© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Good morning. My name is Sylvie, and I will be your conference operator today. Before we begin, I will be reading the company's standard disclaimer. This conference call will contain forward-looking statements with respects to the corporation. These forward-looking statements, by nature, necessarily involve risks and uncertainties that could cause actual results to differ materially from those expected by these forward-looking statements. We consider the assumptions on which these forward-looking statements are based, to be reasonable, but caution the listener that these assumptions regarding future events, many of which are beyond our control, may ultimately, prove to be incorrect since they are subject to risks and uncertainties that affects us. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as results of new information, future events or otherwise, except as required by applicable securities legislations. Unless otherwise indicated, all amounts are in Canadian dollars. At this time, I would like to welcome everyone to Mediagrif's Conference Call on Results for its Third Quarter of Fiscal 2020. [Operator Instructions] Thank you. Mr. Filiatreault, you may begin the conference.
Good morning, everyone. Good to have you all on the call. We see a pretty long list of names here on the screen. So we find that very positive. Second call that I'm holding with you all. The first one, 3 months ago, I was -- I had been on the job for something like 7 or 8 weeks. So it was hard to give you a lot of perspective on things. I think, today, we're in a complete different position. And as we mentioned in the various documents that we published at the end of the day yesterday, not only are we publishing our third quarter 2020, which is absolutely in line with what was expected, but we're also super excited to announce that we've now completed, approved and already started on the implementation of the 5-year strategic plan, which will really take Mediagrif to new grounds and change it from a pretty stable, not fast-growing company to an accelerated-growth SaaS business model, e-commerce technology company. So with that, in the highlights that I would like to share with you is, certainly, we've already completed an acquisition, which you have read about, and we're already fairly advanced in the integration of it. We're using -- we have transferred some of the management from that acquisition to be part of the executive team here, and it's already starting to create some positive momentum. We have -- as you noticed in the financial statements and MD&A, we have changed a bit, the executive team, and of course, that leads to some severance costs and these severance costs are relatively material. So it's not something that we take lightly, but we now have the executive team, which is going to lead Mediagrif to its growth path. Very happy to report that, that strategic plan will really have 2 major components. One is, of course, going to take our business lines, our sectors of business and have them -- transform them into a SaaS-type of business and have them go back into a growth mode. In e-commerce, strategic sourcing and supply chain collaboration, which we all expect can grow double digits by the time we finish the implementation of our various initiatives, and we will compound that with an M&A plan, which should certainly take the company into an accelerated growth and increase our geographical coverage, get some technology tuck-ins, get some AI functionality to our customer base in there, and we're -- we feel that we're completely equipped to deliver on that plan. With this, maybe, Paul, if you have a few comments you'd like to make about the third quarter results? And then we'll be happy to open it up for questions.
Yes. Thank you, Luc, and good morning, everyone. Just a few notes, as most of you have already you read the press releases, I won't repeat all of the numbers that are in there. Just to say that the results of the third quarter on the -- an adjusted basis were in line with our, let's call them, internal expectations in terms of revenues and EBITDA. And as Luc has mentioned, EBITDA this quarter includes a fair amount of nonrecurring expenses with regards to severance payments, as Luc mentioned. The acquisition cost of -- acquisition cost of k-eCommerce for $300,000. And obviously, we had some adjustment on the tax credit and internalized capitalized projects, all in all, for about $700,000. So none of that has nothing to do with the investment that we're doing internally. It's just internal capitalized project must follow specific rules, which -- and some of the times, you do have those type of projects that are eligible, some are not, but nothing to do with our investment in the business. So all in all, almost $2.3 million of nonrecurring costs during the quarter, and we would have been around $2.5 million EBITDA on an adjusted -- total adjusted base for the quarter. So that's -- summarize it and -- for now.
I feel that there's more value in answering your questions than in sort of re-commenting information that's been already published that I'm sure you have all looked into. And I'd like to open it up at this time for Q&A.
[Operator Instructions] And your first question will be from Amr Ezzat at Echelon Partners.
I'd like to start with some of the top line dynamics. On your B2B growth for this quarter, 1.5% year-on-year, a little lower than the last couple of quarters. Can we get your thoughts, I guess, on what are the drivers there? You mentioned MERX, BidNet in the MD&A. But maybe if you could give us like additional color on InterTrade? And like how do we think about that? Is that like normal course of business in terms of volatility? Or is there anything specific?
Well, the -- as you mentioned, Amr, merged BidNet $400,000 increased during the quarter. The InterTrade quarter-over-quarter was flat -- directly flat with last year in terms of revenues. And the other businesses are in -- the decrease in the other businesses are mainly in the e-marketplaces for $300,000. All in all -- well, essentially, Jobboom again, and Reseau Contact.
Then, I guess, like any thoughts on InterTrade like being flat, I think, both sequentially and maybe like year-on-year? Is that like the normal course of business? Or is there like anything to read into that?
Nothing to read into that, Amr. In my mind, it's part of what the company is doing in terms of its strat-plan. As you probably know, right, we were weak on sales, sales people, number of people that aren't working in sales and marketing, in general. And it's one of the aspects of the business that we wanted to strengthen highly. I was personally involved with some of the deals that were acquired by InterTrade over the last, call it, 6 to 8 weeks. And although we have signed some pretty interesting customers, they don't yet turn into revenue. InterTrade tends to sell network-based type of deals, and it just takes time to onboard the customers and get the various suppliers hooked to the network. So -- and you noticed that we have hired a VP of Sales at InterTrade back in November. Again, it's starting to generate some more business, but it doesn't show in the numbers just yet. I believe that InterTrade was without any sales people for almost 2 years, if not a bit more. So that explains that the pipeline has been emptied over time as the focus was on just generating profitability to the furthest extent possible and not investing in that growth of the top line. We started to add some people back, but there is a delay in the time that it takes to create the funnel. So I see absolutely no bad news. On the contrary, as I said, personally involved with multiple sales pitches and deals. So, so far, so good.
Okay. That's very helpful. Then, I guess, if we're thinking like longer-term profile of top line, in your 5-year plan, you speak to 11%, 12% and 15%, like industry growth in the respective verticals in which you operate. Is that what you guys are aiming on an organic basis as well? And do you think it's like a 1-year, 2-year process to sort of get you there? Like how do we think about timing?
You're all very familiar, I assume, with the famous Rule of 40. And in working on our strat-plan, our ultimate goal is to get the combination of growth and EBITDA to a number that's going to be 40% or higher. In the case of these 3 organics, we all know -- these 3 sectors organically, they all grow at double-digit, 15%, 12% and 11%, respectively. And we think it's going to take, let's say, 12 to 18 months to get back into that speed of growth. So we should see that starting to reach those levels in mid-fiscal '22...
'21.
'21, sorry.
And just to be clear, that's organic?
Yes. Correct.
Okay. That's great. Just switching gears on the margin profile. You provided some sort of guidance to -- 8% to 12% short term as you undergo this transition, and we're currently sitting at 9% for this quarter on an adjusted basis. So close to the bottom of that range, is it fair to assume, I guess, that this is a trough that will probably plateau for like 12 to 18 months, as you mentioned? And a lot of your future expenses will be layered in, in tandem with sales growth, given that you're already close to the bottom of that range?
Amr, you read into our mind. So yes, that's exactly the point, right? And as you mentioned, there's going to be a combination of growth and savings that's going to start to appear in the next couple of quarters. We did make some changes in the executive team. So some of those savings are going to start to appear next quarter, and we will also be -- we're working on some pretty significant productivity improvements in some of our business lines and some of our shared services that will show some savings and compounded with investing in sales, and there's always a delay in putting down a sales team and getting some results. And that's why we think that, that 8% to 12% of margin will last about 6 to -- sorry, 12 to 18 months. And with the goal, as we said earlier, to go back into that 40% range.
Understood. Then, I guess, like in your PR as well, you speak to something like AI initiatives and data-monetization initiatives. Can you guys share with us what you guys are working on?
Yes. Absolutely. As you -- as we've indicated, we have close to 5,000 buyers in buying corporations and agencies on our various networks and approximately 150,000 suppliers that we currently monetize only on access to the content that we provide, and that content is mostly centered around bids and bid management processes and vendor management processes. We have undertaken to revise some of our systems to be able to offer some data-based services. We're creating various paying services that we will offer in a SaaS mode to our existing customer base, which will create various levels of reporting on elements of business, of sectors, of geography, pricing information, even technical specification information, competitive watching types of applications. So we're all gradually implementing that, and a lot of it is going to be AI-based. We started to hire some people who are working on this, and we expect to gradually release these services starting about midyear -- mid-fiscal year.
Okay. Understood. So all the data is already in hand, right? That's...
The data is already there. We've been sitting on that data basically forever and not exploiting the data that -- it's part of our new strategy to invest in analyzing that data and providing further intelligence to that huge network of 150,000 suppliers, where if we do a good job of providing them data that helps their business, we think we can significantly increase our revenue at an extremely good margin.
Care to comment how much you could increase the ARPU? Or...
I wouldn't want to go into that right away because, as you know, when you do these types of SaaS businesses, there's a lot of trial-and-error. You produce a service, you try it, you tweak it. And pricing is often an element that you adjust. So we'll be working very -- in a very agile and very fast way. Until we experiment with it, I would not want to give any guidance on how much ARPU we can catch from it. But you take almost any number when you have already 150,000 suppliers, and we're adding suppliers to this on a regular basis. Even a small number constitutes a pretty significant increase of top line and margin.
Next question will be from Nick Corcoran at Acumen Capital.
I have a couple of questions. So the first is just on how you decide on the nonrecurring items that were excluded from your adjusted EBITDA. You talked about how if you excluded all of them, your adjusted EBITDA will be $2.5 million. I'm just wondering how you have that $1.6 million in your press release?
The $1.6 million in the press release essentially is termination benefit, plus the acquisition cost, professional fees that relates to the acquisition of k-eCommerce. That's the 2 together, total $1.4 million. Then from the EBITDA of 2 -- $0.2 million. So you came up with the $1.6 million.
Was that your question, Nick? I'm not sure we caught your question well.
Yes. Just in the prepared remarks, the comment was there's about $2.3 million of nonrecurring items. And I'm just wondering why the press release and messaging was different?
Yes. Yes. Well, a portion of the tax credit adjustment, a portion of that is -- I mean, we can split it, but a portion of that is nonrecurring and the other portion might continue for a little while, but that's -- that was the sense of my comments at the beginning, that if you take the $1.6 million, plus the adjustment that we did on the tax credit, you came up with $2.3 million adjustment for the quarter.
Okay. And then can you maybe give -- I think you might have already gone through this thing in your prepared comments, but you said the termination benefits in the quarter were primarily around management changes. Were there any other severance costs in the quarter that might be worth highlighting?
Less than $100,000, overall. So mainly all of the...
We reorganized the team around our 4 pillars of growth. So we have -- we have put somebody -- someone in charge of each of our pillars, and we also kind of reorganized our shared services and simplified the org chart a bit. And that's what created the release. And we also did a change coming from the k-eCommerce acquisition, and that's what triggered the release of 3 very senior executives that had been here for a very long time. And there -- I don't know, a few people in the teams that we let go, but that was...
Minimal.
A lot less material.
And then what would you expect the savings from not having those executives on, being going forward?
Yes. Those -- the total of these people would be almost $1 million. So on a monthly basis, you can expect -- we can expect savings going forward of, with fringe and everything, it's going to be almost $100,000 a month.
A month, yes.
Okay. And then just switching gears. You mentioned that you're going to accelerate hiring and a significant portion of that would be in -- starting this year. How is that going?
Well, we've already started. In Q3, I believe that we have hired a net of 11 or 12 people. And half of them were in functions of selling, business development, marketing and that type of people. Of course, as I mentioned, we hired a few technology folks in data and AI. And so far, so good. We do have some 50-ish, maybe a bit more open positions currently. We're working on our one-company approach. We're putting a lot of excitement in the business, and that seems to be attracting talent. We have the opportunity of being located in campuses that are out of downtown suburbs, both in Montreal, Ottawa and Albany, and we're really focusing on that with some marketing messaging to attract people and save them from difficult traffic conditions and road work and et cetera.And honestly, it seems to be working. We're doing a lot more communication internally. We're actually -- I'm already at my third, if not fourth, town hall. We're actually going to have another town hall this week on Friday with the whole company, laying out the big blocks of the 5-year plan to our employees, and it's attracting people. Our best ambassadors are our 600 people today that have friends and connections everywhere. And if they're happy and excited about where the business is going, it creates excitement about people wanting to join us. So it's -- it's definitely in the -- it's in the positive trends.
Great. And then just the last question for me is, can you comment on the process to sell the B2C marketplaces?
You probably noticed that together, they're less than $1 million in the quarter. So about $4 million a year, profitable. These properties are very niched and very focused. We were able to -- in the reorg that we did, we put all of our e-marketplaces together under one leader. And on an opportunistic basis, if we get a decent enough offer, well, we'll obviously look at it seriously. But to be totally honest, nothing has come through, and certainly since I started and even before. So since the properties are still working, functioning, they're declining, we're not going to kid ourselves. We won't grow our dating sites, that's not going to happen. But it's generating substantial profitability. So it's cash that we can reinvest in our growth lines. This being said, we will revisit that whole situation at the end of the year, March 31, and decide if we reclassify those assets at that point in time.
Next question will be from Maher Yaghi at Desjardins.
I just have a clarification question, then I'll get to my previous questions that I had. So Paul, in your income statement or your financial reports, in note 12, I can see the tax credit of $0.9 million that you passed in the quarter. The $0.4 million -- basically $400,000 less than what you had last year. So I'm trying to figure out the difference between the $0.7 million you talked about and the $0.4 million that I see in the income statement? Where is that? Do you have tax credit below your operating expense line?
No, we don't. I mean, where are you?
So on note 12 -- note 12 of your financial statement, you have the tax credit there. The difference is $0.4 million. So I'm not getting the $0.7 million? Where is that coming from? The difference in tax credits you talked about? The shortfall?
Okay. The difference is in the shared credit that goes into the tax. Yes.
Okay. That's below -- okay. So that's below the operating line and the tax line?
Yes. I'll double check on that one, Maher, just to be sure, but that's -- but -- where I see you on this. Yes, I'll double check on that, Maher.
So that's below the EBITDA line? So I'm trying to just focus on what you talked about in terms of adjusted EBITDA. And so in the EBITDA line, I can see only those credits that are -- you can call them shortfall of $0.4 million, I'm not getting to $0.7 million. If they're in the tax line, they should not be included in EBITDA line.
Hold on. Hold on. I got your answer now. It's the -- the third element is $200,000 of the capitalized -- internal capitalized cost.
Okay. That's because of the change in accounting?
That's not a change in accounting. That's a -- due to the fact that we had, during this quarter versus the corresponding quarter last year, less project that were -- that were in line or that were -- that we could capitalize on the balance sheet.
Okay. So it's not...
It was $400,000 of credit. It was $200,000 of capitalized cost -- internal capitalized costs.
Okay. So that's not related to IFRS 16?
No. Not at all.
Okay. So that's good. I wanted to get back maybe just on your 40% EBITDA margin long-term goal. And just trying to figure out how do you achieve that margin in terms of -- gross margin in terms of your cost structure. Is that the norm in the industry? And the timing, let's say[ Audio Gap ]
It's the famous SaaS-based [ Audio Gap ] that sort of translates or positions the most successful SaaS-based types of companies, where -- and I'll give you an example. [ Audio Gap ] Should we hit 15% growth rate then we should target 25% EBITDA, should we hit a 10% growth rate, well then we should target a bit more EBITDA and vice versa. So it's not [ Audio Gap ] -- we're looking to get to a 40% EBITDA [ Audio Gap ] alone because that would be very hard to achieve with our -- a growth rate that would be significant. We would sort of fall back where Mediagrif was years ago, at a very high EBITDA margin, but an anemic organic growth, which was why the company was never valued among its peers.
Okay. Okay. No, I -- you're basically foregoing some margin to get the growth in sales, which is what -- that's the strategy. So I understand. So I just wanted to clarify, just making sure that we're not talking 2 things here. So you said the transition period is going to take 12 to 18 months. And so during that transition period, you're obviously talking about doing acquisitions at the same time as growing the organic line, the organic revenue -- growing the organic revenue growth line. So when it comes to M&A, I'm trying to figure out your balance sheet strength. And you talked about the -- needing external financing to do your strategy. When I look at your covenant, your covenant ratio that you need to keep is 3.5, debt to EBITDA. Under the new EBITDA run rate that you're going at right now, you could be hitting that ceiling in the first or second quarter. So how much, well, financing you need to supplement your balance sheet to do the M&A and still below -- remain below 3.5?
That's a great question, and I don't want to get into all of the details of our M&A plan, but we've modeled a sequence of acquisition over the coming years. And in order to execute on these acquisitions we'll, of course, need to go to markets and finance these acquisitions, with a combination of debt, potential high-yield types of instruments, mezzanines, debentures. So today, given that our cash flows or our EBITDA margin will shrink a bit, the normal revolver type of loans that you get from Canadian chartered banks will not be the only instrument that we will have to use to go forward. So it's going to be a combination of various elements, and we will be going to the markets for those in the coming months. We -- up to now, Mediagrif was only using a very classic financing approach because it was generating cash and actually paying quite a bit of dividend. In the coming months, that's not going to be adequate, and we'll just go to the markets for the proper instruments.
Okay. Okay, that's fair. And so now I'm just focusing on your SaaS model and trying to figure out how long you will be looking for signs that your strategy is working. And for us, looking from the outside, how long you think it's going to take to see a material improvement in organic growth? You mentioned, I think, in your -- some previous questions that it could take 2 quarters. Or is that -- so in -- let's say, in 2, 3 quarters, what's your objective in terms of reaching a certain organic growth rate? Because right now, I think, it's about minus 1. What's your objective, let's say, exiting 2021?
We're going to be monitoring, of course. And right now, it's not something that we're currently doing, and we're making the adjustments in order to get there. As you know, when you build this out -- let's just take an example. If we issue a service database service, and we charge -- I'm just going to pick an easy number to count. Let's say, we charge $100 a month. Right? We're going to get a pick up rate in our base of suppliers, and what we're going to be monitoring is what's the CAC? What's the customer acquisition cost? What's the MRR? What's the long-term value of that customer? And that's going to create exiting, as you say, fiscal '21 in MRR amounts, which we could convert into an annual recurring rate. And that's what we're going to be checking like hawks to make sure that it's growing. In terms of material recognized revenue, obviously, it takes time, right, because, again, just -- I'm not -- I don't want to -- I am not throwing a number out there, I'm just using an easy number to count. If I get 30,000 folks to sign up for $100, it's going to take some time before it creates, as you mentioned, a materially -- a material amount that's going to be recognized in our financial statements. However, in terms of bookings that this will create, that's where you will start to see some growth coming. And right now, for -- certainly, for fiscal '21, to say that we would materially make a difference would be a little bit of a stretch, but you would certainly see a material amount of bookings quite a bit larger than what it would be now, which -- we're still finalizing our ways of measuring that. And that's how we will monitor success and drive the company to getting to those numbers.
Great. So are you planning some sort of backlog or KPI that we could track to, let's say, see how your strategy is evolving?
Yes. You could think that we'll put the right KPIs in place and that's work in process. It's part of what needs to happen. And that's a matter of getting the right systems in place, both from a CRM perspective, but having better integration with our financial, internal systems. And again, that's part of the transformation that we're undergoing from an internal basis. But at some point in time, and I certainly think we need a good -- towards the end of fiscal '21, we will start to be able to have these types of numbers, and then we'll decide on how we publish them on a quarterly basis, but we will be able to give visibility on how that's working.
Okay. And my last question on Orckestra and k-eCommerce. So can you talk a little bit about the trends at Orckestra? What's driving the slight decline that we saw in the quarter? And in k-eCommerce, your first impression, now that you have it under the belt and you're running it?
K-eCommerce and Orckestra, both sell an e-commerce platform that's targeted at the B2B enterprise. k-eCommerce sells to, I would say, small to medium businesses, mostly in the U.S. They get anywhere around 10 to 15 new clients per month. Their sales machine is quite well-oiled and it's generating some good growth. In the case of Orckestra, it's a higher-end product. It is an enterprise-grade headless commerce platform with a lot of functionality. And where we were hurting in Orckestra, and that's why you see a small decline is the same problem that I presented on the InterTrade, not enough sales power -- not enough sales horsepower, I should say. And in the combination -- in the integration of Orckestra and k-eCommerce, we're actually going to use the sales methodology, systems, et cetera, that have been used by k-eCommerce and sort of use that as the front-end lead-generation platform for the Orckestra, and we feel that we will really gain from that exposure. K-eCommerce has 600-plus customers, and I think, 80% or 85% of them are in the U.S. Using that network, we have far more reach now to go and present the Orckestra platform to the various potential customers. So that's how we see that growth restarting and initiating the positive momentum there.
Next question will be from Nick Agostino at Laurentian Bank.
I guess, just to pick up on the last set of questions, specifically on the kCentric and the Orckestra. I just -- I know you've been saying how to add more salespeople to get the business going, specifically, on the kCentric side. I believe when you did the acquisition, you called out about $8 million of trailing revenues. That's about $2 million a quarter. You had about 1-month contribution. One would expect that you'd probably get somewhere around $700,000, but you called out the number at, I guess, $300,000 once you've adjusted for the deferrals. And I'm assuming that there was already a set sales force. So maybe just a little bit more color as to why is that business -- probably did not track relative to historical? And also a similar question on the Orckestra. The growth rate has just been slowing, slowing, slowing. I just -- it feels like you've gone from, I think, 33% last quarter. Now you're at minus 5%. It just feels hard to digest that it's just all sales-based?
Well, first, Nick, on the -- obviously, we've closed the deal on the kCentric as of December 3. So we don't have a complete month. And historically, December, not necessarily the best month of the year for either for Orckestra or k-eCommerce. We ended up the quarter at close to $450,000 of revenue that we put in the books. And I know that's from now on, and though we haven't seen nothing in that business, we've had it for 45 days or 60 days now, and we're still in line with the numbers that we've mentioned earlier or in the previous conference call that we're at ease -- really at ease with that acquisition. And like any other acquisition, it takes time to show all the potential and the numbers, but we're convinced that, that will come, for sure.
Okay. And then, I guess, we've seen the business model go from north of 30% EBITDA margin. Obviously, there was a period there where you guys were investing on reconfiguring your platforms that you had previously. So that was a technology spend. But I think there was also some commentary in the past around sales spend I'm just wondering what sort of -- I mean, I understand the whole SaaS model. What sort of sales people or things you think you guys need from a focus perspective that maybe you either don't have the right personnel, or just all these years when you've been focusing, I guess, for the last 2 years on trying to drive top line, what's been missing as far as getting the internal focus really drive sales? And what gives you the comfort that you're going to be able to do at this time [ Audio Gap ]
I guess, your -- I don't know if you're talking specifically about Orckestra, or in general...
It's in general.
It's in general. Listen, it's pretty simple, if you would have spoken with the previous CEO, he was somebody who did not believe in sales people. If you look at the sort of model that Mediagrif was having, when you take MERX and BidNet and the networks that was the, call it, legacy of Mediagrif, these are properties that -- there are no -- there's no big hunting, there's no lead generation. These are properties that kind of live on their own and have a little bit of growth on -- without needing some direct sales people because they're mostly about generating business, right? People go to these properties-defined contracts for anything, from construction to, I don't know, washing -- window washing, the technology services, et cetera. So the properties did not really require a lot of sales-driven lead-generation website, SEO, PPC, all that stuff. And it's something that the previous management team was not focusing on. And it's one of the reasons why I was brought on -- well, a new management team was looked for and one of the main characteristics that the board was looking for was somebody who had quite a lot of experience in implementing sales team and putting companies back in growth mode. So that's what I've been attacking since I started. And we certainly have started to recruit some sales people. There's quite a bit more work to do in terms of getting the appropriate website online, some content-driven websites hooked to tools like automated marketing tools, such as HubSpot, which we were not fully using today, having a one integrated CRM, which, unfortunately, the company is still with the multiple CRMs coming from the various acquisitions. So those are all, I would say, basic building blocks that we're fixing, and I'm absolutely totally confident that we will get those sales back in order because the products are really incredibly powerful. We get raving reviews from our existing customers, and we really think that we were just not out there enough in the market. And that's what we're changing. So it's a shift of culture, it's a transformation, and we're attacking it with all the energy possible.
Okay. Certainly, having spoken with Claude in the past and following the story for many years, I'm quite familiar with the transition that's taking place for quite a few years. I guess, to your point around, I guess, targeting growth and stuff, the -- probably the first acquisition under the old management team around growth was ASC, that was a very concentrated customer base, very enterprise-focused, which tied in nicely with the whole SaaS model. Maybe give us some color on where that acquisition sits today in terms of having some -- I guess, some level of success so that we can build off of to say that you guys have done some acquisitions in the past that have some forward [ Audio Gap ] There's not very much when it comes to prior acquisitions.
If I take the case of ASC, I visited ASC a couple of times since I started. And the products there are quite interesting, right? The ASC has a contract life cycle management system that we wanted to cross sell to a lot of the various agencies that are on MERX, BidNet, et cetera. And although, that seemed to have been the intent, it's never materialized. And it's a similar situation as far as I understand today, there is one sales person at ASC, and there's only one. And we said we have some 5,000 corporations and agencies, and we would need to approach these 5,000 corporations and offer them this CRM product in a meaningful way, but you can't do that with one single person. It's just -- it's an overload. So we -- ASC is part of the growing plans or the growth plans, I should say, in strategic sourcing. We have reorganized strategic sourcing under one single leader. It used to be under multiple individual leaders without any growth objectives, and it was kind of ran purely on generating margins and sales was just not the main focus.
[Operator Instructions] And your next question will be from Ben Franklin at Riverstyx Capital.
I just have a couple of questions about your strategic plan, and the results were, you're saying, are absolutely in line with what you're expecting. The stock price is down quite a bit. Is there sort of a stock price level where raising equity for acquisitions doesn't make sense for you guys?
That's a very good question, Ben. And of course, we were very sensitive to that. The Board is very sensitive to that, and we will be watching that carefully, right? There comes a point where you're absolutely right, equity might just be too expensive. And I don't know that we have a specific number in our head. I don't have a guidance. I would say that where we were just prior to the announcement, felt relatively comfortable to raise money. Where we are right now, we'll see because I understand that we might be shifting types of investors. We've already announced the cut of the dividend, and there were still maybe some people who are in the, call it, the older model, and we might still see some downward pressure on the stock. When it's time for us to really start to look into raising money, that's something we'll have to be mindful of. This being said, there are other instruments that we've been presented with, which might be able to sort of de-risk, or I would say, manage that impact, and we will be smart about how we do this.
That's helpful. And I just have one other question on that. It sounds like you're expecting to show some progress before too long on some of the recent initiatives. Do you think it would be worth it to wait for the progress to show up in your numbers? Because it sounds like you're thinking about acquisitions in the next few months, maybe before we see that before it's been represented in your stock price, do you think it makes sense to wait a little bit? So that everyone can kind of understand the strategy and see that it's working before sort of going up and levering up or issuing equity to continue growing aggressively.
Not a bad idea, right? It's, obviously, a question of -- I would say, a combination of many things that will dictate the behavior, right? We want to see that organic element creates some success. But we do know that it's -- like we said earlier, it's a 12 to 18 months thing. Did we just halt for 12 to 18 months? I don't think so. That might not be the best thing to do. We're certainly not going to go out and raise a very large amount of money anytime soon. But what we wanted to show the market, I would say, is I like to think of we say what we do and we do what we say. So maybe a few small moves to sort of create momentum to show that there is progress. It's working and -- in combination with the organic progress, give confidence in the market, make sure that the longer-term shareholders understand the global goal and start to have a read that, hey, this thing is working. This thing is progressing, and it's time to just buckle-in and just stay for a while. So I believe in this small-step approach, just waiting to make one big step in a year from now might -- it might not come. This being said, there's -- it's always hard to time acquisitions. When they come, they come. And we're currently working on putting a bit more structured M&A team together to be able to build a pipeline of acquisitions and start to see some timing and some potentials in there. And once we have that, sometimes when -- that the moment is ripe, you've got to move. So of course, the financing is a big strategic element of this, and we got -- you can't time the markets. So we'll see. But again, I'm very confident in the future that we'll be able to play that game wisely.
And at this time, Mr. Filiatreault, we have no other questions. Please proceed.
Well, thank you very much for being on the call this morning. We appreciate your presence, and we're going to continue to keep you informed on what's going on, and we'll show some progress as we move forward. Thank you all very much.
Thank you.
Thank you. Ladies and gentlemen, this does indeed conclude your conference call for today. Once again, thank you for attending. And at this time, we do ask that you please disconnect your lines. Enjoy the rest of your day.