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Good day, and thank you for standing by. Welcome to the Haivision Fourth Quarter 2021 and Full Year Earnings Release Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions]I would now like to hand the conference over to your speaker today, speaker Miroslav Wicha, Chairman, CEO and President. Thank you. Please go ahead, sir.
Thank you, operator. Well, thanks, everybody, for joining us today. I'm thrilled to be back to discuss our Q4 and our fiscal year 2020 results. Now as demonstrated by the results we announced earlier today, demand for our innovative technologies remain strong, and our investments in both R&D and sales to capitalize on future growth opportunities are clearly paying off.Now let me start with the amazing Q4 results. $27.1 million, which exceeded all previous quarters and was a 22.3% growth over Q4 of last year. Now the strength of our CineMassive performance only shows the strategic importance of the acquisition of last August. Now I'll leave it to Dan to give us more details on all the financials right after my prepared remarks.Now for the full year of fiscal 2021, we delivered another record revenue year by delivering $92.6 million in revenue, which was up 11.4% over last year and a record $12.3 million of adjusted EBITDA, which was, by the way, a growth of 22.6% over the previous year. Now I do want to remind everyone that this time last year, our adjusted EBITDA grew 67% over the previous year or 53% of normalized for the impact of IFRS 16. Thus, I would say it's an amazing back-to-back years of impressive financial results and delivering on our promise to increase operational efficiency.Now not only did we deliver another record revenue year, but we also delivered our 14th consecutive year of positive adjusted EBITDA. So as you can imagine, we're very, very proud of these results. Now let me briefly discuss 6 key highlights of 2021. Number one, let me begin by stating that I am thrilled for our first strategic and impactful acquisition since the IPO, which was closed in August of 2021. Now CineMassive is a great addition to the Haivision portfolio, and it enables us to be the only provider and vendor of a total end-to-end solution. What I mean by that is really encoding, ingest, contribution, display, record, playback in the advanced visual collaboration space to really deliver innovative mission-critical solutions for tactical operational centers that are heavily requested today by enterprises, governments and defense partners globally.And we're already deriving incredible sales synergies with the CineMassive team, and I'd like to mention that we have already closed a significant but unfortunate confidential joint product deal within the ISR space, the Intelligent Surveillance Reconnaissance space, with our Haivision Media Platform sold together with the CineMassive tactical command and control wall to deliver full recording and playback capabilities, resulting in truly an innovative mobile operations center.I'm very excited on our ability to scale this business globally and to increase our footprint in both enterprise and governments worldwide. I mean the urgent need for real-time low-latency operational control centers is growing, especially given the cybersecurity concerns around the globe, and this acquisition is perfectly synergistic for Haivision, and we'll continue our growth in these high-value markets well into the future.Now point two, our advanced cloud and self-serve SaaS video distribution platform, Haivision Connect, has been receiving very positive feedback from our house of worship and faith clients. And I'm thrilled to report that we now have 90 clients using Haivision Connect as part of our transition to this new SaaS platform, including some of the largest multicampus ministries in the United States. And as mentioned previously, we are transitioning all our house of worship and faith clients this new innovative platform throughout this year and really establishing Haivision Connect as our next-generation fully scalable SaaS-based enterprise platform for real user engagement. And we are very pleased with the progress and feedback from the users, including some really exciting sales to new clients, which I will mention a bit later.Another point, we've also launched the Haivision HUB, right, our innovative cloud-based video stream routing technology already with 27 active clients and plan to introduce new significant features within the next few months. Now these new features will enable full management and device control of Haivision endpoints such as our Makito X Encoders and the Haivision Gateway, giving users powerful control of ultra low latency cloud routing of video securely from anywhere to anywhere globally. And Haivision HUB is really evolving into a powerful video routing and element management platform for all our devices. This is really, really exciting. Point four, our flagship encoder, The Makito, really evolved during the year with new features that enhance remote workloads, including multi-stream synchronization and stream redundancy across multiple network paths. I mean these, combined with its renowned low latency has made the Makito the gold standard for everything remote and broadcast. And this unmatched performance across our product line is the cornerstone of our strategic partnerships with global companies who are bringing forward their own decentralized and cloud solutions, including Avid or editing, EVS for replay and Grass Valley for production.Now our overall international revenue continued to increase at an impressive growth rate of 27.5% in 2021. Again, I would like to also remind everybody that last year this time, I said the international revenue grew an incredible 39% over 2019. It absolutely shows that our investment in various regions over the years are clearly paying off. In fact, business outside of the U.S. today represents approximately 25% of our overall revenue. So very impressive.Now specifically, our International ISR Defense business has continued to show solid growth in the past 4 years, as we continue to benefit from our long-term successes with the U.S. Department of Defense. Our reputation has been the gold standard for mission-critical low-latency ISR solutions for the U.S. DoD has been helping our allies and partner nations adopt similar technologies over the past several years.And we expect this trend to continue as Haivision maintains its leadership in mission-critical real-time video streaming globally. In fact, CineMassive acquisition will further add to our international growth in this market. And we believe having a strong international platform and presence is important to maintain the Haivision's leadership in the global IP video market.And last point I would say is we have been discussing all along that one of our most important initiatives is to focus on operational efficiencies. And we continue to benefit from our decision to reallocate our marketing resources away from the expensive trade shows, both in 2020 and 2021, and will continue to '22 and focus more on digital marketing prowess. We also don't foresee the huge increases in R&D spending as we have made between 2017 and 2020. So together with our continued reduced travel and work-from-home directives, we do expect to be driving bottom line efficiencies throughout 2022.Now let's talk about some new logos as we added many new clients in Q4. Our broadcast customers continue to invest in Haivision technology, supporting a much-needed move to remote workflows and their thirst for more content at reduced costs. And in Haivision and our SRT-enabled connectivity over low-cost networks are at the heart of this transition, giving broadcasters and media companies the ability to do remote production, production in the cloud, high-quality remote interviews and to deliver any feed within our broadcast facility to homebound creatives, producers and directors so they can really do their jobs more effectively.Now some notable Q4 wins, many of them investing in infrastructure related to the return of sports include: the Western Mobile TV and Colorado Studios, both serving remote workflows for the 21 Sinclair regional sports networks, very, very cool wins. Gravity Media, providing remote sports, event contribution, using our technology to support multi-camera synchronization for the Pac-12 Fox Sports and other major sports providers in the U.S. Game Creek, although not a new client, continue to invest in Haivision to support NBC's regional sports networks, remote studio production in 5 city hubs, all managed from New Hampshire.And as another major U.S. 3-letter network count on Haivision to suit up home facilities for their top news anchors to address continue under the threat of disaster or renewed lockdown. In fact, internationally, Haivision secured ZDF, MRD and ARD in Germany; RTL in Luxembourg; Asahi Broadcasting in Japan; TV5's operation in Hong Kong; and the Middle East broadcasting network, beIN serving a weekly audience of 31 million people across 22 countries. It's not closer to home, Firstlight Media, an OTT provider out of Toronto selected Haivision to help with their new challenge, supporting a major Canadian broadcaster and delivering hockey broadcast to viewers across the country.Now finally and most importantly is that many service providers and broadcasters are now using Haivision extensively to support live contribution, multi-region distribution, remote collaboration and in-stadium video distribution for the '22 Winter Games in Beijing. And not to mention my favorite part being a Haivision technology will be used extensively within the largest sporting event on the planet, the upcoming World Cup Soccer at the end of this year in Qatar. So Haivision is really at the core of broadcast today.If you can tell, I'm really enjoying the broadcast market. Some are the house of worship or faith market. It continues to be strong and Q4 wins for our Haivision Connect have shown that this market segment is embracing our new platform that is highly differentiated from the competition by combining a very simple user interface tuned to the challenges of weekly streaming with an extremely powerful and reliable cloud distribution and delivery architecture.Like some select Q4 and new faith client markets -- clients, sorry, include: Samaritan's Purse, I mean this is a humanitarian aid organization, very large, serving 100 countries, and it was actually founded by Billy Graham's son, connecting 7 campuses with 3 stream live video, huge, huge account win. And highlighted brand new Connect customers, actually our Durban Christian Church Centre, Journey Church, the Ginghamsburg Church, Without Walls Church, which was a huge victory replacing a major competitor and EdgeCerch in South Africa. And the Celebration Church in Austin, an existing client for our other services is also adopting Connect due to its ease of use performance. So a very strong and robust market.Let me quickly talk about the enterprise market. It has suffered some setbacks early in the COVID pandemic, because many enterprises, as you know, had strong work-from-home mandates and limited facility access. And our solutions in this segment that delivers secure real-time broadcast throughout organizations are experiencing renewed demand as people are getting back into the office.As in Q4, there's a small sample of some of the enterprises that have adopted Haivision. These include the United Nations. Like they adopted Haivision HUB for connectivity to their stream platform. Now interestingly enough, last quarter, the UN in the Netherlands actually turned to us to support remote participation in the Dutch international courts. RBC Wealth Management turned to Haivision for live internal multisite streaming between Minneapolis and Seattle. Hewlett-Packard bridged their old and new headquarters together with secure real-time video using Haivision. And finally, the European Union and the European Commission both turned to Haivision to support home-based interpreters.Now I just want to kind of conclude with some feedback from our Haivision Connect success a couple of sound bites from our faith clients on our new cloud SaaS platform because this is very important. Jordan Grands, production IT Director from Encounter Church said, "Haivision's Connect user interface is intuitive and extremely easy to use. It's a real game changer and so much better than anything else in the market. I love that it's so fast and simple to get up and running." And from Roxanne Griner, Communication Director from Grace City Church, "when I started using the new Haivision Connect interface, I was impressed with how simple everything was. I love the look and the many features that help make it easy to schedule and launch to multiple platforms with just a few clicks. I also love having all the demographics of our audience so easily accessible. I love most that Haivision has considered their clients' needs and implemented features that make live streaming a breeze for any skill level." So pretty cool feedback on our new SaaS platform.Now just before I pass it to Dan, our CFO, for more detailed analysis on our fourth quarter and year-end results, I would like to also mention that headwinds in '22 do exist, which could affect business and growth and the world is dealing with an unprecedented supply chain and component shortage like never seen before. Now the good news is that our supply chain team has done an excellent job in mitigating these pains thus far and as focused like the laser beam on addressing anything that comes our way. But I understand that costs are up, delivery times are longer and the challenges are there. Now Dan will speak to more of this in detail.And finally, I'd like to add that we are continuing our aggressive focus on acquisitions as part of our M&A strategy since the IPO. I expect to share some more exciting news with you very, very shortly, so please stay tuned. I also want to mention that I could not be prouder of the Haivision team and what we have accomplished last year in 2021. It's truly been an amazing first year as a public company, and not only delivering, but exceeding most of our expectations thus far.I do, however, want to acknowledge one thing that I have received feedback from many of you regarding the lack of investor press or marketing material from Haivision as compared to other companies. Rest assured that I'm going to take care of this and will engage directly to make sure that we increase our presence.And finally, I want to thank all of our investors and analysts on the line today for their continued support of Haivision and look forward to speaking with you very, very soon.Dan, it's all yours.
Thank you, Mirko. So let's get into the numbers. Revenue for this fourth quarter of fiscal 2021 was $27.1 million, representing an increase of $4.9 million or 22.3% from the same period in the prior year. We are pleased with CineMassive's performance this quarter having contributed $5.1 million in our overall growth.Our book of recurring revenue, which we define as our cloud solutions and maintenance and support, continues to be robust. Recurring revenue was $7.3 million, a quarterly record and represented 27% of this quarter's total revenue. For this quarter, gross margins were 70.8%, down from recent history. As discussed on previous calls, we anticipated a decline in gross margins to accommodate CineMassive's lower-margin business. As CineMassive and Haivision operated autonomously in the first quarter as the combined entity, gross margins for Haivision on a stand-alone basis were, in fact, higher than in our third quarter 2021, which is typical as higher quarterly revenues are able to offset the fixed cost of our production departments and other cost of sales. With that said, we have been incurring additional costs, including expediting costs and increases in direct product costs as we derisk our supply chains. And I'll have more to say on that subject later in my prepared remarks.We are continuing to invest in subscription trials for customers interested in both our Haivision HUB and Haivision Connect platforms. And note that both Haivision and CineMassive invested in enhanced production facilities to accommodate even higher levels of revenue going forward.The company generated record revenues of $92.6 million for fiscal 2021, exceeding the prior year by $9.5 million or 11.4%. On a year-to-date basis, revenues from cloud solutions and maintenance and support contracts represented about 25% of total revenue for the year. For fiscal 2021, gross margins were 74.9%, slightly behind last year's performance, but again impacted by the CineMassive business, which historically has operated at a lower gross margin than Haivision's traditional business. As presented, total expenses for the fourth quarter were $19.7 million, an increase of $4.2 million when compared to the same period in the prior year. Normalized for share-based payments, noncash expenses we did not incur in the prior year, total expenses were only $18.8 million, an increase of $3.3 million when compared to the same period in the prior year. However, much of that increase can be explained by the $3.5 million in additional expenses from CineMassive's business. Now note this, as we continue to integrate CineMassive's business into our system, it will become increasingly difficult to identify CineMassive expenses on a stand-alone basis.Total expenses for fiscal 2021 were $74.8 million. However, that figure also included $16.8 million in noncash share-based payments that was not part of our cost structure in fiscal 2020. The $16.8 million in share-based payments can be divided into 2 components. As discussed on previous calls, $14.2 million of those share-based payments were onetime, nonrecurring, noncash expenses resulting from the exercise of options related to our legacy employee stock option plan. This was the combination of a 14-year program that was truly an extraordinarily below-the-line expense. $2.6 million relates to compensation expenses from grants of stock options, restricted share units and deferred share units issued since the time of the initial public offering. Again, no such expenses were recognized in fiscal year 2020 or prior to that year for that matter. So when we normalize for these share-based payments, total expenses for fiscal 2021 were $58 million compared to $55.6 million in fiscal 2020, an increase of $2.4 million.Now as we've mentioned before, fiscal 2021 financial results benefited from the $1.8 million from the PPP loan forgiveness. If we normalize for both the share-based compensation and the benefits of the PPP loan forgiveness, the result is a fair comparison. Total expenses for fiscal 2021 would have been $59.8 million compared to $55.6 million in the prior year, a $4.2 million increase.CineMassive's expenses in that fourth quarter represented $3.5 million of that difference. So normalized, total expenses as a percent of revenues fell to 62.6% compared to 66.9% for last fiscal year, a key contributor to operating efficiency. Adjusted EBITDA for the quarter was $1.7 million, a modest decrease of $100,000 compared to the same period in the prior year. The additional expense of being a public company certainly contributed to the year-over-year shortfall. Nevertheless, this quarter now represents our 30th consecutive quarter of positive adjusted EBITDA. More interestingly, for fiscal 2021, adjusted EBITDA was $12.3 million, an increase of $2.4 million or 24.4% when compared to fiscal 2020.For fiscal 2021, our adjusted EBITDA margin was 13.3% compared to only 11.9% for fiscal 2020. But we could also argue that have we not adjusted EBITDA to eliminate the recurring -- the nonrecurring benefit of the Paycheck Protection Program, EBITDA for fiscal 2021 was $14.1 million, a $4.2 million increase or 42.3% increase from fiscal 2020. Clearly, our focus on operational efficiencies has continued to pay off. But our financial performance may not adequately illustrate the headwinds we overcame in terms of supply chain constraints, hiring, significant added expense of being a public company and the stronger Canadian dollar in fiscal year 2021.So let's unpack each of these headwinds just a bit. The global shortage in electronic components continues to be a challenge. However, we have done much to derisk our supply chain in the short term and in the midterm. We have invested in higher levels of inventory across our supply chain to minimize the risk of revenue disruption, and we've done that in the form of components, subassemblies and finished goods. We have qualified ultimate manufacturers for difficult-to-procure electronic components. We've even redesigned certain products using latest componentry technologies to prevent potential shortages with legacy components.We've invested in a new system to maintain a real-time assessment of our supply chain resilience with market changes. And we've developed strategic partnerships with semiconductors and electronic component distributors to quickly mitigate future component shortages. Although, certain of these initiatives have impacted our balance sheet through inventories, prepaid and deposits, I think it's fair to say that our customers have appreciated that they can still turn to Haivision for their immediate video infrastructure needs.Obviously, none of this is doable without our people. And generally speaking, 3/4 of our cost structure is related to our people costs. We have always had a fairly distributed workforce, but we do have significant offices in Montreal, Madrid, Hamburg, Chicago, et cetera, but we acknowledge that a work-from-home posture is a bit more complicated to perpetuate a culture that we're proud of. As an example, since the pandemic, we have hired 80 people that may have yet to meet their boss face to face or have yet to see one of our offices. In fact, about 1/4 of our workforce has been with us less than 2 years at this point.We know we have a high performance and valued workforce that is the envy of the industry, and our competitors are always trying to find a way to hire our people. And we also have to acknowledge that we do have a general sense of fatigue during this pandemic. It is always challenging to maintain the culture that we are so proud of. Nevertheless, we continue to make investments in our people and key initiatives include the introduction of a long-term incentive plan to attract, retain and motivate our employees. We've offered an employee stock purchase plan.We've hired another full-time recruiter to help identify and recruit quality professionals, and we have worked hard to continue our culture when most people continue to work from home. The cost of being a public company certainly impacted year-over-year comparisons as well. The cost of directors and officers insurance, accounting audits and assessments, legal, translations, investor relations, filing fees are just a few of the expenses we have endured in fiscal 2021. In aggregate, these expenses represent between 10% and 20% of our EBITDA performance, which is significant. Said another way, our operational efficiency would have been dramatically better had we not incurred these expenses.Given our long operating history in Canada, we have decided to report our consolidated financial results in Canadian dollars, notwithstanding that our functional currency is the U.S. dollar. Thus, our results are impacted by changes in exchange rates, particularly the exchange rate between the Canadian dollar and the U.S. dollar. We did see a strengthening of the Canadian dollar in the quarter-over-quarter comparison.In fourth quarter 2021, as an example, the exchange rate was about $1.25 compared to $1.32 in the prior year period. That's a 5% difference. And we saw a similar strengthening when comparing all of fiscal 2021 to fiscal 2020, again, about 5% difference. Although, the difference is small, the movement in exchange rates did have a modest impact on both topline revenue and resulting profitability. With that said, net income for the quarter was $200,000 compared to net income of $1.5 million for the same period in the prior year. Share-based payments represented about $800,000 and an additional cost of being a public issue explains another $0.5 million.Net loss for fiscal 2021 was $8.9 million compared to net income of $5.8 million for the same period in the prior year. That's a difference of $14.7 million. But again, share-based payments impacted profitability by $16.8 million. The cost of being a public issue was another about $2 million and the increases in depreciation and amortization between years was about $1 million. I think we are all looking forward to fiscal 2022 when year-over-year comparisons will be more direct and more representative of our actual performance.Looking at the balance sheet. We've ended the year with $26.8 million in cash. Total assets at year-end were $122.5 million, an increase of $23.1 million from last quarter end. The increase in assets are largely the result of the $47.4 million in noncash assets acquired, net of the $21.5 million in cash consumed related to the CineMassive transaction. Just a side note, the CineMassive acquisition did increase our right-of-use assets by $5 million related to the new real estate leases that accompanied that transaction.Total liabilities at quarter end were $33.6 million, an increase of $5.1 million from last quarter end. We did assume $9.1 million in liabilities related to CineMassive, including $5 million in lease liabilities, but we also retired all bank debt during the year. So in terms of financial liabilities, we are currently debt-free.As we've discussed on prior calls, we did enter into a 3-year credit agreement providing for a new $35 million revolving line of credit with the Bank of Montreal. The revolving facility is for general working capital, general corporate requirements and for financing acquisitions, and it also includes an accordion feature that allows us to expand the line to as much as $60 million.Obviously, the big news last quarter was the CineMassive transaction. CineMassive's year-end is, in fact, December 31. However, in the 12 months ending October 31, revenues were, in U.S. dollar terms, $21.1 million. $5.1 million of that was generated in our fourth quarter.Gross margins for CineMassive business have historically been between 55% and 60% and was closer to 60% in the 12 months ended October 31. We continue to believe there are additional opportunities for margin enhancement. As also stated earlier, it may be unlikely to report CineMassive revenues or margins separately as each of our entities cross-sell products to their existing client base. We had a similar experience with our Video Furnace, Kulabyte and Coolsign's acquisitions. Now one of CineMassive's key assets, albeit a nonfinancial asset, is their facility security clearance. We continue to work with the Defense Counterintelligence and Security Agency, commonly referred to as DCSA, on a special security agreement. Our plans to integrate CineMassive have been discussed with DCSA, and we got awaiting approval on preliminary plans. We do expect the acquisition to be accretive to adjusted EBITDA and to enhance our adjusted EBITDA margin. Just to remind everyone, the transaction consumed $21.5 million in cash and included the issuance of 2,145,000 shares.Before providing some guidance to fiscal 2022 performance, a quick note about currency. Our current guidance does not consider the potential impact of foreign exchange gains or losses as we do not try to estimate future movements in foreign currency rates. Assuming business as usual, meaning a consolidated view of Haivision and CineMassive, we expect revenues to represent year-over-year growth of between 35% and 40%, and we expect adjusted EBITDA to grow at a fast rate of between 40% and 45%. This should, in turn, translate to increases in operational efficiencies in fiscal 2022.With that said, we are now ready to take your questions.
[Operator Instructions] Your first question comes from the line of Robert Young with Canaccord Genuity.
Maybe the first place I'll start, you highlighted a joint contract in the ISR space. Last quarter, you had said that there was a headwind there because of the defense market, some softness there. I think the Afghanistan pullout was something that you highlighted. Is there an update there outside of that joint win? Are you seeing like a return to strength in ISR? Or is that still a little bit of a headwind?
No. We're still seeing a little bit of a headwind, mainly I would say probably in the U.S. and less so in international. So we're still seeing pretty good business, but I would not say that the headwind is over.
Okay. And then the second thing, I think you said that Q3, there was a little bit of a shift of revenue into Q4 in the programmatic, the business -- the government business, did that play out as expected? Like is there any way to quantify the benefit there? Or if that's something that didn't come to fruition?
I mean, Rob, I know it's tough. It's -- because we have quite a lot of programmatic businesses, right? And some are shifting. And in fact, there are some that moved up, and some moved actually out several quarters. But all in all, I would say it probably had very little impact on Q4.
Okay. Great, great. And then you said that 2022, you're expecting strength in the enterprise market. The Omicron wave, that doesn't seem to be having an impact, like was that an impact in Q4 and you're expecting it to get better in 2022? Or are you just seeing strength recover in enterprise like more steadily?
Yes, I think we're seeing and we're hoping the second half of 2022 is going to be a little more open. I think we're already getting some feeling of the fact that countries are going to be opening up regardless of what's going on. But we are seeing a lot of focus on the operational center type of business, the cybersecurity type of stuff, all the stuff -- all a lot of remote monitoring. And in fact, that's really where something like a CineMassive acquisition is going to pay off.I think we're seeing a lot of interest and people getting heavily involved I call that the enterprise business as well, right? It's not just the military side or just the government side, but we're seeing it all across also state, local, right? Emergency response teams, so all of that stuff really feeds very well into the overall enterprise space.
Okay. Maybe just a couple of questions I'll pass it on. The supply chain impact, component costs, freight costs, all of that. Are those costs that you think you can pass through to the customer over time? Or is it you expect that elevated cost to remain? Are you thinking about that as a multiyear factor? Or is that something that you think might be shorter term in nature.
Do you want to take that one?
I know that's a hard thing to answer. But just based on what you understand.
Yes, that's a hard question to answer. I would say that there's 2 things that we're contending with. The first is making sure that we can secure our supply immediately, and in which case, we're paying some spot rates that would be higher than what we typically would spend. And I think those things are going to be dissipating.But I do think -- I find it hard to believe that when these component manufacturers are able to increase prices that they're all of a sudden going to voluntarily decrease prices going forward. So my sense will be that we're not going to see as much of the shock of the spot buy, but we may see the prices to be a little bit higher than we have been historically used to. At least that's my view until we start seeing more production of these components, maybe domestic production, what have you.
Yes. If I understood the comments before, it sounds as though any impact on gross margin is limited. It wasn't really as much from the supply chain headwinds or pricing of component costs, it was more about mix of revenue from CineMassive. Is that fair?
Well, I would say that in the fourth quarter, we did not see the cost of good sold increase as a result of some of these purchases that we're making, but we're always looking 3 months, 6 months, 9 months out. So as we're derisking it, we're making investments and we're buying procuring componentry to be able to address our forecast, and that is costing us a little bit more money than we had in the past.
But to answer, Rob, your question, yes, in Q4, entire decrease in gross margin is due to the lower typical gross margin of CineMassive, absolutely. So we said that in the beginning because remember, they're normally around the 60%, high 50% to 60%, and that's going to continue going forward. Hopefully, we're going to drive better. But our traditional margin as stand-alone maintains the same levels.
Yes. One of my comments was that our fourth quarter gross margins were actually higher than in the third quarter of our year.
Okay. And then last question, just if you could reiterate that guidance for 2022. I'm not sure I got the numbers right, you gave revenue and EBITDA growth, what were those numbers again?
So we expect year-over-year growth at between 35% to 40%, and we expect adjusted EBITDA to grow at a faster rate of between 40% and 45%.
Okay. Well, that's some very strong growth numbers. What would be the big driver behind that? Because I think last year, the guidance was low single digits or mid-single digits growth. And so that's a big step up in the growth profile in 2022. Like what's the big driver behind that?
Well, CineMassive, obviously is part of the thing. When we talk about year-over-year growth, we're really talking about 2021, where Haivision was a standalone business until the fourth quarter compared to what we believe we can do together in 2022.
Right. And then so if I -- is there -- if I look -- think of it just in terms of organic growth, would it still -- would it be mid-single digits, same as last year? Is that the expectation?
No. Our expectation would be between 10% and 15% and probably closer to the 15% number.
Okay. So still a step up from last year. Okay.
[Operator Instructions] Your next question comes from the line of Kevin Krishnaratne with Desjardins.
A question for you kind of on the guidance on the EBITDA leverage that you're going to see there. Can you talk about the drivers there? How do we model the various lines, R&D, sales and marketing? Can we take the fourth quarter numbers and sort of work it through for 2022 forecast? Just how do we think about where other areas of investment might be? Are you thinking still about that international expansion and putting more resources towards CineMassive? I think those are some of the areas of investment you previously alluded to.
Correct. I would say that it's a very good question. And I'm going to see if I can unpack that a little bit here. But I think the fourth quarter cost structure would be a good starting point for where we believe fiscal 2022 is going. Our budget for fiscal 2022 includes the addition of 60-some-odd people within our organization.If we look at where we're investing time and attention, yes, about I'd say, 1/5 of that number goes into the sales organization, about 1/5 of that is going to go into the R&D organization. But I think we're making bigger investments in our infrastructure to support the growth of the business, particularly as it relates to internal systems, as it relates to technical support and what have you. And so you might see that grow a little faster than you would in years past.And as we've kind of said in the past, we've made some significant investments in our R&D area, and for that matter, in our sales and marketing area. So we don't believe that those areas are going to grow commensurate with the topline growth, but we still make investments to grow the business.
Got you. Okay. So I'm looking at that -- what you disclosed as operations and support, that's where we would see upside to the Q4 numbers that we're trying to model out for next year?
Correct.
Okay. Good performance out of CineMassive. I think it came in a bit higher than you had talked about on your last call, you talked about the sort of cross-selling. Is that really what drove the upside there because you also had thought, I think at your last call that there would be a possibility for upside to that sort of $4 million, I think, that you were initially expecting? I'm just trying to understand what really drove the outperformance there?
Well, I think that what we said in our last call is that we expected USD 4 million from CineMassive and $5.1 million actually represent pretty much on target. So I don't think that's really explaining it. I would suggest to you that because CineMassive has this secured facility and because we are working with DCSA, we haven't yet put all the pieces together to fully integrate the sales teams and be able to leverage that to the degree that we expect to do so going forward. That is going to start commencing in the next week or 2 as we start making some moves again, consistent with DCSA to be able to take full advantage of the opportunities that the combinations of sales teams can generate.
Okay. A question for you just on the revenue build out throughout the quarters then. I know historically, you said Q4 has been your sort of strongest quarter on Haivision core, can talk about with CineMassive in the mix now because I think Q1 is the stronger quarter for them, how do we think about how to model out the quarter?
Well, that's another good question. I think what we've been sharing with investors as of late is that historically, you're right, our fourth quarter was our strongest quarter. But we started to see the business shift a little bit, and we had strong second quarters and fourth quarters, largely related to the defense and government business as source.Now if you supplement that with CineMassive, which tends to have a higher first quarter, as you pointed out, we're beginning to see a lot more consistency between our first, second and fourth quarter and perhaps a little bit more weakness in the third quarter comparatively speaking. But again, it's a matter of degrees in the scheme of things.
Okay. Just a question for you, a couple more here on HUB. I might have not caught it accurately. Did you say you've got 27 active clients as of now? How does that compare to what you had the last time we discussed. I thought that might have been close to 25. Just wondering what you're seeing there? With your existing HUB users, are they expanding usage more? Can you just talk about the customer build-out and also just the usage?
Yes, I can hit that one. The -- well, actually, I think last time I probably was quoting people are testing it or trying it and not necessarily fully using it. I think that the -- right now, the 27 fully active paying large accounts using it. So I think the last time the number which included some tests, some people using it and also testing it, right? So we have a lot more people testing it and playing with it. But I wanted to kind of -- now that we've got further down the road is really talk about active clients, right?
I would also suggest, and Mirko touched on this in his remarks, we're adding some significant functionality to the HUB core business of sorts. And so I think with that enhanced functionality, it's going to be a sort of a relaunch of general availability, routing much more functionality than it had in the past.
Yes. Because before there's going to be a -- it's a new -- it's basically a new -- or renewed, I should say, not -- renewed focus on all of our installed base as well because we're really treating this -- I'm almost calling the next generation of HUB, where it's going to be a real platform, not just for routing, but for connectivity and the management, full control management of all of our devices. So when you think about that, that's a big difference from just when we talked about the HUB previously, right? So we're going to be able to -- and when you think of it, we've got over 70 or whatever -- I mean, how many, I think, 18,000 Makitos out there...
158,000 end point.
Sorry, 158,000. I'm sorry, double that. That's a lot of installed base. Just think about now having a complete management platform system that all of our endpoints can take advantage of, which is a very easy-to-use UI based point-and-click to connect devices, forget the cloud routing for now. I'm just talking connecting our devices without the cloud on-prem. Plus through HUB, you'll be able to do an easy-to-point-to click through the cloud on top of that. So you've got 2 interesting revenue streams happening there.So this is a big shift and a big change for the HUB. And I think that's where a lot of people are getting excited about. So you're going to see -- obviously, you're going to see a lot more -- hopefully more uptick, but you're going to see we're going to be focusing a lot on our installed base as soon as we launch the new features.
Okay. Lots of good detail there. I just want to ask if you probably want to -- I'm not sure if you're going to answer this, but any way to think about how much your revenue generating out of HUB? And is that located -- that's all in the cloud solutions bucket right now?
Good question. I don't have a number for you.
We don't have a number. I would not suggest that it's a big part of that cloud solutions revenue that we have there, not yet.
Yes, it's still pretty minimal.
Okay. We'll look forward to that. One last sort of big picture question maybe for Mirko there. Just given your strong relationship with Microsoft and given all of your -- the great momentum and roster of customers that you've got in media and content creation to ask a question on Metaverse. Microsoft is pretty involved here. Are you hearing anything from customers any sort of initial trials? What are your thoughts on Haivision's role to play in this potentially exciting new paradigm?
Well, it's a great question. I mean, honestly, we don't have -- nothing I could really tell you right now that would be actually meaningful. So we are talking and we do have a good relationship in many fronts with Microsoft. But really, honestly, nothing really to talk about at the moment. I mean they're also one of our clients, too, right? So it's not just a strategic part. They're also our customer. But no, we -- there's no discussions to actually be mentioning at this point.
There are no further questions at this time. I would like to turn back the call over to the presenters for closing remarks.
Thank you, operator. Well, thank you, everybody. I really appreciate your time. I hope that we gave you a nice appreciation of what happened last year. And look forward to seeing you sometime in March when we're doing our Q1 results. So thanks a lot. Take care.
This concludes today's conference call. Thank you for participating. You may now disconnect. Speakers, please hold your line. Thank you.