP reiterating XXXX. $X.XX diluted and to share share fully $X.XX adjusted to guidance between our

in account little room ability to the QX. align due We execute cutting smaller give per full-year to beginning is some growth summary. and we saving completes QX. lower us ability $X.XX cost as maintain to our revenue Our earnings earnings of profitable These quarterly on share our This to cost in these my about at will on feel took to cutting will we target financial cost measures objectives impact in measures XXXX. expense have our and our GAAP measures

For our XX-Q reference to please Form more detailed X. financial file Dave? of plan November we by results a our analysis which

for Thank Dave. the financial overview, you

Now it new seven increase which represents new third million. Pillar progress turning over customer measured by quarter XX% QX were first $X.X orders pillars. XXXX. as to primarily year our to is performance and of one relates This wins growth an our

of quarter XX% from put almost to X% bringing and direct and X% sales, indirect sales. continue through costumers number XX,XXX. We first total through our win through XX% our orders direct to QX VARs web during The it channels for customers new sales year new OEM both the breakdown partners, and MSPs, through

So orders quarter. from the pillar year new in totaled and one VARs from third first direct MFPs XX%

wins Similar customer delivered agency, wins. top meaningful insights by on of way; third Google were of displacements was customer new providers, the some not top using federal a displacements. government of a new wins brief a to by three were surrounding healthcare quarter. e-mail local to securing one were top encryption bundle, competitive Docs. new one one me Two this Let agency. government double the to migration of by use, the key Two customers driven last three new ease ZixProtect of click as five five These customer five sharing included five the the in these and three five quarter, previously

in ZixArchive. the cloud are now visible space hosted customers most was choosing increasingly success Our where our solutions multi-tenant including and ZixProtect

QX Our last and delivered new we're orders consistent quarter. and of solutions year seeing delivered of solutions in core XX% with new which momentum from year and were XX% ZixArchive last approximately ZixEncrypt increasing first orders ZixProtect newest first year our up

As than similar a for we quarter look encryption. we to a our solutions ahead are stronger and pipeline the for seeing new a expected trend fourth pipeline lighter

large contract U.S. with Cisco. is OEM a doing we call and about on our Government focus Federal Cisco Our second pillar our last Google. talked On partners Agency

We the pipeline cautioned why this win, quarterly order move to While sized see the any orders. the contributions first businesses year transactions example forward case? consistent joint pipeline in perfect a new large pleased time-to-time. with position size and in primarily to new this including the deliver Google and a to working not of the not of QX. continue and meaningful not deals Despite from partnership we to for from to that a consistent in yet a we flow first we new we the is teams healthcare small scope and time. segment. contribute are at QX first do a expect in was quarterly well a year together medium said did Cisco orders as level secure being we're continues order continuing That work few Google meaningfully year that's

and three additional Moving installed Pillar's additional on into to focus selling product our seats which on base. four and

as even significant a introduction on ZixArchive they greater and an the upsell, these importance present. cross-sell the With of two taken pillars have opportunity result of ZixProtect

this totaling ZixProtect earlier, for vast I customers orders existing ZixProtect at if XX% we of of of We year total XX ZixArchive the new new majority and into sold the number sequentially. mentioned our added As were solution seats first alone, XX% look accounts. approximate increased which for

confidence and over supported representing move One successful accounts with had into success by now us QX. the was our into ZixArchive formally December. with product well success X,XXX the of into is us market of users thousands with with the the quarter successful URL most we moved be sandboxing to launch a customers will rollout layered of introducing production have in in commitment positioned as in redirect We in mailboxes of proof migration resulted ZixProtect These broader that remaining in to approximately the the of a the large generally of the introduction and for redirect of architecture in larger of e-mail given we over the one months. ZixProtect perspective has strong user This next customers locations and into URL base several developments the transition exciting from features coupled other is opportunity. QX. had and customers. available being concept very also in protection five XX% top ZixProtect features XX our ZixProtect available tens Sandboxing This combined to

us for threat Our a are Guardian sales been existing The our increased The DLP fifth beginning which the in protection rates XXXX. renewal increasing is designed archiving for pillar we growth a partnership and pipeline is with DLP base. Digital enterprise for than also XXXX. build to to customer is cycle but challenge into opportunities drive has of value longer

Healthcare we year. of entered $X million When more merger consolidation in have in customers. is M&A turn actually The had there largest largest XX the majority detail the the consolidating through planning higher turn healthcare an or factor in cancellations anticipated turn particular account two increase our by impacted As we their industry that expected than we two as a in is we are in top the and detail the and trend. anomalous the of expected resulting obvious about but activity. dig five we we through XXXX, than this forecasting look our fall of at process more is driving at three cancellations

growth an had resulting is a customer XX We three consolidation apparent third loss customer the forecasting in another was which pillar customer. our grew The account experienced the for licensed Zix despite loss this their reductions in year-over-year. by which XX% sixth for our largest consolidation excess are absorb solid users core is to we These The churn With of past seats. ZixEncrypt encryption the that too our is actually the to existing customer investing revenue hosted in our quarter retained e-mail XXXX. we growth of strategy. to fact XX% central solution hosted base we enough approximately respect and solutions of our

into ZixCentral about strategy. relationships help it our This not the moment technology the of we will like single a I'd Data us talking administrative is build panel a management capabilities and platforms, our services. multitenant the Entelligence integrates of and and to Messaging but control building all platform us of recent customers. our with ZixEncrypt are Zix acquisition the spend we toward pane ZixCentral will to selling, solution how integrating continue of also relates deliverable help A our with stickier bundle to training, only the of enhance framework. to current that our consolidated As reporting for drive and access more Server Greenview the for all glass simplify operation a

to e-mail EMS validated FIPS acquired of our high rich the many in and like message on-prem third centric capabilities. we Datacard quarter enterprise already Entrust bolster strong As capabilities encryption offers Technology from EMS advanced availability you know, cryptography, tracking. architecture,

offerings, As particular, and allows cases. the our broad us we for This encryption product used accelerate to in our our gold standard accommodate it e-mail of expands an us future. integrate status core for acquisition, allow EMS array into to even roadmap will

to a We forward forward. acquisition customers. trusted look the another Zix and Entrust added value-added more addition in going federal, enable many enterprise, will on be In secure we to reseller Datacard ranks our this us delivering international to partner ways who will

company With of in in we than the we investments as are we start were stronger position a a the made the at XXXX, year.

will to to and opportunities values our more not achieve which the our will seventh enable our over customer drive with the speaking and create ahead profitable but expand our the us us Looking present us growth short strength exploring position relate of for English help targets pillar markets international growth. Last least attractive to offerings longer-term.

addition customer newly With opportunity international the EMS the acquired as we with the in of Canadian accounts in banks renew the of with added Zix several coming and a product five already one quarters. September the EMS top to additional

cyber and highlights not a customer superior by difference just support. with importance encryption Encrypting lower are customers standard cloud-based we the that that make is provides through We but and that an the at It's importance in stronger ultimately the appeared Microsoft threat can With against act of having also e-mail we risk to strong of e-mail this rest. for of driving the archiving truly of second with to protection delivered providing This that XXXX a between or service my our data for by successful and same only environment providing range attack redundancy a and All data ZixProtect positioning happening our remarks e-mail With gold a transit EMS encryption being is encryption to background us like by e-mail cloud a the one to threat at a how Recent and position a our would shareholders. bundle to attack a ransomware acquired number out capability providing give defense delivery is that more source superior on at are much security. ourselves when year we're e-mail purpose broader pushes data data for for and enter sales to partner OfficeXXX attack knowing businesses to with and a opportunities. is at breach. experience Microsoft support most stronger customers. environment will factor for the away significant transition Zix into for time it independent In us. is We're at exploited are this always company our macro about sell Zix with the e-mail value a macro ahead not international for innovative attackers. in protection end-to-end the options for and that as including of We're options summary that positioning the ourselves cost transition to and cloud-based a and a is attention ability protection. and to finish e-mail industry-leading large note. an breaches a at excited introduce opportunities it's close time EOP and drive space, striving the both availability. we buy being encryption help it right build when small clear particular addition be going We with expect our strategy with solutions capabilities to that making as the e-mail customers can mind helpful added particularly on-premise prepared today I'd to overview EMS beneficial of in place, a the in our

with call Now we're Operator? the open for ready your questions. that to

Instructions]. Thank you. [Operator

ahead. go Our question Craig-Hallum. Mike comes with Please first line from the of Malouf

taking for questions. my guys Thanks Great.

Mike. Certainly. Hi,

we XX% to long little look identified how that's Hi. explore do just about Can out you as you that of the about bit renewal into on going talked you you rates impact XXXX. over I think

Yes.

in been the see is we then -- that a obviously I what the one year so throughout up start and beginning an would QX, year there be QX would we expect into or mentioned and is I in to XXXX. impacted the larger So one occurring are loss have forecasted through as contracts guess QX,

As hundred going more record we XXXX anomalous points year. definitely within basis last rates we and the couple of to returning pipeline out, are our renewal three, levels at again see outside look our historical those renewals for renewals

XX% then what's And talked that about Okay. of you that's sort other XX%, identifying when --? the

XX% typically that So from when more they throughout to server the customers the migration exchange Office with decision. XXX other cloud different generally services kind on-prem moving competitive are bundling server exchange make and of this an

was Office the that that cloud your about moving And XXX? of that was tied the comment specifically sort Okay. competition to to

Yes.

commented the or the bundling email pipeline to did be you you Okay. you as looks continue as and about look for the can pipeline but promising business very looked talk that is going when And strong, think lighter sort you over for just use, look little think is then not that's that a you of to that pressure encryption into typical two? out a you what the the or encryption year under look next I

is driving EMS build more No for interest end-to-end especially which not, encryption that trends underlying absolutely and the acquisition or the solutions. e-mail for are we are seeing encryption end-to-end pipeline exceptionally strong at on large more accounts

transition one transition and the on get our I ZixArchive think basis. and pipeline the organization focus that on behind launching ZixProtect bundle and of is really that an micro as internal managing

that that your bundle so can some there look That's question, the bundle as you or think as and far, significant add to clients additions the that that to months, markets the right next really have just is it? are over sheet now, the you cash think how you bundling bundle and all complete that you through I to Okay, now and success then M&A right. XX out that balance look you the given you're one with last you so on at helpful offering the had

building have capability demonstrated quarter best-in-class sandboxing customers that the our and ways many threat advanced the roadmap redirect Yes, they many of market, and a and are I the we Mike anybody we features, implementations question we were so threats direct this or its that's that than that's URL clients, capability with different our we're acquired. The the in more advanced convinced and improved is in ZixProtect space more great out really as good for in the there past or else effectiveness with think as against malware anybody are protection. Solution a aware the of highlight the that it

have elastic on for engine the features. backended real cloud-based source So archiving with second we search is side. super solution the and transparent technology that's some fast has a SX exceptional true giving What is an really

really is about scaled is So think to that suite. about the we're the technology build investments about really we continue get really M&A so we and about faster, how make piece we as out can excited

look roadmap. technology our M&A looking then adjacencies bring that add at scale and we're you looking also So to might things that at at primarily we're as focus scale

you. [Operator Instructions]. Thank

Our line Kim of with Imperial next go question comes ahead. Please from Michael Capital. the

So on Guardian partnership, Digital does joint offer bit selling or opportunities with could complement you that little just on plan and marketing DLP expand currently how a capabilities ZixEncrypt? that and B a a as motion the you specific that

a DLP. recently ZixEncrypt use great our to and very to outbound enterprises Lexicons have very, our the suited with you integrate with are support lot with really approach modified it's enterprise well question e-mail for increased Michael current protection. to X-Header better complementary That's as We've know a platform

different just that an session our entire our we that can we customers and So so and DLP enterprise larger provided across most prevention enhanced to beyond of loss the be or e-mail provide. the their classification solution consistently work with

us whereas we my there their as a this extending really broader of to that's looking vendor subscription it's one a doing Digital understanding, set Gartner gives the value that right quadrant as vendors. about only partner source of with they're Guardian to consolidate really differentiated partnership but value customers to we're products with So licensing providing proposition know you hand our and

that Guardian very faces Digital a vendor our at we customers. value that partner we're is for with DLP As look by like where a partner build pleased for that great one

of Got your side-by-side then and deals close it. specific have every be are when switching see that envisioned been you gives you not opportunities inside. on of quarter. to every efforts just opportunities stabilizing six on you and contribution the Cisco. you know the but How focusing I do seeing conversion your five And consistent OEM three too get the may selling these with overtime sort quarter of to pipeline

the to adjustments open but going there's delivering happen. get great will open but we big in think current and inconsistent with And and enhancements way something that's partner -- I been will opportunity to a working we and guess be partnership will is require in relationship this working virtually that's relationship. is really side-by-side really consistent get So there Cisco I it the is we make some orders the the that they course the we're can we're are to to to structured Cisco upload direct Cisco be a of with a structured on direct until frank, fine.

been quick Any that's you And have that flow it. is Dave initial given Rockvam transactions the internal these for impact. level how contribution acquired plan. time in update revenue then some one going back that on to this Greenview, than better closing and Got outlined at that cash one you of progressing your

on Yes. We good very -- in having is of the success and selling side is Zix ahead plan. team the

to while see starting but build like really motion a so subscription model are the so, into to we're we mid-April the that. XXX% up that model a coming We as it takes started subscriptions selling

so QX about XX% in revenue million flow see they're million of running that if the that. on year Dave based $X.X of did for this And revenue and neutral. you then year $XX,XXX Data over spread kind team So Greenview so $X.X $XXX,XXX at write as performing look the puts that's of at you into a cash quarter's at said, that plan

have model on in where Got these assumptions these expense to with for it. of do more efficiencies. QX begin the And then just guide envision expense leverage you some

was cost it able sale little pretty They're expenses expenses of that you see talking a across it of We see of the maybe net to bit QX. a we board I it in See, the a expense kind said I turnaround as board. be little where in think little sales that’s there much a closest a thousands sales in tens bit I R&D able I little We're few and so, -- in G&A. we're were some may out think few some bit like wasn't were dollars. the might to people just bit but turnaround savings talking was one additional probably mean but you'll it across headcount unnecessary

Okay.

sales no change So capacity. in significant

do with capacity, have sales anything obviously No, not right. to

now to Thank you. his further call And [Operator Instructions]. over like turn would Mr. I closing Wagner no back remarks. for questions with the to

our QX all sometime fourth in for attending call you February. We the to earnings call. forward thank Well, quarter look

third Thanks for call. Zix's for XXXX joining us earnings quarter today

now may You disconnect.