Vitalhub Corp
TSX:VHI
Vitalhub Corp
TSX:VHI
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Earnings Call Transcript
Earnings Call Recording
Other Earnings Calls
Good morning, everyone, and thank you for joining us this morning for Vitalhub's 2023 Second Quarter Conference Call. Before we begin, I will read our cautionary note regarding forward-looking information. Certain information to be discussed during this call contains forward-looking statements within the meaning of applicable security laws, including, among others, statements concerning the company's 2023 objectives, the company's strategy to achieve those objectives as well as statements with respect to management's beliefs, plans, estimates and intentions and similar statements concerning anticipated future events, results, circumstances, performance or expectations that are not historical facts.
Such forward-looking statements reflects management's current belief and are based on information currently available to management and is subject to a number of significant risks and uncertainties that could cause actual results to differ materially from those anticipated.
Also, our commentary today will include adjusted financial measures, which are non-GAAP measures. These should be considered as a supplement to and not as a substitute for GAAP financial measures. Reconciliations between the two can be found in our MD&A, which is available on sedar.com and our website.
With that, I will hand over the call to our CFO, Mr. Brian Goffenberg, to go over our financial highlights for the quarter. Please go ahead, Brian.
Good morning, everybody, and thank you for taking the time to join us this morning. We maintain our upward trajectory in the second quarter, steadily and consistently growing our customer portfolio by organic growth and mergers and acquisitions. During this quarter, we have seen a positive trend in both revenue and gross profits, fueled by our commitment to expanding health care product offerings and deeper integration into health care networks.
This has led to a notable increase in stable annual recurring revenue of 31.4% for the first half of 2023. We remain very bullish on the diversified portfolio of product offerings we currently have at our disposal, and we'll continue to target specific health care sectors to strategically scale and grow our business.
With that in mind, I will now proceed to present the financial highlights for this quarter. Total revenue for Q2 '23 totaled $13.1 million compared to $9.5 million in Q2 '22, an increase of 38% year-over-year. Total revenue for the 6 months ended June 30, 2023, was $25.7 million compared to $18.9 million for the same period in 2022, an increase of 36%. Revenue from term licenses, maintenance and support in Q2 '23 was $10.2 million compared to [ $7.2 million ] in Q2 '22, an increase of 41%. Revenue from term license maintenance and support for the 6 months of 2023 was $20.2 million compared to $13 million for the first 6 months of 2022, an increase of 56%. This increase reflects the impact of continued organic revenue growth in the company's suite of products, coupled with revenue derived from acquisitions completed during the previous quarters and year.
Revenue from perpetual licenses in Q2 '23 was $255,058 compared to $149,253 in Q2 '22, an increase of 71%. Revenue from perpetual license for the first half of 2023 was [ $565, 456 ] compared to $2.9 million in the same period in 2022, a decrease of 81%. The decrease is primarily attributable to the unusual volume of high-margin perpetual license sales of $2.7 million in Q1 2022. Revenue from professional services and hardware in Q2 '23 totaled $2.6 million compared to $2.1 million in Q2 '22, an increase of 25%. Revenue from professional services and hardware for the first half of 2023 was $4.9 million compared to $3.1 million for the same period in 2022, an increase of 63%. The increase is primarily driven is attributable to the deployment of the ongoing customer projects and additional service revenues from the new subsidiaries.
Annual recurring revenue, or ARR, of which we formally refer to as annual contract value, totaled $41 million as of June 31, 2023, compared to $31.2 million in June 30, 2022, an increase of 31%. The continued increase in ARR growth is reflective of our strategy to grow the business both organically and through acquisitions. Gross margin on total revenue in Q2 '23 was 81% compared to 83% for the same period last year. The gross margin and total revenue for the first 6 months of 2023 was 81% compared to 84% of same period in 2022. The decrease in both quarterly and year-to-date gross margins were due to the unusual value of margin perpetual license early in Q1 '22 compared to this year.
Operating expenses in Q2 '23, totaled $8.2 million compared to $6.4 million in [ 2022 ] and operating expenses in the first half of '23 totaled $15.9 million compared to $11.7 million in the same period last year, a 36% increase. The increase is due to sales and marketing expenses for conferences and the exhibitions and R&D expenses for acquisitions, completed at '23 and previous years as it takes time for synergies and cost savings to be recognized.
Net income before income taxes in Q2 '23 was $742,516 compared to a net loss of $9,957 in the prior period. Net income before income taxes for the first half of 2023 was $1.5 million compared to $1.6 million in the same period last year. Net income in Q2 '23 was $621,000 compared to $74,000 in Q2 '22, an increase of 33%. And net income for the first 6 months was $784,000 compared to $1.5 million in the same period '22, a decrease of 48%.
EBITDA in Q2 '23 was $1.98 million compared to $1 million in Q2 '22, an increase of 93%. For the first 6 months of 2023 EBITDA was $3.97 million compared to $3.39 million for the same period in 2022, an increase of 17%. Adjusted EBITDA in Q2 '23 was $2.97 million or 23% of revenue compared to $1.87 million or 20% of revenue Q2 '22, an increase of 59%. For the first 6 months of 2023, adjusted EBITDA was $5.9 million compared to $4.92 million in the same period in 2022, contributing to an increase of 20%. This was primarily attributable to the higher recurring revenues of $10.21 million in Q2 '23 as compared to $7.2 million in Q2 '22.
For the first 6 months of 2023, cash flow from operations before changes in working capital was $4.1 million compared to $3.9 million for the same period last year. Cash on hand at June 30, 2020, was $22.9 million compared to $17.5 million at the end of '22.
And with that, I'd like to hand the call over to Dan for an update on the business.
Thanks, Brian. I don't know how much to say today. I'll let first some questions from everyone that's out there just to add some clarity, but just a few comments to make. I think as you can see over the last quarters, Q2 is as steady as we go. We're -- as I mentioned in our Q1 call, I think we've got ourselves into a stage where we are starting to be a little bit of a compounder here and things are starting to work. I still think we've got work to do. I think a little more size would help in terms of our organizations. But as you can see, we're moving the needle on most of our key indicators on a quarterly basis, and we expect to continue to do that. Our ARR is growing above our expense level at this stage in the game.
And we still think we've got room on the expense side to do some things. So it's steady as we go. We're still seeing demand for our products. We're still -- I don't know how many quarters it's been now, but we're doing between $800 million and $1.5 million in the last 2 quarters of being closer to the higher end of that set. And it's really split amongst our products in terms of number of deals and deals that are there.
Of note on our products that our TREAT product set in the Canadian marketplace is seeing some really good momentum in the last little while, and we're excited of what we're doing in the Canadian opportunity. It is turning into a Canadian standard for larger based initiatives where community and mental health agencies are combining or looking to get to the next level. And we've consistently been winning some tenders in that space.
The transform product in the U.K. continues to steadily produce in the Oriel product. The education platform of the Hicom acquisition continues to add users on a quarterly basis. And we're also starting to see impact from the CDS company in Australia as well. We are seeing a little bit of a slower turn on our Intouch product sets, it's still producing. But that quarter that we had in 2022 is long on at this stage in the game, but we're still seeing impact from there.
We're making great progress on our cost side. We continue to ramp up our Sri Lankan innovation lab. Really proud of what that group has done. It's not just QA and development anymore, we've got IT operations support. They're doing implementations, consulting new versions of product updates and so forth, they're all starting to go through there. So we're there. We still think there's room to expand on across geographies. We're starting to see some work in that role, especially in the Canadian marketplace with some of the in touch product sets. And we're still seeing growth on our products across the board. So we're happy with the way that's going.
Traditionally, Q3 is a slow fourth quarter mainly because it's hard to get services over the finish line. I think we're doing okay so far, but it is pretty hard to get government agencies to do the work in the quarter. So we always worry about this quarter, but we're continuing to progress it.
On the acquisition side, we're still seeing deal flow. We've been cautious in that regard. There were a couple of scenarios that we didn't do because we didn't like the way they turned out, but we do have stuff in the works, and we continue to work those areas. We're still sitting on a significant amount of cash. I think we saw our balance go close to $23 million in the quarter. Note the accounts receivable amount in our balance sheet, we expect that number to continue to go up as we continue to progress through our deals and through our business model. So we're happy with what we're doing.
I think if you take cash and look at our valuation, I think we're at like a $90 million enterprise value-based company right now, and we expect to continue to get cash in ARR and continue to grow on those lines. So we're going to just keep executing the plan and keep doing what we're doing. And we were open for any questions.
Perfect. Thanks, Dan. [Operator Instructions] First question is from Richard Baldry of ROTH Capital.
I'm mobile. So hopefully, I'm not too [ garbled ]. Could you talk about the spike in deferred revenue in the quarter? Obviously, that's a disproportionate cash generator when it can run hard. It was up almost well over 50% sequentially. Let us know how that happened, what's sustainable about that or onetime oriented?
It's a combination and Brian can add some light on this as well. It's a combination of annually, we did some more acquisitions, so inherently, that's going to grow. We're also a pretty cyclical business in terms of our recurring time frames, right? So we do a lot of stuff that gets renewed in Q1, which would increase the -- at the end of Q1, which would increase the deferred balance in Q2 as we go through it, and then we've added some deals into that scenario. So deferred is often a question of the timing of when the contracts were signed.
Yes, I think to add to this comments really, there's a fair amount of billing that went out towards the end of the quarter, of which the revenue will only be recognized in the following quarters. It's just really timing.
Okay. Got it. And so you said another narrow new high for adjusted EBITDA, but at the same time, we're seeing you're able to invest pretty strongly in sales and marketing and R&D on a sequential uptick basis. So can you talk about are those sequential upticks or opportunistic hiring in response to some of the demand you're seeing -- do you think that the new levels we're seeing are sort of sustainable here forward?
We have ramped up some new hires in terms in Australia and the Canadian marketplace to try to get some cross-selling and some synergistic work out of some of our product set. So we have done a bit of that on the sales and marketing and beefed up that in. There are some products that we think have better potential from a sales perspective. So we are putting a little bit more development into those as well.
And last for me would be revenues were up sequentially and the COGS line actually fell very narrowly, but let's call it flat. Are you seeing incremental areas of synergies there? Or maybe was 1Q a little ahead of trend and so it's easier to go sideways even as the revenues were climbing?
COGS have usually attributed to 2 things that sort of fluctuate that line for us. One is we deliver more professional services, we've got a higher cost of goods; and two, the hardware component on those deals -- on some of our deals, we have one product as ARPU based, so we get a little bit of a hardware spike, you'll see the COGS increasing on there. We're -- we look at our cost synergistic. We're always trying to figure out ways to be a little bit more innovative to move things into our Colombo innovation group where things like IT resources helped us 24/7 support, things that we can do to move sequentially to move things over there. So we're always thinking of those things, Richard, and it's constant, and it will always be constant that we're just trying to think out of the box in that area.
Great. Congrats on a good quarter, especially on the cash generation, especially in a tough environment.
The next question is from Gavin Fairweather of Cormark.
Can you hear me?
Yes, we can.
Okay. Great. Dan, you referenced the ARR range of kind of $800,000 to $1.5 million. Nice to see you coming in kind of at the higher end of the range. But I typically think is tends to be a bit of a seasonally slower quarter. So is that still kind of the right range for you? Do you think that as you get into the busier sales period, you could actually poke above that range? How do you think about the kind of sales potential of the business on a quarterly basis?
You could see spikes and valleys in this thing you never know. Like it's government health care, right? So funding envelopes open up. Sometimes they're not opened up, right? So you just don't know where that's going to go, right? We hit between $800,000 and $1.5 million and we still don't miss it. And we keep our -- so yes, maybe we'll be on the low end one side of the quarter, but we're still generating cash, right, if that stuff and it's still coming to the bottom line of the next quarter. But this is the long game for us.
Based on our current product set, I think the $800,000 to $1.5 million is probably the number which I feel comfortable with. But more acquisition will lead to different product sets. And there's some growth product sets that are out there, I think we can increase it. But that's where I feel comfortable at this stage of the game still.
Got it. And then maybe on the Australian market, you mentioned that is seeing some increasing traction. I know you added some sales resources there on the patient flow side. You're also planning on taking kind of trait into that market. So I know it's still kind of early days from a revenue perspective, but maybe you can just discuss kind of the demand environment and the reception to some of your increasing sales investments in the region?
We have with CDS, we've got the ability to execute by adding support people and salespeople and making sure that they're going to get proper supervision and management and so we got the structure there to execute. It will take some time for that to happen. We do get a base of about a dozen Intouch customers. I think we got a large MCAP customer already in Australia, and you got your CDS customers and we did ramp up a new sales team that has gone through and has been onboarded and is starting to progress in those areas.
We've also introduced the TREAT product into the CDS group, who's got the ability and the domain experience to sell it and the -- and we're starting to see tenders and things come through there. And we're starting to understand what we need to do to tweak the product a little bit to the marketplace. But the product is being well received based on what we've shown people so far and we're starting to feel that product can be -- can expand into other markets besides Australia as well based on the results that we're getting in Canada. So we're beating some pretty high-profile names with that product set. There's been a ton of R&D that's gone into it over the last 3, 4 years. It's a pretty big team, and we're happy with the way that product progress.
So we're continuing to push the envelope on that product. And -- these are slow sales processes, but they're larger transactions, and we'll just keep pushing the envelope on it.
What about trade in the U.K.?
Yes, we're starting to see some opportunities for that. Again, ideally, I'd like to answer that with an acquisition in the U.K., which would be a great anything for us to do, but we are doing a little bit there, but it takes a team to support that, that really understand that domain and grouping in it's a lot more complex of an implementation and sales process. And we don't really want to make the investment in a deal we'd like to do that through an acquisition.
Makes sense. And if we were speaking, I guess, first half of '22, you would have said that your goal was to grow the business to kind of $50 million and obviously being there for kind of a couple of quarters. Do you have any other kind of fresh targets in mind and thoughts around kind of time lines around those, like what's the dot on the wall internally now that you've achieved that $50 million?
Listen, it would be nice to get to the $75 million to $80 million range with the same metrics that we have producing right now. So going at it organically will be a little bit of a slow growth, but -- every quarter, we get some cash. We'll do acquisitions. We still got the acquisition line. Ideally, a larger acquisition that is very synergistic with or would be the ideal way that we'd like to go here. But -- at the same time, that's a pretty big decision to make, and we have to be really careful in how we make that. So we're continuously progressing and looking for those avenues, and we'll see what happens.
Okay. Congrats on nice combo of organic growth and margin and cash flow here.
The next question is from Christian Sgro of Eight Capital.
Congrats on some good organic growth in the quarter and good results overall. Following on Gavin's question, Q2 isn't normally the strong seasonal one, but hit that high end of the sequential ad. I guess, absent a flurry of new customer announcements in the U.K. or otherwise, would you say that a lot of the ARR add was expansion? And then I might ask separately about Canada, but was some of the deployments in Canada. Was that a big part of the growth this quarter?
Combination of everything. We keep adding users on the Oriel platform. We're not announcing every transaction at this stage in the game to do that. Some of our customers don't want them announced and just because of the government sector of where it's at. And we're just not announcing every single little deal anymore. We're just we're letting things go hold through there.
So it's been a combination of everything. There's been some add-ons to the Oriel product. There's been some rollouts on the TREAT product that have brought that into bought those deals and allowed us to recognize license revenue in there. Transform continues to add stuff on a consistent basis. So we've seen it across all the areas of our business. CBS traditionally always adds $100,000 to $150,000 per quarter, and they're all small deals, but they consistently add them. So we got growth coming from many different areas these days Christian. That's really what's going on.
That's great. And I'll still ask a separate question on Canada, but you had mentioned there was TREAT momentum?
Yes. We're seeing consolidation, and we're seeing decommissioning of all their legacy systems that were being run by government bodies that they're looking for new vendors and we're winning those RPs. So we expect to see a flurry of TREAT deals over the next few quarters.
Great. That's all on the pipeline. It was a forward-looking comment, which is good. I'll ask -- maybe just one more, poke at the M&A, your appetite there and what you're looking for. Would you stick to the same plan that you've had for 3-plus years, high-margin recurring something adjacent? Or is there anything else you're seeing that could be attractive to you? Any color you want to give on a geography or the point....
I think it's upto something we would enter a new type of maybe not new -- like new geographies other than the United States, we're still not ready to go there. But new geographies for sure, we're looking for a similar type of product sets. We know the gaps that we're trying to fill in those gaps, and we're targeting those organizations that we're either working with or competing against in the field. So we're consistently looking. We'll do the $1 million recurring businesses, and those things are still out there, and we expect to execute on a few more of those, but we still got some larger ones that are in the works as well. So we continue just to do what we're doing.
I think the last 2, 3 quarters, we've been a little bit careful to make sure that we got ourselves into a cash generation engine, which I think we have. So we just wanted to make sure that we can self-fund these things and -- if we do get into our debt facility, it really needs to make sense from a synergistic perspective. So we would want to have a profitable organization out of the get-go for that or -- and so forth so that we know we could carry that debt. So we're were the smaller ones, they're not profitable yet, will make them profitable very quickly, that's easily done. The big one is a little bit more challenging. So we just want to be careful as we move through there. And we're looking to all over as we have in.
And I'll sneak in a fourth for Brian, it's quick and mechanical. On the income statement, Brian, for the operating lines, was there some reallocation from Q1 to Q2? And some of the G&A going to R&D, not a huge impact to the overall profile, but to help us with modeling. It looks like there were just some shifts?
It was a little bit. We've got -- we put a new system in place, which allows us to better allocate some of the people side. So there was a little bit of a reallocation.
Perfect. That's all for me.
Next question is from Doug Taylor of Canaccord.
This is Neil Bakshi on behalf of Doug, he is on the call, unfortunately. Congratulations first on the quarter, good organic growth and free cash flow, so there's of echoed. The first question I have, you had mentioned the Intouch product set was a little bit of a down quarter. Just wondering in terms of resource allocation or efforts to see growth return back to its previous levels that you look at in terms of Intouch as a standalone?
It's an anomaly -- there's 2 things with the Intouch. Number one is we've tried to evolve -- moved that into a recurring revenue model from a professional model with some success, but that is not totally, right? So there's still a little bit going -- is still coming through but more to the recurring side versus the professional side.
But because the professional side just sort of set that number a little bit. But because there's a hardware component that gets sold with that, the perpetual seems to be the way that those customers would like to buy that because we're not going to -- we're not ready to do recurring models on the hardware just because we don't make much margin on it. It doesn't make sense that we want to get paid for that step up front as we support it. So of course, the license needs to roll into it.
They got a pretty big penetrated based in the U.K.. We've had some success in Australia with it, and we're trying to move it into the Canadian markets and so forth, but there's still enough left in the U.K. to sell. I still expect that we're going to sell that product, and we'll continue to sell it and it's still -- that business unit still produces really good margin for us. So we expect for it to continue.
In the U.K., we've integrated our groups together pretty nicely except high comment this day. So we can move resources around from the Intouch group can start helping with transforming in the BI groups and so forth, et cetera. So we have the ability to move resources around, which is part of a good -- another good concept of our business model. So it's not that if the time is not right for, we see an uptick in transforming, which we are and expect to continue moving resources from the project team and the implementation teams can be done. So that's part of our plan as well in the U.K..
Great. And then just a question with respect to S12. You mentioned, I guess, in the previous update that we could see a bit of an uptick later this year as new modules are added. But just wondering how progress is going with that product?
Yes, we did a little -- in Q2, we didn't see much impact, but those 2 products sets are -- one is totally completed and in the market, and we're starting to see stuff for Q3. And -- the other one is coming around as well. So we do expect a little bit in Q3 and in Q4, we do expect to see some more impact into next year as well.
Next question is from Daniel Rosenberg of Paradigm.
My first question was just around reviews of the resources you have, you've reached a point where momentum is strong on all fronts. The cash pile is growing. But outside of M&A, has it changed here -- has it changed your thinking on what to invest in, whether it be new product internally, targeting new verticals or adjacent verticals -- has your thinking changed at all about what you can allocate capital to?
Yes. We're -- we're still pretty careful on capital allocation. We have generated some capital into the Canadian and Australia marketplace to expand sales and marketing. So we've done that in a while. There's other products that which we think are newer sets that need some more development groups like the ADI product we acquired last year with the by MyPathway product and the Synopsis product, there, Intouch product, which we think need some more R&D done on them. So we invested in increasing the R&D-based function.
We need to consistently develop our products to maintain their leadership positions in some of those markets. So the transforming products still consistently get development. So yes, we do ramp up our costs in some areas to go do that, but we try to move that into our Colombo Group as much as we can to do that. But from a sales and marketing perspective, we're not going to be this organization that's going to go into a new geography unless it's with a partner or with an acquisition very easily. It's an expensive process, and it's very difficult to do, but acquisitions either way to enter those markets.
So we did make the investment in Australia. So that's one of the areas. And Canada, of course, we got a base already. So that's another area. So health care is very tied to their geography and breaking into that culture of how that health care system works really takes people that have been in that space for a while to really understand it. So we want those people -- those people are really a part of what our assets are. And we'd like to acquire those assets and expand those assets with expanding into products versus just risking it by going in there.
And then on the success you've had in community health, I mean, health care is just a massive market. So are there any areas that you would ever consider expanding into? Or community health is just obviously, there's plenty of runway for you, but it feels like you're kind of at a different point at this point?
Yes, there's a lot of community health vendors out there, right? All those areas need to be digitized, but they're all they are moving to -- this world has changed into like I don't have anything to I need something better world. And we're starting to -- we're seeing -- we need something better, and we think we have that better product with the TREAT solution. So we're progressing into those worlds and those other organizations that don't have the better solutions become acquisition targets, right? So that's really in that particular area, it's is to keep expanding the trade product and keep growing it and keep buying inferior products that we can upsell them to the TREAT product. That's what our business philosophy is there.
Okay. I appreciate that. And I'll echo the comments, congrats on continued success.
Next question is from Gabriel Leung of Beacon Securities.
Dan, I just got a couple of questions on the M&A side of things. Just curious, have you found the M&A environment a bit less competitive now just given the current cost of capital. Concurrently, have you seen seller expectations become, I guess, more reasonable vis-a-vis past couple of years?
And then actually, one more thing as well on the M&A. You mentioned during your preamble that I guess you were close to the finish line and a couple of opportunities, but I guess it be ended in tick the boxes. I'm just curious to hear what those boxes might have been.
Yes, let me answer that. I think we sort of predicted this when the markets would go down, right? So the sellers at first don't -- there's still thicker. The prices were still high. I think a lot of people took their things off of the market. So we are starting to see some more deal flow, but sort of these -- these companies that have tried to get out of the box and sort of have a little bit got out of the box and they've raised capital, but now that capital is dead up. We're seeing a bunch of scenarios where they've got like 3 or 4 implementations. They're bringing in $300,000, $400,000 worth of recurring. It's a really neat product, but it's not totally done yet. And they got customers that like it, but they need and they really need investment more than they need acquisition.
So we're -- and some of those are a little bit more on the larger side, too. So we're careful of those, right, where the product, is there -- we think it's there, but when we get through the due diligence, it's not actually fully there yet. It's still -- we need this work, it needs that work to be competitive. And so we we'll take those on if it has enough scale because we think we can add to things if we can do it, but it doesn't have enough scale, we get a little bit worried about it. And those are a couple of the scenarios that you have. And the other scenario just the accounting wasn't what they thought it was, right? So some people just don't, [indiscernible] understanding current what should be done. So as what you see in some of the smaller acquisitions and smaller target set.
But -- in general, I think we are seeing a little bit more of an uptick on the M&A side as capital. People thought it dried up, but they would wait, and now they waited and it still dried up. And I think there are a little bit more scenarios that are cooking or maybe it's just opportunistic, but we do see more deal flow floating around in the summer of this year than we did towards the end of last year type of thing. So we're progressing -- this opportunity has given us a long time -- a little bit of time to digest these acquisitions and we needed that, and we've revamped a bunch of processes in terms of our data analytics and our operations and so forth. So we're positioned really well to absorb acquisitions right now, and we're actively looking.
And then just shifting over to the, I guess, the growth and demand side of things. Curious if you've sort of heard anything from your customers, prospective customers that might give you worry about your ability to hit sort of that booking -- a quarterly bookings range you've talked about -- and sort of concurrently, is there anything internally within Vitalhub, you feel you can sort of tweak to help the business consistently hit either that range or the upper end of that range.
You always got your pricing target -- your price increases and things like that, which we do, probably a lot more conservative than a lot of organizations. So it's probably still room for tweaking on that perspective. We sell a lot to these customers, so we don't like to play that game totally in a bad fashion. So we're careful from that perspective.
The growth needs to come by expanding to other geographies or adding add-ons or more acquisitions. We still think there's enough of a [ time ] for our products that we still got a couple of years of runway at these -- adding to these rates, right, to [ $800 ] and the [ $1.5 million ] level. And we'll make more acquisitions for some growth products, which will allow that to grow. So we expect to be able to continue to think of ways and be innovative to go do that. It's not the end of the world if we don't do it a few quarters here and there as long as we got our expense level. We look at this as a steady as you go, some quarters will add $3 million, $4 million of adjusted EBITDA, and maybe we'll have a quarter where we do because we didn't sell a lot and we do $1.5 million to $2 million, but 3 months later, we'll be back to doing the $3 million or $4 million.
So we look at this as a bigger picture as long as we're continuously building up in adding cash on a consistent basis and got the model to do it. We're happy as an organization, and we're not going to lose sleep or we're not going to go take risk of investing in sales and marketing to go get that other world because I don't -- that's not what this space is all about.
Got you. Thanks for [ I will see you back ], congrats on the progress.
There are no further questions. I would like to now thank everyone for joining us this morning and hand over the call back to Dan for his closing remarks. Thanks everyone.
It's just the same theme as anything I think we got I keep saying we think of 3 things here today. We're trying to do accretive acquisitions for synergistic products and trying to do those acquisitions at the right price, even if it's not the right price, but it will be accretive down the road. That's okay with us as well to do that. We do got the ability to execute by using our Colombo Innovation Lab as effectively as possible, and we try to bring as much there from a cost reduction perspective, and we're always looking for organic growth of high margins. And we think of those things every day. And we're always -- we've got some pretty good analytics going on in the company. We just keep tweaking our business models accordingly. We're going to have some -- things are good right now. We might have a bad quarter, but it still won't be bad, also would be generating cash.
So we just keep going, and that's what the business model is here. And we're looking for investors that like the idea and like the steady growth and just like the economics of it, it's relative to what other things are out there, like we -- I don't know, I don't know how many companies are out there with like $41 million of recurring, $3 million of adjusted EBITDA and trending at a $90 million enterprise value market cap when you take the cash off. So -- that's where we're at right now. I guess it's just a sign of times to the market, but our job is just to make the investors aware of what this is all about, and hopefully, we did that.
And if you want to know more, feel free to give us a shell, we're always open to talking to an investor from an institution to an individual and trying to explain the business model and more depth to them. So if anybody has ideas, feel free to reach to us.
Appreciate it. Thanks, Dan. This concludes our call. Thanks everyone.
Thank you. Bye.
Bye-bye.