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Good afternoon, and welcome to the mCloud Technologies Fiscal 2020 Fourth Quarter and Full Year Earnings conference call. At this time, I will turn the call over to Wayne Andrews, mCloud's Head of Investor Relations.
Thank you, Gabriel, and welcome all to our fourth quarter and full year 2020 Results Conference Call. Presenting from mCloud is Russ McMeekin, our Chief Executive Officer; and Chantal Schutz, our 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, level 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're 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, which is or should be available on SEDAR momentarily and also on our website at www.mcloudcorp.com. I will now hand the call over to Russ. Russ, please go ahead.
Yes. Thank you, Wayne, and good afternoon, everyone. Operator, if we could move the slide paginated 2. I'd like to take a couple of minutes to recap the acquired company since our inception. I received a request from a number of you since the last conference call in over the several months on putting together the puzzle on how this brick wall ties to AssetCare. So starting with the upper right-hand side, FDSI, that was our pre-go public acquisition. That gave us deep analytics. It was our first iteration of AI analytics. Our first early adopters were Bank of America, we worked closely with the Department of Energy, a lot of the academic insights came from Purdue, and that was the starting point for the company. Very quickly after going public, the company acquired NGRAIN, we acquired this company to give us advanced visual analytics. Our next-generation AI, which has evolved considerably since then. And our original early adopter customer that still is a customer of ours today, Lockheed Martin on the fighter jet Battle Damage Inspection program. And that provides us technology that gives us something that the world does not have, and that is micro precision visual analytics that is military grade. The third acquisition gave us the platform to be able to get out to assets, get out to workers, provide a secure mobile platform that was Agnity. The early adopters were AT&T, SoftBank now most recently, TELUS, Rogers in Canada. And that really gives us voice, data, video, all kinds of connectivity to workers and assets and the aggregation of all, and that's been a very phenomenal acquisition for us. AutoPro followed after Agnity, and that provided us named accounts in Alberta certainly was the foundation from which our most recent strategic move into Alberta has really allowed us to catapult that whole activity, both oil and gas in Alberta and then globally. So that has given us many of the who's who in Alberta and a lot of domain knowledge and high talent individuals to be able to really go after oil and gas in a serious way in which we are. Next with CSA, that technology, the early adopters was most of -- about 95% of the nuclear facilities in U.S.A. installed base uses the CSA technology, again, this is for 3D digital twin. We use that now in all asset types. We've got offshore platforms for oil and gas, onshore oil and gas, midstream, that technology is nuclear grade, as you can see. and therefore, it gives us a very differentiated position in the market with high precision, cloud-based 3D visual analytics in 3D. Then we added to all of this AirFusion, which gave us some customers in Europe. Added to our AI engine capability, significant AI capability. Again, visual inspection, where we basically can take all kinds of visual data and immediately convert it into intelligent information around the health of blades and wind turbines, which post-COVID will be very strategic for a lot of people who have ignored a lot of their assets, not by their own desires, but by reality, we'll be able to scan those blades with drone or ground-mounted visual inspection data, and we'll be able to convert that to them or for them very quickly. And then last but not least, kanepi, which was our last acquisition in the fall of last year. That gave us the foundation for AssetCare enterprise edition. It gives us workflow for the mobile capabilities we have with all of the previous acquisitions. And has been a big driver for a lot of new business in Southeast Asia, Australia. We have first adopters in Canada. We're soon to have first adopters in the U.S. and this is no longer just oil and gas. We have multisite building operators. We have multisite mining operators in Australia. So that was a very strategic move for us. So you put all these pieces together, that's the bricks in the AssetCare wall that makes us, I believe, today, the most advanced player in, call it, Asset results as a service technology provider. Next slide. Highlighting 2020, as you saw this morning in our press announcement, total AssetCare revenues were $20.5 million compared to $8.9 million last year. So that brick wall that I just showed you of technology on a connected asset basis is creating this growth, so we're very excited by that, that's a very significant year-on-year growth. And we're going to get into SaaS metrics later, and you'll see from a SaaS perspective, these are pretty impressive metrics. The recurring revenue component is $12.8 million. That compares to $2.9 million in 2019, so 335% growth. That trajectory as we go into 2021 is quite impressive with very strong backlog as I will get into later. We have significant demand in AssetCare indoor air quality. In fact, in our MD&A that will be published shortly. You will see results from actual before and after, and I'll show you in a slide coming up. Before and after results, which is creating the -- if you don't have it, why not kind of situation versus just a month ago is what should we do to get back to work. Now it's -- when we apply this technology, it brings us to a level that is far beyond anything they've ever seen. So the question becomes if you don't have it, why don't you? Next is converting our current oil and gas customers to recurring revenue to SaaS. There's no doubt, COVID helped with that. A lot of people were forced to stay at home, not able to go to their assets, which drew the question of, well, if we can't get to them by flight or by drive, how do we get to these assets and AssetCare became a key business tool for them. We're now -- we're looking at 2021 with a lot of business activity that started with, let's try it out in 2021, now let's scale it in 2020 -- now let's scale it in 2021. And then most recently, in today's filing, will definitely help as well. We received some shareholder approvals we needed to request the NASDAQ. So we continue to keep driving forward on this NASDAQ listing to create a peer group that is similar to ourselves and to create a currency that is far different than what we have today. Next slide. Again, we use connected assets as our key barometer of what's going on. When we went public, we had 6,000 connected assets at inception in a handful of customers. We look at where we closed 2020. We had 59,462. We have backlog and very clear line of sight to 70,000 connected assets by mid-2021. And then we set the milestone, and we have it clearly in our head, the logos, the geographies, the quotas that the people -- that the business development people are carrying to achieve that goal, targeting 100,000 connected assets. We believe that's the next big milestone to be focused on. Next slide. As requested in previous conference calls and in conferences, and as I suggested earlier, we are now tracking on an annual basis. We will provide some traditional SaaS performance indicators. First of all, one we're very proud of is net dollar retention, 273%. That speaks to the fact that our 3-year contracts and the 0 churn that we have are high concentration with our customers a gross dollar retention of 100%, quite impressive. How we use our sales resources against the margin that we generate from these SaaS contracts are measured as LTV to CAC ratio. It's at 3.2 today. We want to see great improvements there as well. These are world-class standards, but we want to be better than world-class on the LTV to CAC ratio. Our win-loss ratio for 2020 was 74%, but that speaks to the fact that most of our business came from captive customers. So we still have a long ways to go from capturing most of the assets from our existing customers. So the win-loss ratio will continue to remain high. But as we enter into the competing for new logos, there will be a downward pressure on that win-loss ratio, but we're also very proud on this 74%. If you combine our TCV backlog coming into 2021, and our highly qualified pipeline backlog coming into 2021. It's approximately $178 million in a future slide, I'll walk you through the distribution of types of customers. And then 84% of our LTV are from top 25 customers. So this speaks to our very satisfied customers that use our technology, the data we generate from these customers and the amount of benefit they generate speaks to our SaaS metrics very well. Moving to Slide 6. So if you look on the left-hand side, last year's revenues in total was $18.3 million. The impressive part here is we see from left to right, not only a bigger bubble or a lot more revenue, but we also see, as a percentage of revenue, 80% of it comes from our AssetCare brick wall, our technology that is from those SaaS metrics I just showed you very impressive. Engineering is a small percentage of the overall revenue. But it's still very strategic. We lead a lot of sales initiatives with technical services to get the customers to really appreciate that we know what we're doing, and we know how to do it. And then we follow it with AssetCare and we follow through the SaaS metrics quite closely. I will now turn the call over to Chantal, and she'll get into a lot more financial detail. Chantal, over to you.
Thank you, Russ. First, I want to start out by saying that I apologize for the delay today. We experienced some technical hiccups in filing the statements in the MD&A. They are all filed now, and you should see them very shortly. Revenue in the fourth quarter was $9.2 million and $26.9 million for the full fiscal year. This was a 47% growth year-over-year. And this compares with Q4 2019 revenues of $10 million and annual 2019 revenues of $18.34 million. Q4 2020 when compared to Q4 2019, reflects a reduction in engineering services, as Russ previously mentioned, of about $3.3 million, and this was a result of the impact from the pandemic restrictions. This decline was replaced by a material increase in the recurring asset over time revenues. For the full year 2020, over 80% of our revenues were derived from AssetCare compared with less than 15% in '19 -- or in 2019. Can we move to the next slide, please? The AssetCare overtime revenue in the fourth quarter was $5.546 million compared with $1.276 million in the same quarter of last year, that's a $4.3 million increase, representing, as Russ previously mentioned, 335% growth. On a year-over-year basis, AssetCare overtime revenue totaled $12.8 million compared with only $2.9 million for the year ended December 31, 2019, again, representing a $9.9 million increase and 335% growth. We can go to the next slide, please. Monthly recurring revenue is a key metric in the analysis of our current results as well as our future growth trajectory. Our MRR blended average per connected asset, which had in this mix, a large number of early adopter customers from 2018 has grown from $12.56 per asset in Q1 2020 to a blended average of $33.75 per asset in Q4. Our revenue growth is derived not only from additional connected assets but also from increasing our MRR. If I can have the next slide, please. While we continue to focus on growing recurring revenue, we have also kept close tabs on our operating expenses. In presenting and discussing our expenses, I will be referring to non-IFRS measures unless I otherwise specify. And IFRS to non-IFRS reconciliation is provided in our MD&A. Our gross margins remained relatively consistent throughout the year. However, they have increased for the total year over 2019. As you can see on the chart, during each quarter, operating expenses specifically tied to selling, marketing and research and development as a percentage of revenue declined with corresponding quarterly revenue growth. We see that in Q1, operating expenses as a percentage of AssetCare revenue was 387% and this showed a steady decline over the 4 quarters ending at Q4 at 134%. At the same time, we continue to see a reduction in what management considers nonrecurring or nonoperating expenses. During 2020, payroll and third-party expenses tied to the acquisitions and acquisition integration declined from $4.1 million in Q1, rather, to $3.4 million in Q4. Furthermore, our recurring or IFRS defined expenses were consistent, while AssetCare recurring revenue increased from $3.1 million in Q 1 to $8.2 million in Q4. It's important to point out a number of expenses, which are classified as research and development operating expenses are driving revenue performance now and will into the future. We've completed the integration of our recent acquisition, and we are now building in new features and functions to the AssetCare platform, and as such, we're exploring the ability to capitalize certain R&D expenses under the IFRS rules. Operating expenses tied to forward-looking revenue illustrates solid leverage in our business model. Turning now to the balance sheet and cash flows. We ended the year with about $1 million of cash on hand. Our net cash inflows for the year of just under $500,000 are represented by $25.6 million of cash used in general operating activities, offset by $32 million from investing activities, primarily driven by the proceeds of our public offering, proceeds from the issuance of convertible debentures and proceeds from special warrants, offset by replacements of loans and leases, repayments of loans and leases. Furthermore, investing activities used $6.2 million in cash related primarily to the acquisition of kanepi, AirFusion and other intangible assets. Despite the growth of sales, our AR at year-end was only slightly more than the year before, while long-term receivables grew from $1.6 million to $5.3 million, resulted from the increased long-term revenue contracts in the year. Intangible assets in goodwill showed significant increases as a result of the acquisitions of CSA, AirFusion and kanepi, and there was no impairment in goodwill as at December 31, 2020. Our current trade payables and accrued liabilities grew to $12 million at the year-end December 31, 2020, compared with $8 million -- $8.8 million at year ended 12/31/2019. As a result of the growth during the year and the increase in expenses. Other liabilities also ended the year at $5.3 million, representing the convertible debenture offering in December 2020. These debentures were later issued in early 2021. The almost doubling of share capital during the year was driven by the shares issued for the purchases of CSA, kanepi and AirFusion, along with the conversion of special warrants, the non-brokered public offering of $4 million and the brokered public offering of $11.5 million. Our 2019 figures were recast for the effect of a change in tax rate assumptions used in the calculation of deferred taxes on the equity portion of the convertible debenture issued in 2019. This was considered by our auditors to be immaterial from a qualitative perspective. And as mCloud is not profitable yet, there is no current tax impact. The deferred tax expense on the resulting deferred tax liability must be recorded in equity. I'll now turn the call back to you, Russ.
Thank you, Chantal. And operator, we will move from what is paginated Slide 9 to Slide 10, please. So back to major growth drivers, as I mentioned previously, indoor air quality as they get back to work and becoming a need to have to must have with many geographies and many operators, building operators or occupiers has been a really strong activity for us, and we're going to see a lot more in the coming weeks, months. in terms of announcements. If you look on the left, you see the configuration of what a building looks like today in terms of the sensors and what feeds are AI model. We go back 2 years ago, that would be a fraction of these kinds of measurements and objective functions we'd focus on. But more or as importantly, if you look to the right, this is a live building in British Columbia, where prior to the turning on and the monitoring and turning on of the active air technology SecureAire with the monitoring technology we have in this given building, pretty large building. You can see that the airborne contaminants are well above anything that would be acceptable. And then post, it's well below. In fact, you get down to levels that are at levels that you would feel comfortable bringing your little kids into. So therefore, we see these kinds of results and then peer groups looking at these kinds of results. And based on an MRR basis where people can subscribe to this and the analogy I like to use is it cost you more to keep your toilets clean than it does to keep your air clean in your building, they'll drive to these kinds of indoor air quality standards. So we believe this is a -- we know it is today, and it's going to continue to be a very solid growth driver going forward. Next slide, Slide 11. The next major driver is decarbonization of oil and gas also tied into ESG. So on the right-hand side of this slide, these are example reports and there are many reports that our customers are asking for requiring to provide plugged into SAP systems and Oracle systems and back-end systems that they need to be able to comply with their ESG reporting. If you notice in early March, the SEC for U.S. reporters have mandated now using an enforcement group of, I think, 22 people in the SEC that the ESG reporting for operators such as oil and gas be auditable, traceable, and when they report it, be able to have some semblance of connectivity to their reality. So AssetCare is a perfect fit for that, and we see a lot more reports being generated by that compliance requirement. If you look on the left-hand side, circled in red, these are very specific areas where mCloud focuses on. So when we connect to heat exchangers, when we connect to compressors, when we connect the pumps, at the controller level, we're looking at the left-hand side in terms of efficiency, detection and repair, not letting things go to flare. Those kinds of things are in that 47% range of where fugitive gases are created. Then there is leak detection, our next-generation leak detection, working in the province of Alberta, which has been very strategic with the end-user customers and the regulators in the province to focus on wearable devices on mobile workers that will feed our cloud and use workers and reports in AI to begin to detect things that are unseen in operations, the fugitive gas not only at the asset level but as you roll them in facilities, you'll be able to find these fugitive gas. If you -- some of these 3 component areas are these 3 areas of focus of ours, you will see very material reduction in carbon intensity of these operators, which is the game plan of the province of Alberta to be the lowest carbon intensity operator in the world. Therefore, in those areas where you see the red boxes that will reduce those leakages or losses quite considerably. And mCloud's role in this is very significant. So that -- we're at the center of this. This is why we've moved to Alberta, and there's a lot more to be discussed on this in future calls and future announcements. Moving to the next slide. In summary, we signed -- we see signs of the global pandemic lifting, I would say, quite safely by May in most of the state's provinces and some of the countries, including Europe, that are starting to come online. We are seeing people getting back to work with schedules and timing that makes sense that I think are going to be maintained now versus setting dates that are moved out because of additional shutdowns and government mandates to stay home, that seems to be mitigating now. So we expect by May, things to really clear. As I mentioned before, $175 million of a combination of pipeline and backlog, mostly 3-year TCV. 40% of that are buildings and growing 40% is oil and gas and growing. We have some wind carryovers, some deals mainly in Europe and in China. We expect close to once they're installed and they got results mainly around blade inspection, post being ignored during COVID, we think there's going to be a multiplier effect by references showing how our way of blade inspecting is far more efficient than traditional ways. And therefore, that as a percentage of the total should begin to grow, and the absolute numbers should begin to grow in the wind plus others. Again, focusing on our internal KPIs remaining above 200% of net dollar retention is very strategic to us. Our LTV to CAC ratios where we really take advantage of our sales force getting our $4 million per TCV in place, maintaining a very high win-loss ratio. So we want to be top quartile performers from a SaaS perspective. To the next slide. In final summary, we look at surpassing 70,000 connected assets here in the very near term, then 100,000 is our next milestone, as I mentioned previously. We have some tremendous people around the world now in Europe, Middle East, Southeast Asia, Australia, Canada, U.S., where we are going direct to customers. We have an indirect channel. We announced with Fidus that's a very strategic partnership we've signed for some very large fortune top 20 multisite building operators. We mentioned our progress in New York state. That's now turning into connected buildings. Our progress in Northern California, as you know, New York state, Northern California, are very dense population states. We've had some very strategic wins in our own backyard in C that will turn into multiplier effect with school boards and what you name it, a lot of exciting stuff there and also working with the utilities in BC. So it's happening in our own backyard, not just in multi-states. Our other focus is EBITDA generation once we get above this 70,000 connected assets and start heading towards 100,000 connected assets, all of that's accretive and starts generating positive EBITDA. Gross margin has improved significantly from 2019 to 2020, going into 2021 as recurring revenues become a larger percentage or maintain as a larger percentage. Gross margins is a good story. Our new home base of Alberta is very strategic for us. I can't say enough positive things, the combination of working with government entities. The government itself how the customers or the end operators work collaboratively, it's just something I've never seen in my life before. It's quite impressive. And then us in the middle of it is quite exciting. And as COVID lifts and things happen, this will become a major growth driver. And Alberta's credibility as an operator and early adopter in technology in the Middle East, Southeast Asia, Australia and Texas is very well understood and renowned. So we expect that to drive scale, not only in Canada, Alberta but around the world. That's the end of our prepared remarks, and I'll turn it over to the operator for questions.
[Operator Instructions]Your first question will come from the line of Steven LI of Raymond James.
I don't see the filings yet. So maybe I can ask a couple of financial statement questions. So Chantal, I just want to confirm, so you said $1 million cash on hand at quarter end?
Yes.
And then since quarter end, how much was raised whether debentures or any pull forward arrangement?
Since January, we've announced approximately USD 3.5 million of additional close, and we expect to last close very shortly.
Okay. Perfect. And now for Q1, are you expecting some cash burn in Q1?
Yes. Russ here. You ask if we're expecting some cash burn? So there's -- as long as we're below the $14.5 million revenue per quarter, we still use cash. So there will be uses of cash in Q1. We expect to be breakeven from a cash flow point of view around the midpoint of Q2, which is that 70,000 connected asset that we put in the press announcing this morning.
Okay. That's perfect. And Russ, when you thinking Q1, I mean, should we expect that trend to continue? So Q1 cash burn may be lower than Q4?
Yes, because we did a lot of -- in Q4, there was still a lot of heavy-duty kanepi closing and stuff of that nature. So this financing was not that costly. NASDAQ work was pretty light. So we should be seeing a reduction in those kinds of expenditures. Yes.
Makes sense. And maybe, Russ, let me ask you about the guide. So you said that double the growth of AssetCare revenue. So now does that mean double the AssetCare revenue base you just had in 2020? Or -- because if I look at the growth 2020 over 2019, that's a bit higher. It's $11.6 million year-over-year growth. So that would put your assets here at about $44 million in 2021, which one were you referring to?
Let me see if I get your question straight here. So I'm going to Slide 6.
Yes. No, I think, in the press release, you say for fiscal '21, you expect double the growth of AssetCare revenues. So if I take that literally, that means you grew $11.6 million in '20?
Yes. So therefore, so year-end was about $20 million total AssetCare. So you're asking is it going to be close to $40 million at the end of 2021, is your question, I believe for AssetCare?
Well, not at the end for the full year, not a run rate number, but for the full year 2020?
Yes. No, that's what I'm getting at. Yes, yes. The answer is yes, it should be pretty close. Again, I'm assuming May is open business as usual. We're doing the 8,000-plus connected assets again that we used to do. And we have carried over the recurring, that's what was intended in the press announcement, correct.
Right. And what's a good number for engineering? I mean that's been depressed, but maybe we should expect some recovery in '21. Maybe a range would be helpful here, Russ?
Yes. So let's explain what we've done with engineering. So if you look at some of the -- when we grow AssetCare, some of those technical people are in the COGS, right? So we've applied them to AssetCare growth. So they were -- so we didn't let them go. We just use them differently, and they're doing a very good job. And our game plan isn't to go back to the $5 million a quarter of projects. I think at a steady state, when everything is back to business and everything is good, a number of about $3 million a quarter for technical services, specifically tied to being, call it, early creators of opportunity for AssetCare is a good strategic mix for us.
Got it. And you would only get to that level, probably in the second half, is that fair?
That's fair. That is fair.
Your next question will come from Brian Kinstlinger of Alliance.
First, can you talk about the progress you're making in Alberta with your partnership? And how should we be thinking about assets related to that partnership ramping?
So Invest Alberta is one partnership wholly owned. Basically, there is a business arm of the province. So from a -- looking at ways to be clever of pulling forward capital with new capital structures around contracts, they've been very active and helpful. Looking at international contracts, looking at deals we couldn't have looked at otherwise without that partnership. Now we're at the table with major governments and major players around the world. So domestic growth by just being able to get to existing customers and provide them easy SaaS to deal with ESG endorsed by the province, you should think of that as definitely an acceleration. We were doing very well before in connecting assets, we're going to do even better in Alberta, Brian. But it's not just -- Invest Alberta is not just an Alberta only organization. They have people in Singapore. They have people in the Middle East. So we are actively in discussion with Singapore, with Saudi Arabia and how do we take a lot of the technology that are adopted and proven out in Alberta to these other countries. So we should see an acceleration in those countries. We always had aspirations in those countries. Now we're going to have acceleration in those countries. In terms of getting technologies that are endorsed by regulators. There are regulators in Alberta. There are very smart regulators in Alberta. So they work closely with our development team to make sure we're not just developing things that are not consistent with how they see regulations around decarbonization and ESG. So everything we do will have -- like we have with indoor air quality. We like to say it meets the requirements of people like CDC. We'll have a similar mantra in Alberta around people like emissions reduction, Alberta and others.
Great. Switching gears. In terms of 70,000 connected assets, it sounds like some point towards the end of the second quarter. Do the environment need to change for the better to achieve this goal, meaning if travel restrictions continue, can you still achieve that?
I believe so because where the restriction has lifted -- in that 70,000 count, I think we're starting to see work around or even relaxation of those, some of the standard, even in your own state, we're starting to see things a little bit more practical. So I would say -- I could give you a theory around that, but the practical reality is things are opening up more so than the headlines are suggesting. So I'd say we're feeling pretty good about 70,000, and we're feeling pretty good about the great state of New York.
Great. And then you gave a backlog combined with pipeline number. To me, backlog is asset you've contracted. So how many assets have you contracted to install that are awaiting the queue? Or what percentage of that -- what was it $120-some-odd million is actually backlog??
Well, I'll give you that number before, right? So it was over $30 million last time, right? $28 million something, so over $30 million of real backlog, real contracted backlog. That gets you well over now, 70,000 connected assets. So that's why when you ask me, am I confident? I feel pretty good because there's not much to really do other than through logistics. And then the rest of it is -- yes, the rest of it is in sales force and that really high probability portion of the -- your sales force, you've seen sales force before. It's the kind of things in the funnel that you get excited about. So that's the number we got in there.
Great. Lastly, you touched on, and I'm going to say it wrong, Fidus Global.
You said it right.
Are they a reseller -- good. Are they a reseller to your solution? Are you -- are they going to get a royalty? Are you going to get a royalty? Just explain how that partnership works?
So they are very -- they used to be the customer, right? So now they have a consulting arm. So step #1 is they will sell services to go in to help people get back to work, meeting all these requirements. So they're smart consultants that have a small bench today, but an ability to grow a nice size bench to be installers. So it will be, call it, effort light for us with SaaS heavy contracts with them, where they get a percentage of the MRR. But most of their revenue is from consulting and installation efforts. And that's their business. It's a private company. It's quite a lucrative business for them, and they used to be at places like Amazon, FedEx, you name it. So they know how to do and they have the credibility to do with some serious people.
[Operator Instructions]Your next question will come from Jack Vander Aarde of Maxim Group.
Congrats on the strong finish to the year. A couple of questions for me. Russ, I'd be interested in getting your thoughts on any updates. I think you kind of briefly alluded to some of this, but what I'm getting is, any updates on the RealWear AR headsets for your field workers? And how this is progressing in terms of -- is -- are we generating AssetCare revenue from connected workers yet? Or is this still on the horizon here?
We did in Q4, generate revenues from AssetCare using RealWear headsets, both in Alberta and international. We're seeing 2 dimensions there. So is it real? Is it commercial? Is it operating now? The answer is yes. And we have many applications. In fact, I think our team is presenting to their sales force, all these added apps that they can procure kind of like App store style to add to the RealWear headset once you've already made the investment in it. I think we've got workflow. We've got work order. We have many, many. So put it to you that way. Everyone is an additional monthly recurring fee, not unlike when you get a phone and you add things to the phone. I think you asked me what do I think of it? And how is that working? From a noise cancellation point of view, it's very well received in the market. A lot of the other technologies are comfortable. But when they get into very loud environments are not very effective, RealWear is very effective. They're intrinsically safe. So that's a barrier that's easy to come over. Some of our customers are big utilities in oil and gas, where you can't get on-site unless it's intrinsically safe. So if you were to go to Slide 3 later and take a look at demand with the headset on, that's an intrinsically safe version. So it's not intrusive to the operator. So we're seeing a lot more customers buying a lot of hardware directly, not having -- us having to put it through the MRR or through the contracts. And then coming to us with apps ranging from just connecting an expert to a whole bunch of other applications that we have for the market.
Okay. Cool. That's great. Just can you remind me to just for context of like bigger picture down the road, what -- and from like a revenue mix perspective, what is the connected worker represent in terms of -- is it like 20% of like the long-term mix, like with like traditional connected assets?
In that backlog, I showed you a 40%, 40% and then 20% was wind and others. That's got connected worker in there. But one of our strategies, Jack, is that we seem quite attractive is to bundle 10 workers with 15 assets. I'm just giving you an example. And putting it together as a bundle as long as there is -- and then we identify each user as they are each connection as a monthly recurring fee. We believe that strategically is something nobody else does period. There's AI guys who think about buildings, there's AI guys who think about oil and gas plants and then there's connected worker people. We put it all together in one as a bundle on a monthly subscription basis. We have yet to see anybody who thinks that way. So it's not unconceivable that you'll see a lot of big deals coming with the bundle. And the more and more people do that, the more -- well, hopefully, our 70% hit win-loss ratio will stay equal to or greater than . So we see that as a very strategic move for ourselves.
Okay. Great. That's helpful, Russ. And then just switching gears to a question on kind of the outlook for guidance. I guess just for starters, would you expect -- it's kind of a pointed question, obviously. So it's okay if maybe you can't provide a specific answer. But from the revenue line, total revenue, would you expect the first quarter revenue to decline from the fourth quarter and that -- but then grow sequentially throughout the year? Or would you expect first quarter to be above the fourth quarter?
It's a good question. So what I don't have a good feel for is in March, how much billable technical services we did because we saw we got a little bit above $1 million in Q4 in technical services. We start off January, it's like -- December, everyone got excited, Jack, and then it's like January, everyone shut down again. So technical services went from things might be getting better to almost 0 in January. So it started picking up literally. I don't mean this to be joking, but Valentine's Day is when we actually saw pickup in activity again. So we won't have the benefit of January being overly built from a technical services point of view, which is the projects line. Obviously, the recurring revenue is the recurring revenue. And we are connecting assets at the back end of March. So is it going to be down? I don't think so. Could it be about the same as Q4? Maybe. Could it be up? That's our goal.
Got you. That's a great answer. Okay. And that makes sense. I only ask because I know how lumpy this business can be from the project side, especially. And then just reviewing your comments as well as for EBITDA and if that's synonymous with cash flow breakeven. Because I know in your EBITDA reconciliation, you guys add back a bunch of items. I'm just wondering like does -- when do you expect to be, I guess, like, truly cash flow positive? What revenue level?
So that's the $14.5 million I gave you. So that's just back out noncash, stock comp and all that other stuff that goes into EBITDA, back those things out and just look at cash, margin minus cash items. And assuming normalized, I think someone asked me the question, I think it was Steven about M&A deals and so on. So I assume M&A light or NASDAQ light, not doing a whole bunch of crazy stuff. At $14.5 million, the gross margins minus the cash items equals cash contribution, let's call it, cash contribution.
And that's on a per quarter, Russ?
Yes. And then we go from $14.5 million to a bigger, that's the breakpoint. Yes.
Okay. Fantastic. That's all I have. Great strong finish to the year, like I said, and look forward to keeping in touch.
And we have no further questions at this time. I'll now turn the call back over to Mr. McMeekin for closing remarks.
Well, thank you very much, and we'll have our next call. And hopefully, this time, the filings will show up before the call. Thank you very much, and we'll be next time.
This concludes today's conference call. Thank you for joining. You may now disconnect.