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Good afternoon, and welcome to mCloud Technologies' Fiscal 2020 Third Quarter 2020 Earnings Conference Call. Today, the company will discuss the unaudited results for the third quarter ended September 30, 2020.Joining the call today from mCloud is Russ McMeekin, Chief Executive Officer; and Chantal Schutz, Chief Financial Officer.Before we proceed further, please note that remarks made on this conference call may contain forward-looking statements about mCloud Technologies' current and future plans, expectations, intentions, results, levels of activity, performance, goals or achievements or any other future events or developments. Forward-looking statements are based on information currently available to management and on investments and assumptions based on factors that management believes are appropriate and reasonable in the circumstances. However, there can be no assurance that such estimates and assumptions will prove to be correct.Many factors could cause actual results, levels of activity, performance, achievements, future events or developments to differ materially from those expressed or implied by the forward-looking statements. As a result, mCloud Technologies cannot guarantee that any forward-looking statements will materialize, and you are cautioned not to place undue reliance on any forward-looking statements. Except as may be required by law, mCloud Technologies has no obligation to update or revise any forward-looking statements as a result of new information, future events or otherwise. For additional information on these assumptions and risks, please consult the cautionary statement regarding forward-looking information contained in the company's most recent MD&A available on sedar.com.At this time, I will turn the call over to Russ McMeekin, Chief Executive Officer of mCloud.
Thank you, David. Welcome, everyone, to the third quarter conference call. Looking at Slide #3, what we show here is the growth in connected assets, which, as a company, as everyone who knows the company, that's our primary focus. We grew year-on-year connected assets 56%. We added just over 3,000 in the quarter, despite what I would call a significant headwind and things we have to do logistically to get things connected.However, we have a pretty robust line of sight and you can see in this slide the distribution of types of assets and the number of assets. That's about a $38 million TCV of deals to get us to 70,000. There's no magic to 70,000. That's the guideline we had set for ourselves for this year. It's, again, headwind impediment from COVID-19, but we'll blast through that. But our real goal is to get and break to 100,000 connected assets here in the very near term. So as we get into 2021, that's the focus, break 100,000 connected assets, and this begins to get real fun.Moving to the next slide. And the impact of moving to connected assets, as you can see in this slide, is the transition to AssetCare. So on the left, you can see, this time last year, we had about $6 million in revenue, most of it from engineering services, which is nonrecurring and is lower gross margin, significantly less sticky.You move to Q3 2020, you see a lesser amount from engineering services, significantly increased in AssetCare over time. And as we connect assets the first month, we have in this initialization fee, and that's what's driven on the upper right-hand side of this curve. So $6.1 million of revenue when you compare to last year in the third quarter, also approximately $6 million revenue. But the transition to AssetCare is a very significant move despite the headwinds we're living in.I'm going to turn the next slide over to Chantal. She will walk through in more detail.
Thanks, Russ. So we should be on Slide 5 now, and thank you to everyone who is joining us here today. I am pleased to report that we continue to see progress in our financial reporting process and controls as well as our company-wide internal controls. We saw a seamless Q3 review with our auditors, and we're well on track for a successful year-end audit. I'm very, very pleased with our team.In terms of revenues, quarter-over-quarter revenue growth shows a healthy upward trend as we head into the last quarter of 2020. Our Q3 revenues grew 22% over Q2, with a 34% increase in AssetCare Over Time revenue. This is a trend we expect to continue into Q4 and beyond. This includes a significant contribution from our oil and gas customers. The growth in AssetCare Over Time revenue more than made up the decline in revenues from engineering services related to pandemic restrictions, and we do expect to see an improvement in engineering services as restrictions ease in the coming months.If we can just move to the next slide now, please. As you can see here, our year-over-year growth was $8.3 million in 2019 to $17.7 million in 2020. AssetCare Over Time in the first 9 months of 2019 was $1.66 million, and we more than doubled that amount in Q3 2020 alone at $3.6 million.In terms of our expenses, you'll see that in 2020, there's a full 9 months of consolidation of Agnity, Autopro and CSA, which are now included. Management continues to be -- to mindfully invest resources where they will have the most significant impact on revenue and asset count. The trend is certainly in the right direction as we held our expenditures constant between Q2 and Q3, while our revenue trends accelerated by 22% overall. And although we don't report TCV, we are seeing the impact of these investments in our TCV backlog.Management made appropriate spending reductions in the areas of head count, where appropriate, in light of the decline of engineering revenues and growth in AssetCare Over Time. Our talented personnel were strategically managed during Q3. We moved experts from oil and gas engineering teams over to our research and development teams. This allowed us to gain significant traction with the new heat exchanger, integration of kanepi technology and enhancements to our AssetCare Mobile.Our BD and marketing teams are focused on converting the existing pipeline of opportunities into revenue, and Q3 saw an increased investment of time and resources in virtual events and digital marketing efforts. This is reflected in our uptick in revenues and, in particular, the growth in AssetCare Over Time.Professional and consulting fees were consistent in Q3 as we closed 2 financings and the acquisition of our Australian subsidiary, kanepi.As we finish out 2020 and we head into 2021, we are focused on the integration of our acquisitions to continue to fuel additional revenue growth.In respect to cash, we are mindful and we are exercising tight controls. Cash collections and pull forward cash are beginning to take shape. Customers and partners have been proactive in working with us. And we definitely see this trend continuing to shape up over the quarters and become more of a common structure.I will hand it back to you now, Russ.
Thanks, Chantal. Moving to the slide, Q3 2020 highlights. So first, we made tremendous progress in integrating kanepi into our AssetCare enterprise. In fact, we've already seen expansion in existing customer contract size to include AssetCare Enterprise, both with Petronas and Idemitsu in Japan.We've seen other Southeast Asian operators do the same that came to us via kanepi, one of their legacy customers. And since this slide was created here in North America, we have Shell Midstream Gas coming onboard. So we're seeing the kanepi acquisition definitely starting to take hold with some big brand name operators, which is what we expected, but this is quite exciting to see happening now.Moving over to indoor air quality around AssetCare for building. This is the phenomenon you're seeing around TCV. We're seeing a lot of people doing planning, getting ready, starting to solidify contracts. But what we're not seeing is them opening. So we are in discussions to get this back-to-work programs in place in Canada, a lot in the Northeast United States and California, in various parts of the United States and parts of France.So this is very active for us. Again, this is measured in TCV, as Chantal mentioned, which is not a measured or a reportable number, but it's certainly something that begins to build and as we move into 2020, turns in -- 2021, turns into revenue.In addition, converting the existing oil and gas customers into recurring revenue, we've seen an increase of over 30% from the customers that were acquired to where they are today and all of it or most of it in the area of AssetCare. So we're seeing good growth from brand name customers that we've acquired growing their revenue base or contract base, and we see that growing significantly more going into 2021 as we have line of sight to their budgeting and how they plan things.We stay on top as we have been on looking at south of the border, listing on the NASDAQ. We need to do a few things to make that happen, but we're on top of it. And as you've heard from Chantal, we've moved to this pull-forward structure with some of our contracts, mainly those with high creditworthiness customers where we can do that, and that will begin to take form as we go into 2021. But certainly, near term, we've seen a number of them already.Moving to Slide 8. Bottom line going into 2021, of our top 10 customers, if you look at the contracts we have and backlog right now, we have over $50 million going into 2021. So now it's all about moving those into revenue without logistical challenge -- reduce logistical challenge. And again, restating that existing customers from those top 10 are going to grow another 30% in 2021 of their spend, and that's primarily AssetCare of various types. And that's very exciting. So our customer capture cost is significantly lower. So some of the investments you heard from Chantal that we made in 2021 -- in 2020 of capturing customers turns into TCV, then turns into revenue going forward. And you have these 3- to 5-year contract arrangements with customers. So the value creation from these activities are quite exciting.Again, continued focus on connecting assets, SaaS growth, moving to AssetCare, making that a flagship effective standard where we can. As we get above 100,000 connected assets, this becomes very real, and we're very focused on that.Again, navigating through these COVID constraints. Every day, we wake up to some new news about something, but we managed through it. Our teams come up with some very clever ways of using Microsoft Teams for remote connection, our RealWear headset display to help customers self-guide themselves, so we can do things we've never done before. And we wouldn't have done it if it wasn't for this restriction from travel. So there's a lot of very interesting innovations that when this takes form and things get back to normal, I believe we'll see this in quarterly connection velocity of assets much simpler, much faster than we ever saw before because we've developed internally a lot of tools and methodologies that were brought upon due to the COVID-19 issue that faces us.Moving to Slide 9. And in summary, the bottom line heading into 2021, leveraging our existing contracts to access cash from these multiyear contracts, a lot of them from our existing customer -- large customer base, these multimillion-dollar contracts that we have. And then aligning our sales activity and our partner activity for contracts that will definitely be eligible for these pull-forward contracts -- pull-forward capital from these contracts. And our sales incentives and our BD people are aligned to go make that happen. So it's a full internal process. It's a full continuum to make this happen.So without any further ado, David, I'll turn it back to you, and we can open up for analyst questions.
[Operator Instructions] The first question comes from the line of Kevin Krishnaratne with Eight Capital.
Russ and Chantal, it sounds like a lot of good momentum that you're talking about heading into 2021. Before moving to 2021, I'm wondering if you can just touch on your thoughts on closing out the year? In the remarks, it's great to see the SaaS revenue up Q-over-Q by 34%. There was some commentary on how -- I think you mentioned that type of momentum should continue into Q4. Can you just talk about expectations on that line. And in the context of asset additions, you had previously provided some sort of guidance in a way on where you thought you'd be at the end of the year for connected assets. I'm wondering if you can just discuss Q4 in the context of SaaS and connected assets?
Yes. Yes. So to the best I can, and I'm not trying to be cagey, I'm just being realistic that, again, it's a daily logistical update. But we do have line of sight and you saw on the slide exactly the types of assets we can connect, Kevin. Will we get to 70,000 sitting here almost Thanksgiving in the U.S.? I think that's going to be pretty tough because we'd have to do a lot of installations in the month of December.Can we see a similar momentum that we saw in Q3? A lot of that came from existing customers, so -- and there's more to be done with existing customers. So a similar kind of growth trajectory to Q3 doesn't seem unreasonable at all. But to see us explode to adding 15,000 assets in the quarter doesn't seem likely.But December is a new month. We'll deal with it when the time comes. Certainly, the TCVs are there and our people are ready. We have a lot of clever ways to make that happen.So whatever doesn't hook -- connect in Q4, will connect in Q1 or Q2, whenever this whole mess clears up. That's -- the beauty is we have long lead-time visibility now like we never had before, but we're not supernatural. We have to operate within the confines of the world we live in.
Right. So in Q3 then, I mean, that was nice to see the pick up in the net adds 2,600 in Q2 and then 3,400 in Q3. Can you talk about mix there in terms of -- you mentioned that there was strength in oil and gas. So how many assets that will continue...
Yes. That will continue. They seem to be more bullish and less deterred, if that makes any sense. The building people are more concerned, are more regulated and are -- actually, in the case of California, if you saw yesterday, they're shut down again, literally shut down. So there's not much you can do when the state says you're shut down.The oil and gas people are a little more bullish. So we have a better line of sight, better visibility. And therefore, it's such we're seeing better progress. So even though of the $38 million of TCV, it represents -- maybe just under a half is oil and gas of TCV. The line of sight to go make that happen is -- seems a lot more logical right now than buildings. Certainly, wind turbines, that's like a tougher one for sure because a lot of those people are still laid off, are still furloughed and -- certainly in Europe are. So that becomes a tougher one to determine when this is going to all happen.
Okay. And then just to help us close out the quarter then, thoughts -- the SaaS, get it -- the drivers there. There have been other elements in the story. In the past, you've had perpetual license revenue. You've had -- you had, at a point in time, talked about the remote worker. I can assume that -- probably that's not happening in Q4.And so as we think about the build to Q4, we used what we got in Q3. We built on the fast . You've got some kanepi in there as well. I'd love to just hear your thoughts on that. But just help us kind of set expectations for Q4? Because there are -- in assets -- in the mCloud store, there are a number of different revenue pieces, consulting as well.
Yes. So 3D scanning, which I think is one of them you're referring to, require physical at-site work. We found a way with this floating LNG in Southeast Asia to scan it without being there. And we hope other customers will call it play along and do some of the scanning themselves, which would be a great business model. If we can do 3D scanning and never have to do the scanning and they just purely be a cloud play on that, that would be great. But that's been a constraint to get those revenues going, which is the 3D, which is the initial scanning to get the 3D model.That could be, I think, what you're grappling for is what are the other drivers that could be upside. That certainly could be one, but we need the end customer to be willing to play along with self-scanning model. And I think that, that is doable. But how quickly we can get another Petronas in Q4? There's a number of them we could do, but it's -- it requires effort.On Connected Worker, you actually raised a really good one there, Kevin, and that is, believe or not, in China, we have a lot of connected workers, and we have a contract or a TCV that is pretty large of a number of connected workers. The rev rec on that one, I'm not totally sure. They'll need to have their headsets. They'll need to be connected. And I think they own a lot of their own headsets. So there's some possibility there. So that's -- what was called Agnity is now a Connected Worker. That's a key component of that. And kanepi -- the workflow capability of kanepi is in that contract.How will the revenue look in Q4 from a rev rec point of view? That is a good question. We'll see how it goes live, make sure everything is in good place, and then we can recognize revenue on that. I'd call, very large Connected Worker deal in China.And then what's your third -- the third element you wanted to...
So Kanepi is a -- I know that you disclosed as being a $2.5 million in recurring, but there's other elements to it, too. So just how do we think about that business then?
That one needs -- that one still requires under the old model an at-site component for the rev rec. They -- Australia has been locked down. You can't even fly within the country, let alone out of the country. So that one is still so much constrained. But Idemitsu -- and I forget the name of the operator in Vietnam, a very large FPSO and Petronas, that's all being done with Microsoft Teams, remote working and so on. And that's largely because kanepi makes that possible.And how the rev rec could look in Q4? It could be pretty interesting if certain milestones are met because those are legacy -- 2 of those 3 are legacy deals that have milestones tied to them. And so -- and it's not written -- the contracts aren't written AssetCare style. So the revenue recognition needs to see itself through following kanepi-style contracts. All new contracts -- our proposals and contract on our kanepi are traditional mCloud style. So that's a lot easier for me to comment on how the rev rec would work.
Okay. Maybe I'll just move down the P&L. You noticed the OpEx remaining relatively flattish quarter-over-quarter and the -- your reported adjusted EBITDA improved sequentially, but a couple of thoughts. There was another -- I know that we were expecting some level of, call it, onetime items in the OpEx. You did $4 million in Q2. I think it was just under $4 million in Q3. Does that -- what are those -- remind us what those relate to again? And do we see -- how do those levels improve in Q4?And then more importantly, just on the cash flow, there -- it was negative. It was quite negative again. So just curious on other elements that we should consider working capital as you think about Q4?And then love to hear the thoughts on the pull-in contracts. You had a press release not that long ago on sort of a $3 million level that you disclosed. I'm wondering how we just think about the cash flow statement for the remainder of the year?
Okay. So on -- let's go in reverse on that. We have -- 1/3 of it is done. The other 2/3 of the $3 million is near done, meaning near collected or it's in progress of being collected.I'm trying to answer all your questions in the reverse order here. Chantal will have to address your $4 million question in terms of what goes away in terms of expenses. You've fired off a lot of questions there, Kevin. So I want to make sure I answer them all.So how we -- so I've answered, I believe, how we've done relative to the press note. And 1/3 of it's been collected. 2/3 of it is being collected. So that will be -- show up soon. That will show up as deferred revenue on the balance sheet. So that's how it's treated. Cash is cash. Deferred revenue is deferred revenue.Remind me again the other items you wanted to quantify.
Yes. Super helpful. So you've got $1 million that came in through. The other $2 million, does that come -- that hits the cash flow statement in Q4?
Yes.
Okay. Great. Yes. That and then -- great. And then on the OpEx items, you did -- you had the $11.5 million, I guess, and -- whatever you had OpEx in Q3, how does that potentially moderate? Does it moderate? And how do we think about basically your ability to generate cash in Q4?
Yes. So there's explicitly about $2.5 million in Q3 was tied to kanepi and 2 financings, right, and then all the work around that. So that we're not -- there was a little trickle over into Q4 from kanepi because it didn't close precisely on September 30, if you recall. And so we have lawyers in Australia and so on, and that was a total pain dealing with the regulators down there, but -- so there should be some residual in Q4, but nothing like you saw in Q3. And in Q2, you had other big deals, right?So in Q4, by definition, we're not -- we haven't announced or aren't doing any big deals. So those kinds of expenditures will not happen in Q4. So there's about $2 million of it right there.Do you -- if you want more precision on other numbers, Chantal can jump in, but -- yes.
I guess that's a good -- so just 1 more statement, and then I'll pass the line. So essentially, as you think about Q4, you've got $2 million of expenses that were in Q3 related to deal and consulting and lawyers that won't show up and hit the line. And then you're going to be getting $3 million related to these contract pull-ins. So essentially, there's going to be a positive $5 million delta right there when you look at, from a cash flow perspective, Q3 to Q4?
Yes. And there's additional TCVs that we have -- that weren't in that $3 million that -- right out of the get-go, we can apply that pull-forward model. So we don't expect to just stop at $3 million. Those were the ones that were done. We need to do -- there's the ability to do more in every one of our proposals, in every one of our contracts, which, we call it, highly creditworthy customers have those terms in it. So as we sign TCV, we may not see much revenue, but we should be able to pull-forward cash.
[Operator Instructions] Your next question comes from the line of Bill Zhang with Raymond James.
So if you could just give us an update on the kanepi acquisition? Does it look like they'll hit the earn-outs for the first year? I'm talking about that AUD 10 million for fiscal 2021, given the current climate.
I would say yes, because it's not just what they're booking as kanepi, but it also includes deals that are synergistic with us. And because it's all big oil -- big companies that we're talking to, AUD 10 million on 3 or 4 deals happens pretty quickly.So the beauty of the kanepi business is the deals are huge.
Yes. That's awesome to hear.
Yes, yes. So -- I mean, is it all going to happen at the back end of next year. You're -- I'm not the COVID guy, so you're talking to the wrong guy.But in terms of is it going to happen? I believe, yes. Is it going to time itself perfectly to the calendar year as per the contract? I think so. I would hope that next year, we don't have another crazy year like this year. So a quick answer, Bill, yes. There you go.
Okay. Yes. Great. And then, like in oil and gas, I know in Q3, you said -- you gave us an update on the connected assets there. Is there still a line of sight to 2,500 by the end of the year? Or do you think that's out of the option now?
Is there still line of sight to an additional 2,500 before -- between now and year-end? Is that your question?
A total of 2,500, I believe that's what it was.
In oil and gas?
Yes, in oil and gas.
You faded out in part of your question. The reason I'm asking is, I only heard half of your question because it's faded out for some reason.So we asked the question because I heard the word 2,500, and I heard the word year-end, but everything else was garbled in between. So ask me the question again.
Right. So connected assets for oil and gas, do you think it will hit the 2,500 by the end of the year?
Well, we've got 1,400 right now. So 1,100 between now and year-end, I'd say yes. Yes. If anything -- if there's anything I have reasonable certainty on, that would be that one, yes.
Okay. Great. And then I know you guys haven't given guidance for 2021, but just how would you -- how would we think about 2021?
A very simplistic way is that $70 million didn't happen in 2020, so we should make it happen in 2021, right? So that's a simplistic way of looking at it. But it's, again, simplistic. We're doing a bottom-up, asset by asset, region by region, salesmen by salesmen to build that model up. I would assume it'll be no less than 70 million. That would be a reasonable way of thinking of it.
Your next question comes from the line of Brian Kinstlinger with Alliance Global Partners.
The first question I had, there's 2 backlog numbers. The first was a $38 million backlog and then there was a $50 million backlog. And I just want to understand, is the $38 million for new customers?
AssetCare.
$38 million in AssetCare.
$38 million in AssetCare. $50 million is everything. So in that existing top 10 customers, we have projects. We have technical services. So you add $12 million of project services. So it's one plus the other. So when I said $38 million, it was AssetCare, TCV...
Understood. Yes, that clarifies it. Got it. And then the -- assuming you didn't have the headwind of COVID and logistics, which who knows when that's going to be -- talk about what capacity you have to, actually, on a quarterly basis install new connected assets? In a perfect world -- if tomorrow was -- everything was gone, could it be 10,000 a quarter? Is it 15,000 a quarter? What is your ability to service and install?
Yes. I was telling Steven Li at Raymond James this morning, when he used to ask me that question, I was always a bit timid about the 10,000 a quarter because there were always some views -- my views of technology limitations in terms of velocity, in which we could do it, what's required to build the AI model.Now since we had to build all these tools to automate a lot of things, I have 0 concerns about doing it at least if the market was there and everything was open 10,000 connected assets a quarter. We have people all around the world now. We literally operate 24 hours a day.So there's someone in Australia, there's someone in India, there's someone in Singapore, someone in Europe, someone in -- so doing 10,000 a quarter with the technology, the way we've developed it with the tools we have, with the people we have everywhere, doing at least 10,000 a quarter now should be very straightforward.Six months ago, if you were asking me that question, you would have had a long answer.
Yes. But to temper sell-side analysts and expectations until things improve, something like -- where you were this quarter to 5,000 or 6,000, it's probably reasonable in the near term.
Totally. Because that assumed customers were willing to be creative in how we did it and assumed the customer had their job and they showed up to work every day. I mean, literally, this morning -- I was dealing with someone last week, so this morning, their outlook says I no longer work here anymore. So last week -- and that's one of the world's largest coffee companies. So this is the real weird world we live in. So yes -- so we've had to be creative to do that 3,000, 3,500 connections because of a lot of things. That's not normal.When we get back to normal, hopefully, we don't get any more of these outlook responses, and people are back to work and things are more normal. That's a good way of thinking about it, Brian.
Yes. And then the $38 million of connected asset backlog, I don't remember, I'm not looking at my Excel spreadsheet. Can you -- do you have a number at the end of June what that looked like?
It's the first time I've ever said it because we gave the number of assets and so on. First time I've ever gave it. So is it up significantly as Chantal says in her notes? Yes. I mean -- well, before, it wasn't big enough, so that's why I never I would said it, right? So -- but it was big, trust me, I would have told you before. Now it's bigger.
So I guess that brings me to the question I really want to ask is, the environment is not good, obviously, for installations. Talk about -- and we've talked about this in quarters past, the sales approach and how you are adding this backlog? Is it all through, like you said, Teams? Is it all reaching out through the phone? Is there in-person meetings? Just go through where we are today with the sales process and how you're adding these connected assets to backlog?
So in Alberta, in-person meetings are continuing. In the U.S., it's Teams, it's Zoom, you name it, but a lot of them are existing customers, so they know us. They don't need to see us. Remember, I said a significant amount of that backlog is from customers -- existing customers that grew, so it's just doing their planning.The others are -- they're doing back-to-work planning. So we're involved in discussions around buildings and getting their facilities back to work. Barry, who's listening on the call, but is not on -- spokesperson on the call, has been very active in 2 countries, in Canada and the United States, with the policy setters who are back to work. TDs, if you were, at our AssetCare, our mCloud Connect, you heard a lot of experts from Harvard, from a number of institutions where there -- we've been active in the back-to-work guidelines that people will have to meet. So since we've been part of those discussions and making sure AssetCare will allow customers to be -- to conform and to be audited, to make sure they conform with those new standards. We're part of the get-back-to-work planning. So we know what they're buying from us to get back to work.The problem we don't know is when they will be back to work. So just because you're involved, and we're signing contracts and we're doing TCV deals, there's frustration from people, then why doesn't someone going and install it? Because there's no business being opened, period, right? So they know what they want to do. They just don't know when they want to do it. But we've been involved in those discussions. And again, I encourage anyone to go back to listen to some of those panelists around indoor air quality in the policy setting. We've -- our road map is perfectly navigated to meet those standards. So we just need those people to back to business. So that's where that TCV is coming from.
The last question I have, and maybe Chantal can step in because you mentioned, "Do you want more clarity?" You answered the question, which I think is really important about nonrecurring costs. So if we look at salary and wages and we look at professional consulting piece, maybe Chantal, can you talk about how much will come out of each one? Because those are cash costs, even though they're nonrecurring. So maybe it'll help us model where those trends are for those 2 line items.
Right. So for the professional and consulting fees, those align very specifically with financings and acquisitions. So as we begin to taper down on some of that activity going into the next 2 quarters or 3 quarters because we're focusing on revenue generation, you'll see those start to decline.In terms of the salaries and wages, same sort of scenario there, in terms of how we look at them internally and to what extent they're contributing to nonrecurring activities.
The $2 million roughly will come out of those 2 line items in the December quarter and then slowly dissipate a little bit more. Is that how to think about it?
They will start to come out in Q4. To the extent $2 million exactly? I can't comment on that quite yet, but you'll start seeing them wind down.
Yes. As a reminder, Brian, October was still closing kanepi, and so we still have Australian lawyers and a bunch of stuff to close through that part. So that was part of that $2 million. So in Q3, that -- it carried over in some additional bills and costs. So for it to be perfectly $2 million gone, kanepi would to have been closed and shut down on September 30, which it didn't happen. It bled into October.
Your next question comes from the line of Jack Vander Aarde with Maxim Group.
Russ, Chantal, so a lot of my questions have been answered or addressed at least. But just a couple of quick ones that are on my mind are -- with a lot of the growth -- of the revenue growth this quarter coming from existing customers, as you mentioned, wondering if you could provide more color on what's driving this? Maybe specifically, are customers -- existing customers adding or connecting more assets at each location?So maybe a customer's building had 20 connected assets, but there was really an additional 60 assets or something they could connect. So are they connecting those incremental or remaining assets at a given location? Or is it more that customers are connecting assets to locate -- like if they own a bunch of locations or a bunch of buildings. Are they now expanding AssetCare to those locations that had yet to be connected?
Excellent question. So it's going reverse with buildings. Buildings is 2 dimensional. One is primarily new buildings, but now with indoor air quality. Nobody -- none of our customers had any, call it, advanced indoor air quality that would have met the standards that are being implemented now.So any -- we price that per zone. So an IAQ sensor is a zone. It's like a thermostat is a zone. Therefore, it will represent an asset. So if you were a building that had 3 zones, i.e. 3 connected assets because of rooftops or 3 thermostats, you may be adding 2, maybe 3, maybe 4 IAQ zones, indoor air quality zones. Those are priced at, at least $50 per zone, depending on what technology you're using to meet those standards.So an existing building could double in number of connectable assets because they were never, in the first place, indoor air quality compliance. So that's fertile ground. And that's easy pickings, and that's primarily most of the discussions that goes on today.And then they have additional buildings that we hadn't done before. So it will be expanding to new buildings. So that's positive on both dimensions of that equation.And the wind industry is all additional turbines because we've done a very small subset of anybody. So that's all -- a very de minimis percentage of their wind turbines are connected, are scanned. So that's all growing within existing sites and new sites because we're so underpenetrated. There's a lot of room to grow.And very similarly in oil and gas. A lot of people, a year ago, didn't even know who the hell we were in oil and gas and connected AI to their assets. Now we're highly discussed in 3D digital scans. You saw last week, we're starting with a major customer in Alberta doing a gas emissions, which is a new standard that's coming down on the industry big time in oil and gas. They come to us first to talk about using AI and new sensors to make that happen. So that -- again, oil and gas is fertile ground, a lot of growth within existing sites because we're very underpenetrated at any given site, and then a lot of new sites.
Got it. That's helpful. That's encouraging to hear. Kind of a double driver there, more sites and more assets -- or connected assets, more revenue essentially per location.
Yes. And no one's on buildings, indoor air quality, nobody is pushing back. The cost per month to add indoor air quality compliance, I keep saying, is less than the janitorial services they pay for to keep their janitor -- their bathrooms clean. So -- and now we're talking about keeping indoor air quality to comply with the state of New York, state of California, state of Massachusetts, province of British Columbia.And if you look at it on a cost per square foot per month, it's about $0.05 a square foot per month. It's nothing, right, on a $50 per asset basis. So it's -- once this takes off, I think it's going to be amazing, personally.
Got you. And then actually, as it relates to the indoor air quality AssetCare solution, are you seeing -- do you have -- I guess, what is contributing to -- what is the mix, I guess, of customers that are selecting this? Are you penetrating new customers with this solution? And are you also penetrating existing customers with connected -- your standard AssetCare connected assets and now you're layering that on top. What's kind of like the rough breakout? How many are like weren't previously customers that you're penetrating -- able to penetrate with this...
So very few are connected now for all the logistical reasons I just gave you. In terms of new TCV, it's about the same. I mean, we get calls from everybody, school boards, casinos, who want to get back to work and comply. You name it. We're dealing with government. Everybody we never talked to before, who get that either through regulators, people from ASHRAE, people from Harvard School of Medicine, you name it.And then when they're asked, what do you need to do to comply? Who has technology to comply? There's your traditional go to Honeywell and spend $100,000 to upgrade your equipment. Or go to mCloud, they'll use IoT, cloud. They'll do calculations, and they know the regulations dead cold. And they'll vary from state to state, from province to province a little bit, but not much. And for a subscription fee versus a capital fee, you're in the game. That story sells pretty well.School boards have no money, restaurants and -- even the big guys, the big coffee guys. The last thing they want to hear about is a whole bunch of capital expenditure on building. So a subscription model fits perfectly well with them. So the answer is both. Existing customers and new because people are scrambling to comply.
Got it. That's helpful. And then in terms of just -- in terms of geography here, revenue by geo, Canada, if I just look at 3Q '19 versus 3Q '20 or even the 9 months ended '19 versus '20, actually, I guess, really just the quarter, Canada's revenue was $5 million. It was, like, 90% of your revenue in Q3 last year. And then it came to since dipped. But U.S. has kind of offset a lot of that. And then you also sprinkle on some EMEA and APAC regional revenue you didn't have before. But where is this $2 million -- or I guess, $1.6 million of revenue decline from Canada, just given your relationships...
Projects, projects, projects. It's projects. Yes. It's all projects. We have no project activity anywhere in the world, but in Alberta.
Got you. Okay. That makes sense. And then as far as the APAC and EMEA regions go, it looks like $660,000 of revenue or so that didn't exist before last year. What assets are these? Are these a mix of everything here? Is it -- or is it primarily oil and gas and smart buildings?
No because kanepi is not in EMEA -- in Asia Pac. So that's some -- a little bit of Connected Worker, a little bit of wind turbine. And then obviously, some buildings in China that we announced before. But there was no -- till kanepi was closed, which doesn't show up in our books till Q4, it's our real driver for Asia Pac and Africa is the kanepi -- what was kanepi customers. So you'll see a meaningful increase there.
Understood. Okay. And then just lastly, just following up with China and a few quarters back before COVID hit the world, there's a lot of positive momentum you're gaining with some major China shopping centers. Now that China is kind of -- it seems like ahead of the curve now with COVID moving beyond it, is that business returning? Is there additional opportunity there just as it relates to -- yes.
So in terms of signing TCVS, that's happening in terms of -- both in connected buildings and connected workers, in terms of Russ talking too much about it, I've been kind of keeping your calm because we got all excited before and then we got an abrupt pause. I'm not in the mood of getting all excited and watching another abrupt pause.So I think that's one of those being cautious. But if you were to look at our contracts and our contract back line for the country of China, you'd be quite impressed. But that came to a pretty abrupt stop once in March. And so I'm just cautious, that's all.But the answer is yes. Actually, maybe even more than it was. I mean -- but it's more targeted. Its value proposition is more clear, and we know who to do business with, and we also know who not to do business with. So we've gotten very smart since COVID, so -- yes.
There are no further questions at this time. I will turn the call back over to Mr. McMeekin.
Well, thank you very much, everyone. It was a very good call. Thanks for all the great questions, and look forward to year-end 2020, where we'll have the next call. And hopefully, a lot of this stuff will be much clear to all of us. So everyone be safe, and speak to you next time.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.