Enghouse Systems Limited — Call Transcript 2026

Good morning, ladies and gentlemen, and welcome to the Enghouse Q1 2026 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, March 13th, 2026. I would now like to turn the conference over to Mr. Stephen Sadler, Chairman and CEO. Please go ahead. Good morning, everybody. I'm here today with Rob Medved, Chief Financial Officer, and Todd May, VP, General Counsel. Before we begin, I will have Todd read our forward disclaimer. Certain statements made may be forward-looking. By their nature, such forward-looking statements are subject to various risks and uncertainties, including those in Enghouse's continuous disclosure filings, such as its AIF, which could cause the company's actual results and experience to differ materially from anticipated results or other expectations. Undue reliance should not be placed on forward-looking information, and the company has no obligation to update or revise any forward-looking information, whether as a result of new information, future events, or otherwise. Thanks, Todd. Rob will now give an overview of the financial and business results. Thank you, Steve. Good morning, everyone, and thank you for joining us today. I'll begin with a brief overview of our first quarter results for fiscal 2026. Overall, the first quarter reflects a continuation of the operating environment we've seen over the past several quarters. Customer decision-making remains somewhat cautious in certain markets, and activity levels continue to vary throughout the business. Against that backdrop, our results reflect stable operations, continued profitability, and strong cash generation. Revenue for the first quarter was CAD 120.1 million, compared to CAD 124 million in the same quarter last year. The year-over-year change reflects a combination of factors within our operations, including the timing of product and services activity and normal variability in customer purchasing patterns across our customer base. Maintenance services revenue was lower year over year, reflecting expected levels of churn within portions of the installed base, which is characteristic of this type of revenue and something we continue to manage over time. Looking sequentially, revenue was also lower than in Q4. That primarily reflects the timing and inherent variability of hardware-related transactions, which can be uneven from quarter to quarter, as well as softer professional services activity as some customers deferred or delayed project starts. We continue to see a degree of customer caution in certain markets, particularly around the timing of larger or more discretionary services engagements, and visibility remains somewhat limited. Recurring revenue, which includes SaaS and maintenance, was CAD 84.6 million and represented 70.4% of total revenue for the quarter. While modestly lower than the prior year, recurring revenue continues to represent a substantial and important portion of our overall business. It contributes meaningfully to the predictability and stability of our results and remains a key focus as we manage the business through the current environment. From a profitability perspective, Adjusted EBITDA was CAD 31.1 million, representing a margin of 25.9%. Operating income was CAD 28.3 million, and net income for the quarter was CAD 17.5 million. These results reflect continued attention to cost management and operating efficiency across the organization while maintaining the flexibility needed to support our various product lines and customer bases. During the quarter, we also continued with targeted alignment and efficiency initiatives in specific areas of the business. These actions are consistent with our long-standing operating model and are intended to ensure that our cost structure remains aligned with current activity levels while preserving the ability to respond as conditions change. We remain focused on maintaining margins and supporting our recurring revenue base across the portfolio. Cash generation remains a consistent strength of Enghouse. Net cash provided by operating activities, excluding changes in working capital and income taxes, was CAD 31.4 million in the quarter, and we ended the period with CAD 260.2 million in cash equivalents, and short-term investments. This level of cash generation and balance sheet strength supports our ongoing capital return activities, including dividends and share repurchases, while also providing flexibility to fund internal initiatives and evaluate acquisition opportunities as they arise. Reflecting the strength in cash generation, yesterday, the board approved a 3.3% increase in the company's eligible quarterly dividend to CAD 0.31 per common share, payable on May 29th, 2026 to shareholders of record at the close of business on May 15th, 2026. This represents the 18th consecutive year in which the company has increased its dividend. It's also helpful to consider the business mix when looking at quarterly results. Enghouse operates across a range of software markets and solution areas, and performance naturally varies by product and customer group from quarter to quarter. In the Asset Management Group, revenue was CAD 52.8 million for the quarter, compared to CAD 50.8 million in the same quarter last year, reflecting steady performance and the inclusion of Sixbell, which was acquired during the quarter. Elsewhere in the portfolio, activity levels were mixed, reflecting normal variability in license sales, professional services timing, and recurring revenue across a broad installed base. Overall, this mix continues to contribute balance to the consolidated results. Turning briefly to technology trends, including AI, this continues to be an area of active discussion with customers. We are increasingly seeing customers ask how AI-enabled functionality might be applied within their existing systems to improve efficiency, automation, or insight. At the same time, many of the environments we serve are operationally complex or regulated, and adoption tends to be gradual and use case driven. In parallel, we are also using AI internally in targeted ways to support efficiency and decision-making across parts of the organization. Our focus remains on identifying practical applications of AI within our platforms where there is clear customer value and a path to monetization rather than treating AI as a standalone offering. In summary, we are continuing to operate the business with a focus on stability, profitability and cash generation while remaining disciplined in how we invest and allocate capital. The fundamentals of the business remain sound, and we believe we are well-positioned to manage through the current environment. With that, I'll now turn the call over to Steve. Thanks, Rob. The markets in which we operate today continue to be difficult as our customers try to understand the impact of changing tariffs, the impact of the global conflicts, and how to best implement AI to monetize their substantial investment. We use AI in a hybrid strategy model, leveraging industry-leading external models for immediate productivity while building solutions on targeted investment. We continue to implement practical AI, like Rob said, and we've done this for years when new technology comes out. We have recently established AI teams have started to implement applications to improve efficiency and many internal solutions, which are now being called AI software that we have developed over the years, again, using technology. When looking at AI, you've got to ask when someone says they've laid off staff or done something, which AI solution allowed this to happen, as many are just attributing AI to all things, the cost reductions, revenue, et cetera. I thought I'd give a few of the ones we've used over the years and are continuing to use in some form. Virtual Agents, which can be monitored, measured, and reported on just like human agents. This is an early activity for us, as AI still does not provide the accurate answers in all cases. Agent Assist, which is designed to make human agent handling conversations more efficiently, and we use the Google technology for this aspect. Quality Management System, which connects our own transcription service to translate voice, emails, and chat, which allows for analysis of every conversation and will handle the analysis of virtual communications as well. Smart Quality, which enables contact center supervisors to analyze how each call is handled and to listen on problematic calls. For example, when a customer or someone raises their voice, it routes it to the supervisor who then can listen to the call. Of course, the one that's in the news a lot today, R&D development and quality assurance of programming code continues to be. We continue to develop using new AI tools, sometimes with different platforms. For example, Claude recently came out, and it's proving to be a little better in developing code than some of the prior AI platforms. On our video features, they also include summarization of videos and automatic multilingual subtitles. This also is a continuing development of our AI usage. Again, only to improve profitability and increase productivity and efficiency. We don't do it for fun. We do it because it gives us results. Back to capital employment. With respect to capital employment, we are purchasing in-house shares using our internally generated funds and our substantial funds on hand. We believe our purchasing our company shares is a good use of our funds. As noted, we have only increased our dividend very slightly this year, reallocating this historical dividend increase to repurchase of our shares. We believe that purchasing our own in-house shares seems to be a good allocation of our capital currently. We continue to see acquisition opportunities which will have a good return on our investment as well, but the completion of such opportunities requires further risk-based due diligence to ensure our ROI will be achieved and the business of the opportunity will not be seriously disrupted. I would now like to open the call for questions. Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Erin Kyle with CIBC. Your line is now open. Hi. Good morning. Thanks for taking the questions. I just wanted to start right there on capital deployment and M&A, Steve. Maybe if you can expand a bit further on just what you're seeing from an acquisition perspective? You know, are targets still expecting higher multiples in this environment? Are you seeing owners holding off on hopes of market recovery? Just how should we think about the pace of deployment for M&A here? You've got a lot of questions there, but I'll see if I can cover them all. First of all, in the public markets, software, as you can tell, is getting beaten up, firstly, everywhere. Initially, when AI came out, it said contact centers would go to zero, where you wouldn't need people. A lot of, not our clients, but contact centers who tried that are now hiring back the staff because it doesn't really work as well yet that they believe it to be. The applications seem to be more promotional than actual reality. However, how does that impact? Of course, acquisitions or capital deployment of public company software are reasonably priced, i.e., we believe there's an opportunity there, but they're larger acquisitions, and that's why we tend to hold our funds. In the private market, they still are looking back a year to 18 months. They just don't believe that the value is right, and so they're waiting for higher values. But they also haven't really done a lot of work to understand how AI could disrupt their business. So it's taking us a little bit longer to, again, examine and do better due diligence because we don't want to make a mistake. Our commitment is if we do acquisitions, they'll add to shareholder value, and we want to make sure we do the right ones. But there's quite a few to look at today. It just takes time. It takes a little longer to go through them. Okay. Fair to say there, kind of in summary, the acquisition environment does remain attractive. Just the due diligence process that you're undertaking in evaluating acquisitions is a bit longer in this environment. It might even be better than attractive, okay? Only because everyone's believing AI is going to take over everything, okay? The promotion exceeds the reality in our view. That impacts the market. It will have some impact, so we've got to analyze that impact when we're looking at acquisitions, which adds another flavor to it. Because as you also know, AI is changing rapidly every day. It's not a matter of what it's doing today. We've got to sort of make some assessment what will it do to a business tomorrow. Okay, that's helpful. I just wanted to switch gears just on some of the churn that you called out in the MD&A. Churn from Lifesize. It was mentioned again as a headwind this quarter. Churn there just seemed to be a bit persistent. Is there anything specific to call out there? You did acquire that acquisition a couple of years ago now at this point, so just want to see if there's anything else to call out? It's flattening out on the Lifesize part. Again, a lot of people are trying to assess, should you buy today or wait to see when all this noise clears? There's a lot of noise in the marketplace. There's nothing really different than before. It's just more of the same, and people are getting more nervous, and they just don't know where the future is going. They're being more careful with their dollars, as are we. Thanks, Steve. I'll pass the line. Your next question comes from David Kwong with TD Cowen. Your line is now open. I was wondering just on the decision for the dividend increase this year, obviously being less than the 10% plus that we've seen historically? It sounds like it's more being driven by some allocation or that you guys are focusing on the share buybacks, obviously, given how the share price has performed? Is the right way to think about it that maybe there's a fixed amount that you kind of want to allocate to dividends and share buybacks versus M&A? Not really. I mean, how we looked at the dividend part, we usually increase the dividend, as you pointed out, for 10 years by 10%-20%. 15%-20%, usually. When we look at things today, and we didn't do a lot of buybacks. I generally don't believe in the buybacks because what I do is I'd rather use that for M&A or dividends rather than just buy back our own stock. However, looking at where our stock price is today, we always assess where we should deploy the capital, and we concluded that, you know, our current stock price is better than a lot of the acquisitions. The value of it is better than a lot of the acquisitions we're seeing, especially in the private market. We believe it is better to put more to the buyback program, which again, we haven't done much of, but we're doing more of now. Where to take that from, we decided it was better not to take it from acquisitions, but take it from the dividend part, where we've always had substantial increases. We still want to increase the dividend a little bit, which we did. The reason why is because we have a commitment to shareholders that we've increased their dividend every year for over 10 years. We didn't want to change that because I think they expect some increase. We just lowered the amount so we could apply more to buybacks rather than to the dividend. Okay. An analysis of where we can best apply our capital, and we believe our own shares is better, in some ways, better than some acquisitions we're seeing and better than paying more out in a dividend, which is really high because our stock has come down and makes it look very high. It is really more in dollar value than we paid, I'd say, last year, but it's high now. We just, we're gonna use our cash in a different form, which we always look at. It just so happens this year it's now changed to say the buyback is better than doing any more dividends. We have a commitment that we'll increase every year, so we did increase a little bit. M&A, our own stock seems to be a better buy than some of the acquisitions we're seeing, which is unusual. No, that's helpful, Steve. I guess it sounds like you're kinda holding some ammo back for M&A as well versus reallocating it to the dividend? Yes, that's right. The other thing, I think if you look at the marketplace, some of our very large competitors are having trouble, okay? Their stocks are down quite a lot, but more so you have a company like Mitel, competitor went into bankruptcy a couple of months ago. You have Avaya that tries to get out, which is a $2 billion contact center type company, can't really get out in the market these days. You got many of them going out of the small business area that we're in 'cause they can't make it profitable. Well, we're making it profitable, and we're running things well to do all those things, although it's tough. You can't take on any business just to make yourself look like you're growing at a loss. We are careful in that area. We continue to be. When it comes to down to our capital allocation, well, we believe more should be as a result in repurchasing our shares than are adding to our dividend. We aren't taking the dividend down, we just aren't adding like we have in the past, and we still wanna keep our powder dry for acquisitions. There are some pretty large ones out there that are reasonable value for us, but you gotta convince people to sell us that value because although it might look like a good value on the market, often they say they're worth more than what they are, just like we do. That's why we're buying back our own shares. No, that's great. I guess in that vein, just kinda looking at the buybacks versus M&A versus dividends and just the, you know, opportunities I see to deploy more capital on the buyback side, would you not consider then a substantial issuer bid? We always look at substantial issuer bid, but then I give up a lot of my cash, and as I just said, there's some larger opportunities that I might need that cash for. They're not here. You can never depend on them. If you look in the market, there is opportunity to do larger deals. The question is what benefit you're gonna get if everyone believes contact centers are gonna be eliminated, which we do not. We do not see that. We see that changing actually, as I said. The AI has moved on from contact centers because now after saying it for so long and it not happening, they gotta come up with a new thing, and now it's all software is gonna be eliminated. Well, we'll see. I don't see that happening either. We see AI as another tool that helps us do things better. Both software development makes the contact center better, makes our agent assist and answer the customers better. We see it as a valuable resource in a hybrid model with the other things that we do. We're seeing it a little differently, but we don't see the market's treating it like it's gonna eliminate contact centers, as an example. We don't believe that will happen. It's like the driverless cars today. I'm looking out the window right now, I don't see very many, but I see a lot of cars where there's digital features looking in your blind spot, stopping automatic, you're backing up if someone's behind you. There's a lot of things it has enhanced over the last 10 years as they've talked about having driverless cars and we'll all be sitting in the back seat while cars drive us around. That may happen in the future. You have to be in the game, but it takes a lot longer than the market thinks, and it sometimes it doesn't happen. You look at electric vehicles, they were be-all and end-all, and as I was coming in this morning, I heard again of another company, I think it was Honda or something, writing off billions of dollars again 'cause their EV isn't quite working. 'Cause in all these systems and software, people are involved. Sometimes people wanna talk to a person, not a machine, when they call into a contact center, unless it's a very easy question, 'cause they wanna explain it and get the proper answer back. That still is a little ways off. We're working towards it. We have to be in it. It's an important thing to be involved in. It's an important thing to look at, and we are certainly doing all those things to keep up with the technology, but in a practical way, not a promotional or, I'll call it hype way, where the promotion far exceeds the reality today. That doesn't mean that won't change in the next couple of years. We therefore have groups that do AI. We have people learning AI. If it changes, we can catch up quickly and be involved. No, that's great, Sadler. Just last question for me. How much, I guess, of the targeted CAD 2 million-CAD 2.5 million cost savings from the restructuring did you realize this quarter, and how should we think about margins playing out for the balance of the year? It's interesting. When you redo restructuring, because we're in many countries, sometimes it takes six months. You gotta keep the people on and pay them. Again, you'll see some restructuring we're continuing to look at and do. You have to have consultations with them, and that can take a month or two to do, so it delays some of it. Again, that's another item that we've got to look at. We're approaching it, again, like everything we do. We try and approach it in a practical manner, and it's continuing to do. We still have some more restructuring still to do going forward. We match costs and revenue. If revenues get tougher or something happens, we've got to match the cost to that revenue. We look through all our businesses, we measure everything. We're like a baseball team. We know how many times they're up, how many we hit for, and how many times do they walk. We measure everything in our business, and we always look at it to see where we can make further efficiencies improvement. The other thing I'll say is turnover is minimal in this market now, at least for us. I hear layoffs of everyone else that they claim to be AI is why they're doing those layoffs. What I would say to you, which is an interesting question, when they say that, you should ask what software solution did they actually do in AI that allowed the layoffs. You might find that AI wasn't the cause of the layoffs in many cases. That's a good question to ask. You did some AI. What's that solution that caused Amazon to lay off 30,000 people? I mean, tell us what it was if the cause of the layoffs were AI? We find AI isn't doing it, but not those type of numbers. Unless they just were overstaffed and they're fixing a problem. We get that. Great. Thank you. Your next question comes from Kevin McVeigh with UBS. Your line is now open. Great. Thanks so much and really helpful context. Hey, I wonder, you know, obviously, AI has been in the market, and obviously there's a lot of questions on it, but just from a different perspective. From a funding perspective and from a budget perspective, are the clients deploying it in parallel with your solutions? You know, just in terms of any shifts in behavior you'd call out, because I happen to agree with you that it's going to be an enabler as opposed to wholesale displacement. Are you seeing, you know, in terms of running parallel with you folks or, you know, any specific behaviors you'd call out? Yeah. You know, this is an odd thing to say, but I'll tell you anyway because we're pretty open. Sure. The applications are hard to see how to monetize AI. We set up these two consulting groups, and we believe if we work with customers, maybe we'll see an AI application that works. There's a study done by 55 major companies, and we're in the small business lower end of the market, so it's harder for us to do, where 95% of the proof of concepts didn't work. At least today. It's improving every day and didn't work. We believe if we do work for customers, we might come up with a terrific application that we can take to all our customers. 'Cause maybe we're not smart enough to see it, but maybe there's somebody there who can point us in the right direction. Part of that is why we set up the two AI professional services groups to work with our customers to help them with proof of concepts, because we have the talent to do it, and we want to learn AI. From that, maybe we'll pick up some good ideas. It's always good to get good ideas from others. You just don't know where they come from. We find if we do those services, we might find some that we can use throughout the whole business. That's why we did that. On our own, we're having difficulty seeing today how that works. Even the virtual agent, you know, people are getting frustrated, and after about three times of asking things, they actually hit a button, "Get me to a human being who I can talk to about this." There's still some of that. That can change because it's growing rapidly. We understand that, and we're trying to take a practical approach to it. That's why we're doing it the way we're doing it. No, that makes a lot of sense. Just as you think about kind of when obviously another change in the industry a long time ago, shift from voice to some software, right? Has it been at the same pace in terms of how you're recognizing the revenue or, you know, I guess more so just the, I guess, the cost and what you're able to charge for kind of the AI? Because obviously that almost feels like a more dramatic shift when you went from live agent to software. Just any thoughts on, you know, just some perspective because I always try to understand what's happened in the past to try to parallel what could potentially happen with the AI? Yeah. The good news is, at least for a management group, there's been a lot of changes over the years. I mean, it used to be called a help desk where you phoned in and got help. Now it's we have many things. It could come SMS messaging, it could come in as an email, or they could call in. In fact, when they do call in, I'll give you a little example. We use software that translates that voice into digital, so to compare everything together to see how an agent's doing. We don't want to miss out on that part of it. Now, in doing that, we started using Google to do that translation. Too expensive. We couldn't do it. We wrote in about three months our own system, which does the translation. Cost went down by 80%. 80%, not 8%, 80%. There's a lot of things we're trying to learn by doing this and how to get efficient in doing it. Some of it we use the platform people, because they're very good at it. Some areas it's too expensive to do. We are looking at all those aspects, how to analyze better. Like when we have a virtual agent, you're going to charge more for a virtual agent than you are for one that isn't, 'cause they're taking advantage of not having a person there. You got to be careful. The virtual agent has to be reasonably good or else they say, "What am I doing here?" We're developing it over time. That's a very early stage on that virtual agent for us because we're still trying to get the software to do that properly. Remember, you got to tie that to, they say, a large language model. We actually use a small language model because our customers are smaller. We don't have giant contact centers of thousands of people. They generally average between 50 and 250 agents. It's a smaller base of which to deliver, and therefore a smaller time frame. You don't want to keep history for 10 years. We can do something like an agent, monitor them for a month or two, and do an analysis on how well they answered calls. Even the virtual agent, how many times did it actually answer, or did it move you over to a real person? We're still. It's still new. We're trying it all. You have to be there. We're learning a lot by doing it, but there's a lot of moving parts right now, and it takes some time. In doing that, you're doing that while still marketing and still trying to, you know, add revenue and value with what you've got today. Again, I think 70% of our revenue is recurring, but some of that is older revenue on-prem, and there's some customers who are going back on-prem. The latest thing for AI is they don't think SaaS is going to work anymore. You got to read all this stuff. I'm reading it, trying to learn as I go, and there's a lot of different views out there right now, and the true answer is they don't know. We don't know. We're trying to keep our finger in all the games, so we're there. When a trend we see it's really working, we want to be there to get on it quickly. That's what we're trying to do rather than just expend a lot of money trying to experiment with stuff. We're more likely to make money, and we'll be there a little late, but we'll get there quickly because we're still involved in the game. It's very helpful, and congratulations on the execution. Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Paul Treiber with RBC Capital Markets. Your line is now open. Yeah, thanks, good morning. Just a question on, you mentioned earlier that you're expanding the due diligence on acquisitions just regarding AI. You know, can you share some thoughts around, you know, what your checklist is or, you know, evaluation criteria to assess AI risk or AI resiliency for acquisitions? To get that, Paul, you're going to have to give me an acquisition and be involved in it, because it's not a little list. Again, it's not just doing AI. We're looking at all aspects of the business, but we've got to sort of see what's the risk of it, the business being disrupted by AI. That's a lot of things to look at. That also means you got to know what AI can do and what it can't do right now. What's that going to be like in a month? What's that like going to be in a year? We're taking it a little slower on that when we're looking at some of the deals. Some of them aren't even in AI, we don't think will change much there, and maybe we're wrong. We got to assess that when looking at the risk of any deals now. Another factor you have to look at, one of the key things they do in valuations, they always say, "Well, what's the terminal value?" That could be at five or 10 years out. If you do a valuation, there's always a terminal value. It's pretty hard to tell what that is today, and therefore we're probably a little risk-averse. That may be positive, but it may be a negative, because it means, if we took a little more risk, we might get more done. Investors might like that, shareholders might like that, but I have to live with it. They don't have to fix it if it doesn't work. We're careful, and maybe that slows us down more than it should. Opportunities are actually greater because everyone's worried. Remember, the promotion by everyone out there is contact centers, as an example, are going to be eliminated. That's not going to happen. Okay. Just like cars aren't eliminated. Driverless cars haven't taken over. That's 10 years when they told me that initially, 'cause as an old guy, I go through all that stuff and remember it. There is, there's a lot of work. More work to be done to say. If you do do it, are investors going to say, "What'd they spend their money on that for? Keep the cash, because we don't think it's, in five years, it's going to be worth anything. We got to assess all those things, and we do it the best we can, and it changes very rapidly every day. Thanks for that. The second question is just on the AMG side of the business. I think a lot of the talk has been on IMG and the dynamics there with AI. In terms of AMG, you know, what have you been seeing in terms of customer interest in AI, and either, you know, uptake or delays regarding new software deployments just related to AI uncertainty? Yeah. Certainly, and I should mention this too. We always talk a lot about contact center because it seems to be the thing in the, in the market. Our contact center revenue is down quite a bit in the sense of our total revenue these days, because with the other revenue from our transportation, our new deals that we did, and our networks have been increasing while our contact center has been going down because of Lifesize and things that we bought in that space that we're trying to fix up. Our contact center is a little bit smaller. Your question about, let's say networks or AMG. AMG is really networks and transportation. There's less of an issue there right now, but there's a lot. You know, They want to have a system AI that goes through and maybe guesses if a person's gonna go off the system. You're talking, let's say, a person redoing their internet or even their phone, you know, CAD 30 a month. That's what they. It's not as big to really apply to know that one or two customers go off. You've got to do it slightly differently. There's less comments from our other areas on AI, but it still impacts them. They still wonder where it's going. The big one in networks is how do you detect fraud? How do you detect cyber? How can AI do that? That's the plus. The negative is how is AI going to change that, so you've got more risk on cyber, et cetera, because the bad guys are gonna use AI as well to disrupt your organization. If you use more of it, they might be able to implant it somewhere and get it. All these factors are still talked about, a lot of thinking going on them. We look at it. We did it. We've set up groups in both AMG and IMG to do AI. Small groups, four-five, that we wanna do. We have people who've been doing it internally, so we're just gonna focus their knowledge a little bit more and go out to customers and say, "Look, we have a group who knows this stuff. We're not as expensive as the California teams who are out selling this service. It costs CAD millions. We can help you with your projects and maybe we learn something by it. We may get an application from it, and we're on top of the direction of where a lot of people are going. We get it by having this service that we just set up in January. It's starting to show a little bit of traction, but it's very new. It's really done to help us learn more and help us come up with good projects that customers want that we can apply AI to and maybe take to other customers that we have as we learn from work we're doing with customers. The good news for me is they actually pay for it. That's good too. It isn't a big cost to do the AI like many are doing and spending money on. We actually at least cover our costs in doing that type of a professional services business. Just one last question from me. Just on Lifesize, you know, I believe you had a new updated version of Lifesize coming out early this year. Could you speak to the customer interest and feedback and maybe pipeline for that new offering? Sure. I think. Look, Lifesize, it was an interesting project. We made our payback very quickly on that one because if you remember, we bought it out of bankruptcy. We didn't take on liabilities, and even though the revenues dropped, we're still doing quite well. The new product, their product was a good start that we had for that business. As we get into it, they had some third-party products incorporated. They're taking a little longer to get out so we can get better margin on that product, so we're still doing that. It's still got some work to do. Again, we got to introduce the sales staff how to sell this new type of product. All that's going on, it all takes a little longer than everyone thinks. We're trying to build some AI into it. It's just taking a little bit longer, but that's still our plan. We're very close to doing better there, and hopefully, we'll get better traction from our revenue side from it. 'Cause virtually right now, we haven't done that much. 'Cause you don't want to put it out there in a customer with third-party products that cost a lot and then tell the customer you wanna take those out and put a new one in. They ain't too happy with those type of changes. In some ways, it's slowed down as we make those changes and get the product better before we start putting it in customers. We are starting to do that now. Hopefully, we'll show some traction on that, but there hasn't been much on it yet. Okay. Thanks for taking the questions. There are no further questions at this time. I will now turn the call over to Mr. Stephen Sadler for closing remarks. Well, I wanna thank you all for attending the call and your continued support. It's a very interesting technology environment today. You know, we're handling it in the usual manner, trying to practically do it, not at the bleeding edge, but we're certainly in the game, and we certainly are positioning for the future as well as for the present. You can see that theme with the platforms. Three weeks ago, Copilot was good, Gemini was good, and now it's Claude. Like, if you start picking on one and putting it on all your systems and they change that, what are you gonna do? Go change all your systems? It's still a new area, and we certainly believe that it will help. We believe it will improve efficiency. You gotta find the right application to do it, and you can't die in the process. Which, again, many of our competitors are having some trouble. They're all doing AI because they believe that's what investors wanna hear. We're trying to say, "Live through it, do the AI, but let's at least make our cash flow from what we're doing." It's a little different approach. Maybe not as fancy as the others, but steady and if it all blows up, we'll be last man standing. That's what we wanna make sure that we're gonna be there no matter what. If it takes off, we're gonna get there quickly because we are spending time and money trying to get paid a little bit for it by the professional services group. We're spending time and money trying to at least keep up with the technology, which is going very quickly. We'll have to see where it all goes. I think as another company said in one of their calls, we're in inning one, and not at the end of inning one. We're at the start of inning one, and we've got to see how it all fares out and where you can use technology like we have in the past to make the investment. This time, that technology is called AI. In the past, it's been called other things. For example, we had to go with cloud with SaaS. You know, now they're saying SaaS will be eliminated. Yeah, I'm not so sure. We just built that area up, so that'd be a little unfortunate. We are still trying to figure out how best to use it to add value for shareholders. It's not easy, and it's in a very fast-changing environment. That's sort of where we're at on it. It's an honest view, but we're not being left behind. I haven't said much in the past because I don't want to promote something that I'm really experimenting with in many ways right now. Thank you, everybody. Again, I'll look forward to seeing you in the future. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

Speaker 4: Good morning, ladies and gentlemen, and welcome to the Enghouse Q1 2026 conference call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Friday, March 13th, 2026. I would now like to turn the conference over to Mr. Stephen Sadler, Chairman and CEO. Please go ahead. Good morning, ladies and gentlemen, and welcome to the Enghouse Q1 2026 conference call. good morning ladies and gentlemen and welcome to the enghouse q1 2026 conference call At this time, all lines are in listen-only mode. at this time all lines are in listen-only mode Following the presentation, we will conduct a question-and-answer session. following the presentation we will conduct a question-and-answer session If at any time during this call you require immediate assistance, please press star zero for the operator. if at any time during this call you require immediate assistance please press star zero for the operator This call is being recorded on Friday, March 13th, 2026. this call is being recorded on friday march 13th 2026 I would now like to turn the conference over to Mr. Stephen Sadler, Chairman and CEO. i would now like to turn the conference over to mr stephen sadler chairman and ceo Please go ahead. please go ahead

Speaker 7: Good morning, everybody. I'm here today with Rob Medved, Chief Financial Officer, and Todd May, VP, General Counsel. Before we begin, I will have Todd read our forward disclaimer. Good morning, everybody. good morning everybody I'm here today with Rob Medved, Chief Financial Officer, and Todd May, VP, General Counsel. i'm here today with rob medved chief financial officer and todd may vp general counsel Before we begin, I will have Todd read our forward disclaimer. before we begin i will have todd read our forward disclaimer

Speaker 8: Certain statements made may be forward-looking. By their nature, such forward-looking statements are subject to various risks and uncertainties, including those in Enghouse's continuous disclosure filings, such as its AIF, which could cause the company's actual results and experience to differ materially from anticipated results or other expectations. Undue reliance should not be placed on forward-looking information, and the company has no obligation to update or revise any forward-looking information, whether as a result of new information, future events, or otherwise. Certain statements made may be forward-looking. certain statements made may be forward-looking By their nature, such forward-looking statements are subject to various risks and uncertainties, including those in Enghouse's continuous disclosure filings, such as its AIF, which could cause the company's actual results and experience to differ materially from anticipated results or other expectations. by their nature such forward-looking statements are subject to various risks and uncertainties including those in enghouse's continuous disclosure filings such as its aif which could cause the company's actual results and experience to differ materially from anticipated results or other expectations Undue reliance should not be placed on forward-looking information, and the company has no obligation to update or revise any forward-looking information, whether as a result of new information, future events, or otherwise. undue reliance should not be placed on forward-looking information and the company has no obligation to update or revise any forward-looking information whether as a result of new information future events or otherwise

Speaker 7: Thanks, Todd. Rob will now give an overview of the financial and business results. Thanks, Todd. thanks todd Rob will now give an overview of the financial and business results. rob will now give an overview of the financial and business results

Speaker 6: Thank you, Steve. Good morning, everyone, and thank you for joining us today. I'll begin with a brief overview of our first quarter results for fiscal 2026. Overall, the first quarter reflects a continuation of the operating environment we've seen over the past several quarters. Customer decision-making remains somewhat cautious in certain markets, and activity levels continue to vary throughout the business. Against that backdrop, our results reflect stable operations, continued profitability, and strong cash generation. Revenue for the first quarter was CAD 120.1 million, compared to CAD 124 million in the same quarter last year. The year-over-year change reflects a combination of factors within our operations, including the timing of product and services activity and normal variability in customer purchasing patterns across our customer base. Thank you, Steve. thank you steve Good morning, everyone, and thank you for joining us today. good morning everyone and thank you for joining us today I'll begin with a brief overview of our first quarter results for fiscal 2026. i'll begin with a brief overview of our first quarter results for fiscal 2026 Overall, the first quarter reflects a continuation of the operating environment we've seen over the past several quarters. overall the first quarter reflects a continuation of the operating environment we've seen over the past several quarters Customer decision-making remains somewhat cautious in certain markets, and activity levels continue to vary throughout the business. customer decision-making remains somewhat cautious in certain markets and activity levels continue to vary throughout the business Against that backdrop, our results reflect stable operations, continued profitability, and strong cash generation. against that backdrop our results reflect stable operations continued profitability and strong cash generation Revenue for the first quarter was CAD 120.1 million, compared to CAD 124 million in the same quarter last year. revenue for the first quarter was cad 120.1 million compared to cad 124 million in the same quarter last year The year-over-year change reflects a combination of factors within our operations, including the timing of product and services activity and normal variability in customer purchasing patterns across our customer base. the year-over-year change reflects a combination of factors within our operations including the timing of product and services activity and normal variability in customer purchasing patterns across our customer base Maintenance services revenue was lower year over year, reflecting expected levels of churn within portions of the installed base, which is characteristic of this type of revenue and something we continue to manage over time. Looking sequentially, revenue was also lower than in Q4. That primarily reflects the timing and inherent variability of hardware-related transactions, which can be uneven from quarter to quarter, as well as softer professional services activity as some customers deferred or delayed project starts. We continue to see a degree of customer caution in certain markets, particularly around the timing of larger or more discretionary services engagements, and visibility remains somewhat limited. Recurring revenue, which includes SaaS and maintenance, was CAD 84.6 million and represented 70.4% of total revenue for the quarter. Maintenance services revenue was lower year over year, reflecting expected levels of churn within portions of the installed base, which is characteristic of this type of revenue and something we continue to manage over time. maintenance services revenue was lower year over year reflecting expected levels of churn within portions of the installed base which is characteristic of this type of revenue and something we continue to manage over time Looking sequentially, revenue was also lower than in Q4. looking sequentially revenue was also lower than in q4 That primarily reflects the timing and inherent variability of hardware-related transactions, which can be uneven from quarter to quarter, as well as softer professional services activity as some customers deferred or delayed project starts. that primarily reflects the timing and inherent variability of hardware-related transactions which can be uneven from quarter to quarter as well as softer professional services activity as some customers deferred or delayed project starts We continue to see a degree of customer caution in certain markets, particularly around the timing of larger or more discretionary services engagements, and visibility remains somewhat limited. we continue to see a degree of customer caution in certain markets particularly around the timing of larger or more discretionary services engagements and visibility remains somewhat limited Recurring revenue, which includes SaaS and maintenance, was CAD 84.6 million and represented 70.4% of total revenue for the quarter. recurring revenue which includes saas and maintenance was cad 84.6 million and represented 70.4% of total revenue for the quarter While modestly lower than the prior year, recurring revenue continues to represent a substantial and important portion of our overall business. It contributes meaningfully to the predictability and stability of our results and remains a key focus as we manage the business through the current environment. From a profitability perspective, Adjusted EBITDA was CAD 31.1 million, representing a margin of 25.9%. Operating income was CAD 28.3 million, and net income for the quarter was CAD 17.5 million. These results reflect continued attention to cost management and operating efficiency across the organization while maintaining the flexibility needed to support our various product lines and customer bases. During the quarter, we also continued with targeted alignment and efficiency initiatives in specific areas of the business. While modestly lower than the prior year, recurring revenue continues to represent a substantial and important portion of our overall business. while modestly lower than the prior year recurring revenue continues to represent a substantial and important portion of our overall business It contributes meaningfully to the predictability and stability of our results and remains a key focus as we manage the business through the current environment. it contributes meaningfully to the predictability and stability of our results and remains a key focus as we manage the business through the current environment From a profitability perspective, Adjusted EBITDA was CAD 31.1 million, representing a margin of 25.9%. from a profitability perspective adjusted ebitda was cad 31.1 million representing a margin of 25.9% Operating income was CAD 28.3 million, and net income for the quarter was CAD 17.5 million. operating income was cad 28.3 million and net income for the quarter was cad 17.5 million These results reflect continued attention to cost management and operating efficiency across the organization while maintaining the flexibility needed to support our various product lines and customer bases. these results reflect continued attention to cost management and operating efficiency across the organization while maintaining the flexibility needed to support our various product lines and customer bases During the quarter, we also continued with targeted alignment and efficiency initiatives in specific areas of the business. during the quarter we also continued with targeted alignment and efficiency initiatives in specific areas of the business These actions are consistent with our long-standing operating model and are intended to ensure that our cost structure remains aligned with current activity levels while preserving the ability to respond as conditions change. We remain focused on maintaining margins and supporting our recurring revenue base across the portfolio. Cash generation remains a consistent strength of Enghouse. Net cash provided by operating activities, excluding changes in working capital and income taxes, was CAD 31.4 million in the quarter, and we ended the period with CAD 260.2 million in cash equivalents, and short-term investments. This level of cash generation and balance sheet strength supports our ongoing capital return activities, including dividends and share repurchases, while also providing flexibility to fund internal initiatives and evaluate acquisition opportunities as they arise. These actions are consistent with our long-standing operating model and are intended to ensure that our cost structure remains aligned with current activity levels while preserving the ability to respond as conditions change. these actions are consistent with our long-standing operating model and are intended to ensure that our cost structure remains aligned with current activity levels while preserving the ability to respond as conditions change We remain focused on maintaining margins and supporting our recurring revenue base across the portfolio. we remain focused on maintaining margins and supporting our recurring revenue base across the portfolio Cash generation remains a consistent strength of Enghouse. cash generation remains a consistent strength of enghouse Net cash provided by operating activities, excluding changes in working capital and income taxes, was CAD 31.4 million in the quarter, and we ended the period with CAD 260.2 million in cash equivalents, and short-term investments. net cash provided by operating activities excluding changes in working capital and income taxes was cad 31.4 million in the quarter and we ended the period with cad 260.2 million in cash equivalents and short-term investments This level of cash generation and balance sheet strength supports our ongoing capital return activities, including dividends and share repurchases, while also providing flexibility to fund internal initiatives and evaluate acquisition opportunities as they arise. this level of cash generation and balance sheet strength supports our ongoing capital return activities including dividends and share repurchases while also providing flexibility to fund internal initiatives and evaluate acquisition opportunities as they arise Reflecting the strength in cash generation, yesterday, the board approved a 3.3% increase in the company's eligible quarterly dividend to CAD 0.31 per common share, payable on May 29th, 2026 to shareholders of record at the close of business on May 15th, 2026. This represents the 18th consecutive year in which the company has increased its dividend. It's also helpful to consider the business mix when looking at quarterly results. Enghouse operates across a range of software markets and solution areas, and performance naturally varies by product and customer group from quarter to quarter. In the Asset Management Group, revenue was CAD 52.8 million for the quarter, compared to CAD 50.8 million in the same quarter last year, reflecting steady performance and the inclusion of Sixbell, which was acquired during the quarter. Reflecting the strength in cash generation, yesterday, the board approved a 3.3% increase in the company's eligible quarterly dividend to CAD 0.31 per common share, payable on May 29th, 2026 to shareholders of record at the close of business on May 15th, 2026. reflecting the strength in cash generation yesterday the board approved a 3.3% increase in the company's eligible quarterly dividend to cad 0.31 per common share payable on may 29th 2026 to shareholders of record at the close of business on may 15th 2026 This represents the 18th consecutive year in which the company has increased its dividend. this represents the 18th consecutive year in which the company has increased its dividend It's also helpful to consider the business mix when looking at quarterly results. it's also helpful to consider the business mix when looking at quarterly results Enghouse operates across a range of software markets and solution areas, and performance naturally varies by product and customer group from quarter to quarter. enghouse operates across a range of software markets and solution areas and performance naturally varies by product and customer group from quarter to quarter In the Asset Management Group, revenue was CAD 52.8 million for the quarter, compared to CAD 50.8 million in the same quarter last year, reflecting steady performance and the inclusion of Sixbell, which was acquired during the quarter. in the asset management group revenue was cad 52.8 million for the quarter compared to cad 50.8 million in the same quarter last year reflecting steady performance and the inclusion of sixbell which was acquired during the quarter Elsewhere in the portfolio, activity levels were mixed, reflecting normal variability in license sales, professional services timing, and recurring revenue across a broad installed base. Overall, this mix continues to contribute balance to the consolidated results. Turning briefly to technology trends, including AI, this continues to be an area of active discussion with customers. We are increasingly seeing customers ask how AI-enabled functionality might be applied within their existing systems to improve efficiency, automation, or insight. At the same time, many of the environments we serve are operationally complex or regulated, and adoption tends to be gradual and use case driven. In parallel, we are also using AI internally in targeted ways to support efficiency and decision-making across parts of the organization. Elsewhere in the portfolio, activity levels were mixed, reflecting normal variability in license sales, professional services timing, and recurring revenue across a broad installed base. elsewhere in the portfolio activity levels were mixed reflecting normal variability in license sales professional services timing and recurring revenue across a broad installed base Overall, this mix continues to contribute balance to the consolidated results. overall this mix continues to contribute balance to the consolidated results Turning briefly to technology trends, including AI, this continues to be an area of active discussion with customers. We are increasingly seeing customers ask how AI-enabled functionality might be applied within their existing systems to improve efficiency, automation, or insight. turning briefly to technology trends including ai this continues to be an area of active discussion with customers. we are increasingly seeing customers ask how ai-enabled functionality might be applied within their existing systems to improve efficiency automation or insight At the same time, many of the environments we serve are operationally complex or regulated, and adoption tends to be gradual and use case driven. at the same time many of the environments we serve are operationally complex or regulated and adoption tends to be gradual and use case driven In parallel, we are also using AI internally in targeted ways to support efficiency and decision-making across parts of the organization. in parallel we are also using ai internally in targeted ways to support efficiency and decision-making across parts of the organization Our focus remains on identifying practical applications of AI within our platforms where there is clear customer value and a path to monetization rather than treating AI as a standalone offering. In summary, we are continuing to operate the business with a focus on stability, profitability and cash generation while remaining disciplined in how we invest and allocate capital. The fundamentals of the business remain sound, and we believe we are well-positioned to manage through the current environment. With that, I'll now turn the call over to Steve. Our focus remains on identifying practical applications of AI within our platforms where there is clear customer value and a path to monetization rather than treating AI as a standalone offering. our focus remains on identifying practical applications of ai within our platforms where there is clear customer value and a path to monetization rather than treating ai as a standalone offering In summary, we are continuing to operate the business with a focus on stability, profitability and cash generation while remaining disciplined in how we invest and allocate capital. in summary we are continuing to operate the business with a focus on stability profitability and cash generation while remaining disciplined in how we invest and allocate capital The fundamentals of the business remain sound, and we believe we are well-positioned to manage through the current environment. the fundamentals of the business remain sound and we believe we are well-positioned to manage through the current environment With that, I'll now turn the call over to Steve. with that i'll now turn the call over to steve

Speaker 7: Thanks, Rob. The markets in which we operate today continue to be difficult as our customers try to understand the impact of changing tariffs, the impact of the global conflicts, and how to best implement AI to monetize their substantial investment. We use AI in a hybrid strategy model, leveraging industry-leading external models for immediate productivity while building solutions on targeted investment. We continue to implement practical AI, like Rob said, and we've done this for years when new technology comes out. We have recently established AI teams have started to implement applications to improve efficiency and many internal solutions, which are now being called AI software that we have developed over the years, again, using technology. Thanks, Rob. thanks rob The markets in which we operate today continue to be difficult as our customers try to understand the impact of changing tariffs, the impact of the global conflicts, and how to best implement AI to monetize their substantial investment. the markets in which we operate today continue to be difficult as our customers try to understand the impact of changing tariffs the impact of the global conflicts and how to best implement ai to monetize their substantial investment We use AI in a hybrid strategy model, leveraging industry-leading external models for immediate productivity while building solutions on targeted investment. we use ai in a hybrid strategy model leveraging industry-leading external models for immediate productivity while building solutions on targeted investment We continue to implement practical AI, like Rob said, and we've done this for years when new technology comes out. we continue to implement practical ai like rob said and we've done this for years when new technology comes out We have recently established AI teams have started to implement applications to improve efficiency and many internal solutions, which are now being called AI software that we have developed over the years, again, using technology. we have recently established ai teams have started to implement applications to improve efficiency and many internal solutions which are now being called ai software that we have developed over the years again using technology When looking at AI, you've got to ask when someone says they've laid off staff or done something, which AI solution allowed this to happen, as many are just attributing AI to all things, the cost reductions, revenue, et cetera. I thought I'd give a few of the ones we've used over the years and are continuing to use in some form. Virtual Agents, which can be monitored, measured, and reported on just like human agents. This is an early activity for us, as AI still does not provide the accurate answers in all cases. Agent Assist, which is designed to make human agent handling conversations more efficiently, and we use the Google technology for this aspect. When looking at AI, you've got to ask when someone says they've laid off staff or done something, which AI solution allowed this to happen, as many are just attributing AI to all things, the cost reductions, revenue, et cetera. when looking at ai you've got to ask when someone says they've laid off staff or done something which ai solution allowed this to happen as many are just attributing ai to all things the cost reductions revenue et cetera I thought I'd give a few of the ones we've used over the years and are continuing to use in some form. i thought i'd give a few of the ones we've used over the years and are continuing to use in some form Virtual Agents, which can be monitored, measured, and reported on just like human agents. virtual agents which can be monitored measured and reported on just like human agents This is an early activity for us, as AI still does not provide the accurate answers in all cases. this is an early activity for us as ai still does not provide the accurate answers in all cases Agent Assist, which is designed to make human agent handling conversations more efficiently, and we use the Google technology for this aspect. agent assist which is designed to make human agent handling conversations more efficiently and we use the google technology for this aspect Quality Management System, which connects our own transcription service to translate voice, emails, and chat, which allows for analysis of every conversation and will handle the analysis of virtual communications as well. Smart Quality, which enables contact center supervisors to analyze how each call is handled and to listen on problematic calls. For example, when a customer or someone raises their voice, it routes it to the supervisor who then can listen to the call. Of course, the one that's in the news a lot today, R&D development and quality assurance of programming code continues to be. We continue to develop using new AI tools, sometimes with different platforms. For example, Claude recently came out, and it's proving to be a little better in developing code than some of the prior AI platforms. Quality Management System, which connects our own transcription service to translate voice, emails, and chat, which allows for analysis of every conversation and will handle the analysis of virtual communications as well. quality management system which connects our own transcription service to translate voice emails and chat which allows for analysis of every conversation and will handle the analysis of virtual communications as well Smart Quality, which enables contact center supervisors to analyze how each call is handled and to listen on problematic calls. smart quality which enables contact center supervisors to analyze how each call is handled and to listen on problematic calls For example, when a customer or someone raises their voice, it routes it to the supervisor who then can listen to the call. for example when a customer or someone raises their voice it routes it to the supervisor who then can listen to the call Of course, the one that's in the news a lot today, R&D development and quality assurance of programming code continues to be. of course the one that's in the news a lot today r&d development and quality assurance of programming code continues to be We continue to develop using new AI tools, sometimes with different platforms. we continue to develop using new ai tools sometimes with different platforms For example, Claude recently came out, and it's proving to be a little better in developing code than some of the prior AI platforms. for example claude recently came out and it's proving to be a little better in developing code than some of the prior ai platforms On our video features, they also include summarization of videos and automatic multilingual subtitles. This also is a continuing development of our AI usage. Again, only to improve profitability and increase productivity and efficiency. We don't do it for fun. We do it because it gives us results. Back to capital employment. With respect to capital employment, we are purchasing in-house shares using our internally generated funds and our substantial funds on hand. We believe our purchasing our company shares is a good use of our funds. As noted, we have only increased our dividend very slightly this year, reallocating this historical dividend increase to repurchase of our shares. We believe that purchasing our own in-house shares seems to be a good allocation of our capital currently. On our video features, they also include summarization of videos and automatic multilingual subtitles. on our video features they also include summarization of videos and automatic multilingual subtitles This also is a continuing development of our AI usage. this also is a continuing development of our ai usage Again, only to improve profitability and increase productivity and efficiency. again only to improve profitability and increase productivity and efficiency We don't do it for fun. we don't do it for fun We do it because it gives us results. we do it because it gives us results Back to capital employment. back to capital employment With respect to capital employment, we are purchasing in-house shares using our internally generated funds and our substantial funds on hand. with respect to capital employment we are purchasing in-house shares using our internally generated funds and our substantial funds on hand We believe our purchasing our company shares is a good use of our funds. we believe our purchasing our company shares is a good use of our funds As noted, we have only increased our dividend very slightly this year, reallocating this historical dividend increase to repurchase of our shares. as noted we have only increased our dividend very slightly this year reallocating this historical dividend increase to repurchase of our shares We believe that purchasing our own in-house shares seems to be a good allocation of our capital currently. we believe that purchasing our own in-house shares seems to be a good allocation of our capital currently We continue to see acquisition opportunities which will have a good return on our investment as well, but the completion of such opportunities requires further risk-based due diligence to ensure our ROI will be achieved and the business of the opportunity will not be seriously disrupted. I would now like to open the call for questions. We continue to see acquisition opportunities which will have a good return on our investment as well, but the completion of such opportunities requires further risk-based due diligence to ensure our ROI will be achieved and the business of the opportunity will not be seriously disrupted. we continue to see acquisition opportunities which will have a good return on our investment as well but the completion of such opportunities requires further risk-based due diligence to ensure our roi will be achieved and the business of the opportunity will not be seriously disrupted I would now like to open the call for questions. i would now like to open the call for questions

Speaker 4: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Erin Kyle with CIBC. Your line is now open. Thank you, ladies and gentlemen. thank you ladies and gentlemen We will now begin the question and answer session. we will now begin the question and answer session Should you have a question, please press star followed by the one on your touchtone phone. should you have a question please press star followed by the one on your touchtone phone You will hear a prompt that your hand has been raised. you will hear a prompt that your hand has been raised Should you wish to decline from the polling process, please press star followed by the two. should you wish to decline from the polling process please press star followed by the two If you are using a speakerphone, please lift the handset before pressing any keys. if you are using a speakerphone please lift the handset before pressing any keys One moment, please, for your first question. one moment please for your first question Your first question comes from Erin Kyle with CIBC. your first question comes from erin kyle with cibc Your line is now open. your line is now open

Speaker 2: Hi. Good morning. Thanks for taking the questions. I just wanted to start right there on capital deployment and M&A, Steve. Maybe if you can expand a bit further on just what you're seeing from an acquisition perspective? You know, are targets still expecting higher multiples in this environment? Are you seeing owners holding off on hopes of market recovery? Just how should we think about the pace of deployment for M&A here? Hi. hi Good morning. good morning Thanks for taking the questions. thanks for taking the questions I just wanted to start right there on capital deployment and M&A, Steve. i just wanted to start right there on capital deployment and m&a steve Maybe if you can expand a bit further on just what you're seeing from an acquisition perspective? maybe if you can expand a bit further on just what you're seeing from an acquisition perspective You know, are targets still expecting higher multiples in this environment? you know are targets still expecting higher multiples in this environment Are you seeing owners holding off on hopes of market recovery? are you seeing owners holding off on hopes of market recovery Just how should we think about the pace of deployment for M&A here? just how should we think about the pace of deployment for m&a here

Speaker 7: You've got a lot of questions there, but I'll see if I can cover them all. First of all, in the public markets, software, as you can tell, is getting beaten up, firstly, everywhere. Initially, when AI came out, it said contact centers would go to zero, where you wouldn't need people. A lot of, not our clients, but contact centers who tried that are now hiring back the staff because it doesn't really work as well yet that they believe it to be. The applications seem to be more promotional than actual reality. However, how does that impact? Of course, acquisitions or capital deployment of public company software are reasonably priced, i.e., we believe there's an opportunity there, but they're larger acquisitions, and that's why we tend to hold our funds. You've got a lot of questions there, but I'll see if I can cover them all. you've got a lot of questions there but i'll see if i can cover them all First of all, in the public markets, software, as you can tell, is getting beaten up, firstly, everywhere. first of all in the public markets software as you can tell is getting beaten up firstly everywhere Initially, when AI came out, it said contact centers would go to zero, where you wouldn't need people. initially when ai came out it said contact centers would go to zero where you wouldn't need people A lot of, not our clients, but contact centers who tried that are now hiring back the staff because it doesn't really work as well yet that they believe it to be. a lot of not our clients but contact centers who tried that are now hiring back the staff because it doesn't really work as well yet that they believe it to be The applications seem to be more promotional than actual reality. the applications seem to be more promotional than actual reality However, how does that impact? however how does that impact Of course, acquisitions or capital deployment of public company software are reasonably priced, i.e., we believe there's an opportunity there, but they're larger acquisitions, and that's why we tend to hold our funds. of course acquisitions or capital deployment of public company software are reasonably priced i.e we believe there's an opportunity there but they're larger acquisitions and that's why we tend to hold our funds In the private market, they still are looking back a year to 18 months. They just don't believe that the value is right, and so they're waiting for higher values. But they also haven't really done a lot of work to understand how AI could disrupt their business. So it's taking us a little bit longer to, again, examine and do better due diligence because we don't want to make a mistake. Our commitment is if we do acquisitions, they'll add to shareholder value, and we want to make sure we do the right ones. But there's quite a few to look at today. It just takes time. It takes a little longer to go through them. In the private market, they still are looking back a year to 18 months. in the private market they still are looking back a year to 18 months They just don't believe that the value is right, and so they're waiting for higher values. they just don't believe that the value is right and so they're waiting for higher values But they also haven't really done a lot of work to understand how AI could disrupt their business. but they also haven't really done a lot of work to understand how ai could disrupt their business So it's taking us a little bit longer to, again, examine and do better due diligence because we don't want to make a mistake. so it's taking us a little bit longer to again examine and do better due diligence because we don't want to make a mistake Our commitment is if we do acquisitions, they'll add to shareholder value, and we want to make sure we do the right ones. our commitment is if we do acquisitions they'll add to shareholder value and we want to make sure we do the right ones But there's quite a few to look at today. but there's quite a few to look at today It just takes time. it just takes time It takes a little longer to go through them. it takes a little longer to go through them

Speaker 2: Okay. Fair to say there, kind of in summary, the acquisition environment does remain attractive. Just the due diligence process that you're undertaking in evaluating acquisitions is a bit longer in this environment. Okay. okay Fair to say there, kind of in summary, the acquisition environment does remain attractive. fair to say there kind of in summary the acquisition environment does remain attractive Just the due diligence process that you're undertaking in evaluating acquisitions is a bit longer in this environment. just the due diligence process that you're undertaking in evaluating acquisitions is a bit longer in this environment

Speaker 7: It might even be better than attractive, okay? Only because everyone's believing AI is going to take over everything, okay? The promotion exceeds the reality in our view. That impacts the market. It will have some impact, so we've got to analyze that impact when we're looking at acquisitions, which adds another flavor to it. Because as you also know, AI is changing rapidly every day. It's not a matter of what it's doing today. We've got to sort of make some assessment what will it do to a business tomorrow. It might even be better than attractive, okay? it might even be better than attractive okay Only because everyone's believing AI is going to take over everything, okay? only because everyone's believing ai is going to take over everything okay The promotion exceeds the reality in our view. the promotion exceeds the reality in our view That impacts the market. that impacts the market It will have some impact, so we've got to analyze that impact when we're looking at acquisitions, which adds another flavor to it. it will have some impact so we've got to analyze that impact when we're looking at acquisitions which adds another flavor to it Because as you also know, AI is changing rapidly every day. because as you also know ai is changing rapidly every day It's not a matter of what it's doing today. it's not a matter of what it's doing today We've got to sort of make some assessment what will it do to a business tomorrow. we've got to sort of make some assessment what will it do to a business tomorrow

Speaker 2: Okay, that's helpful. I just wanted to switch gears just on some of the churn that you called out in the MD&A. Churn from Lifesize. It was mentioned again as a headwind this quarter. Churn there just seemed to be a bit persistent. Is there anything specific to call out there? You did acquire that acquisition a couple of years ago now at this point, so just want to see if there's anything else to call out? Okay, that's helpful. okay that's helpful I just wanted to switch gears just on some of the churn that you called out in the MD&A. i just wanted to switch gears just on some of the churn that you called out in the md&a Churn from Lifesize. churn from lifesize It was mentioned again as a headwind this quarter. it was mentioned again as a headwind this quarter Churn there just seemed to be a bit persistent. churn there just seemed to be a bit persistent Is there anything specific to call out there? is there anything specific to call out there You did acquire that acquisition a couple of years ago now at this point, so just want to see if there's anything else to call out? you did acquire that acquisition a couple of years ago now at this point so just want to see if there's anything else to call out

Speaker 7: It's flattening out on the Lifesize part. Again, a lot of people are trying to assess, should you buy today or wait to see when all this noise clears? There's a lot of noise in the marketplace. There's nothing really different than before. It's just more of the same, and people are getting more nervous, and they just don't know where the future is going. They're being more careful with their dollars, as are we. It's flattening out on the Lifesize part. it's flattening out on the lifesize part Again, a lot of people are trying to assess, should you buy today or wait to see when all this noise clears? again a lot of people are trying to assess should you buy today or wait to see when all this noise clears There's a lot of noise in the marketplace. there's a lot of noise in the marketplace There's nothing really different than before. there's nothing really different than before It's just more of the same, and people are getting more nervous, and they just don't know where the future is going. it's just more of the same and people are getting more nervous and they just don't know where the future is going They're being more careful with their dollars, as are we. they're being more careful with their dollars as are we

Speaker 2: Thanks, Steve. I'll pass the line. Thanks, Steve. thanks steve I'll pass the line. i'll pass the line

Speaker 4: Your next question comes from David Kwong with TD Cowen. Your line is now open. Your next question comes from David Kwong with TD Cowen. your next question comes from david kwong with td cowen Your line is now open. your line is now open

Speaker 1: I was wondering just on the decision for the dividend increase this year, obviously being less than the 10% plus that we've seen historically? It sounds like it's more being driven by some allocation or that you guys are focusing on the share buybacks, obviously, given how the share price has performed? Is the right way to think about it that maybe there's a fixed amount that you kind of want to allocate to dividends and share buybacks versus M&A? I was wondering just on the decision for the dividend increase this year, obviously being less than the 10% plus that we've seen historically? i was wondering just on the decision for the dividend increase this year obviously being less than the 10% plus that we've seen historically It sounds like it's more being driven by some allocation or that you guys are focusing on the share buybacks, obviously, given how the share price has performed? it sounds like it's more being driven by some allocation or that you guys are focusing on the share buybacks obviously given how the share price has performed Is the right way to think about it that maybe there's a fixed amount that you kind of want to allocate to dividends and share buybacks versus M&A? is the right way to think about it that maybe there's a fixed amount that you kind of want to allocate to dividends and share buybacks versus m&a

Speaker 7: Not really. I mean, how we looked at the dividend part, we usually increase the dividend, as you pointed out, for 10 years by 10%-20%. 15%-20%, usually. When we look at things today, and we didn't do a lot of buybacks. I generally don't believe in the buybacks because what I do is I'd rather use that for M&A or dividends rather than just buy back our own stock. However, looking at where our stock price is today, we always assess where we should deploy the capital, and we concluded that, you know, our current stock price is better than a lot of the acquisitions. The value of it is better than a lot of the acquisitions we're seeing, especially in the private market. Not really. not really I mean, how we looked at the dividend part, we usually increase the dividend, as you pointed out, for 10 years by 10%-20%. 15%-20%, usually. i mean how we looked at the dividend part we usually increase the dividend as you pointed out for 10 years by 10%-20% 15%-20% usually When we look at things today, and we didn't do a lot of buybacks. when we look at things today and we didn't do a lot of buybacks I generally don't believe in the buybacks because what I do is I'd rather use that for M&A or dividends rather than just buy back our own stock. i generally don't believe in the buybacks because what i do is i'd rather use that for m&a or dividends rather than just buy back our own stock However, looking at where our stock price is today, we always assess where we should deploy the capital, and we concluded that, you know, our current stock price is better than a lot of the acquisitions. however looking at where our stock price is today we always assess where we should deploy the capital and we concluded that you know our current stock price is better than a lot of the acquisitions The value of it is better than a lot of the acquisitions we're seeing, especially in the private market. the value of it is better than a lot of the acquisitions we're seeing especially in the private market We believe it is better to put more to the buyback program, which again, we haven't done much of, but we're doing more of now. Where to take that from, we decided it was better not to take it from acquisitions, but take it from the dividend part, where we've always had substantial increases. We still want to increase the dividend a little bit, which we did. The reason why is because we have a commitment to shareholders that we've increased their dividend every year for over 10 years. We didn't want to change that because I think they expect some increase. We just lowered the amount so we could apply more to buybacks rather than to the dividend. We believe it is better to put more to the buyback program, which again, we haven't done much of, but we're doing more of now. we believe it is better to put more to the buyback program which again we haven't done much of but we're doing more of now Where to take that from, we decided it was better not to take it from acquisitions, but take it from the dividend part, where we've always had substantial increases. where to take that from we decided it was better not to take it from acquisitions but take it from the dividend part where we've always had substantial increases We still want to increase the dividend a little bit, which we did. we still want to increase the dividend a little bit which we did The reason why is because we have a commitment to shareholders that we've increased their dividend every year for over 10 years. the reason why is because we have a commitment to shareholders that we've increased their dividend every year for over 10 years We didn't want to change that because I think they expect some increase. we didn't want to change that because i think they expect some increase We just lowered the amount so we could apply more to buybacks rather than to the dividend. we just lowered the amount so we could apply more to buybacks rather than to the dividend

Speaker 1: Okay. Okay. okay

Speaker 7: An analysis of where we can best apply our capital, and we believe our own shares is better, in some ways, better than some acquisitions we're seeing and better than paying more out in a dividend, which is really high because our stock has come down and makes it look very high. It is really more in dollar value than we paid, I'd say, last year, but it's high now. We just, we're gonna use our cash in a different form, which we always look at. It just so happens this year it's now changed to say the buyback is better than doing any more dividends. We have a commitment that we'll increase every year, so we did increase a little bit. An analysis of where we can best apply our capital, and we believe our own shares is better, in some ways, better than some acquisitions we're seeing and better than paying more out in a dividend, which is really high because our stock has come down and makes it look very high. an analysis of where we can best apply our capital and we believe our own shares is better in some ways better than some acquisitions we're seeing and better than paying more out in a dividend which is really high because our stock has come down and makes it look very high It is really more in dollar value than we paid, I'd say, last year, but it's high now. it is really more in dollar value than we paid i'd say last year but it's high now We just, we're gonna use our cash in a different form, which we always look at. we just we're gonna use our cash in a different form which we always look at It just so happens this year it's now changed to say the buyback is better than doing any more dividends. it just so happens this year it's now changed to say the buyback is better than doing any more dividends We have a commitment that we'll increase every year, so we did increase a little bit. we have a commitment that we'll increase every year so we did increase a little bit M&A, our own stock seems to be a better buy than some of the acquisitions we're seeing, which is unusual. M&A, our own stock seems to be a better buy than some of the acquisitions we're seeing, which is unusual. m&a our own stock seems to be a better buy than some of the acquisitions we're seeing which is unusual

Speaker 1: No, that's helpful, Steve. I guess it sounds like you're kinda holding some ammo back for M&A as well versus reallocating it to the dividend? No, that's helpful, Steve. no that's helpful steve I guess it sounds like you're kinda holding some ammo back for M&A as well versus reallocating it to the dividend? i guess it sounds like you're kinda holding some ammo back for m&a as well versus reallocating it to the dividend

Speaker 7: Yes, that's right. The other thing, I think if you look at the marketplace, some of our very large competitors are having trouble, okay? Their stocks are down quite a lot, but more so you have a company like Mitel, competitor went into bankruptcy a couple of months ago. You have Avaya that tries to get out, which is a $2 billion contact center type company, can't really get out in the market these days. You got many of them going out of the small business area that we're in 'cause they can't make it profitable. Well, we're making it profitable, and we're running things well to do all those things, although it's tough. You can't take on any business just to make yourself look like you're growing at a loss. We are careful in that area. We continue to be. Yes, that's right. yes that's right The other thing, I think if you look at the marketplace, some of our very large competitors are having trouble, okay? the other thing i think if you look at the marketplace some of our very large competitors are having trouble okay Their stocks are down quite a lot, but more so you have a company like Mitel, competitor went into bankruptcy a couple of months ago. their stocks are down quite a lot but more so you have a company like mitel competitor went into bankruptcy a couple of months ago You have Avaya that tries to get out, which is a $2 billion contact center type company, can't really get out in the market these days. you have avaya that tries to get out which is a $2 billion contact center type company can't really get out in the market these days You got many of them going out of the small business area that we're in 'cause they can't make it profitable. you got many of them going out of the small business area that we're in 'cause they can't make it profitable Well, we're making it profitable, and we're running things well to do all those things, although it's tough. well we're making it profitable and we're running things well to do all those things although it's tough You can't take on any business just to make yourself look like you're growing at a loss. you can't take on any business just to make yourself look like you're growing at a loss We are careful in that area. we are careful in that area We continue to be. we continue to be When it comes to down to our capital allocation, well, we believe more should be as a result in repurchasing our shares than are adding to our dividend. We aren't taking the dividend down, we just aren't adding like we have in the past, and we still wanna keep our powder dry for acquisitions. There are some pretty large ones out there that are reasonable value for us, but you gotta convince people to sell us that value because although it might look like a good value on the market, often they say they're worth more than what they are, just like we do. That's why we're buying back our own shares. When it comes to down to our capital allocation, well, we believe more should be as a result in repurchasing our shares than are adding to our dividend. when it comes to down to our capital allocation well we believe more should be as a result in repurchasing our shares than are adding to our dividend We aren't taking the dividend down, we just aren't adding like we have in the past, and we still wanna keep our powder dry for acquisitions. we aren't taking the dividend down we just aren't adding like we have in the past and we still wanna keep our powder dry for acquisitions There are some pretty large ones out there that are reasonable value for us, but you gotta convince people to sell us that value because although it might look like a good value on the market, often they say they're worth more than what they are, just like we do. there are some pretty large ones out there that are reasonable value for us but you gotta convince people to sell us that value because although it might look like a good value on the market often they say they're worth more than what they are just like we do That's why we're buying back our own shares. that's why we're buying back our own shares

Speaker 1: No, that's great. I guess in that vein, just kinda looking at the buybacks versus M&A versus dividends and just the, you know, opportunities I see to deploy more capital on the buyback side, would you not consider then a substantial issuer bid? No, that's great. no that's great I guess in that vein, just kinda looking at the buybacks versus M&A versus dividends and just the, you know, opportunities I see to deploy more capital on the buyback side, would you not consider then a substantial issuer bid? i guess in that vein just kinda looking at the buybacks versus m&a versus dividends and just the you know opportunities i see to deploy more capital on the buyback side would you not consider then a substantial issuer bid

Speaker 7: We always look at substantial issuer bid, but then I give up a lot of my cash, and as I just said, there's some larger opportunities that I might need that cash for. They're not here. You can never depend on them. If you look in the market, there is opportunity to do larger deals. The question is what benefit you're gonna get if everyone believes contact centers are gonna be eliminated, which we do not. We do not see that. We see that changing actually, as I said. The AI has moved on from contact centers because now after saying it for so long and it not happening, they gotta come up with a new thing, and now it's all software is gonna be eliminated. Well, we'll see. I don't see that happening either. We always look at substantial issuer bid, but then I give up a lot of my cash, and as I just said, there's some larger opportunities that I might need that cash for. we always look at substantial issuer bid but then i give up a lot of my cash and as i just said there's some larger opportunities that i might need that cash for They're not here. they're not here You can never depend on them. you can never depend on them If you look in the market, there is opportunity to do larger deals. if you look in the market there is opportunity to do larger deals The question is what benefit you're gonna get if everyone believes contact centers are gonna be eliminated, which we do not. the question is what benefit you're gonna get if everyone believes contact centers are gonna be eliminated which we do not We do not see that. we do not see that We see that changing actually, as I said. we see that changing actually as i said The AI has moved on from contact centers because now after saying it for so long and it not happening, they gotta come up with a new thing, and now it's all software is gonna be eliminated. the ai has moved on from contact centers because now after saying it for so long and it not happening they gotta come up with a new thing and now it's all software is gonna be eliminated Well, we'll see. well we'll see I don't see that happening either. i don't see that happening either We see AI as another tool that helps us do things better. Both software development makes the contact center better, makes our agent assist and answer the customers better. We see it as a valuable resource in a hybrid model with the other things that we do. We're seeing it a little differently, but we don't see the market's treating it like it's gonna eliminate contact centers, as an example. We don't believe that will happen. It's like the driverless cars today. I'm looking out the window right now, I don't see very many, but I see a lot of cars where there's digital features looking in your blind spot, stopping automatic, you're backing up if someone's behind you. We see AI as another tool that helps us do things better. we see ai as another tool that helps us do things better Both software development makes the contact center better, makes our agent assist and answer the customers better. both software development makes the contact center better makes our agent assist and answer the customers better We see it as a valuable resource in a hybrid model with the other things that we do. we see it as a valuable resource in a hybrid model with the other things that we do We're seeing it a little differently, but we don't see the market's treating it like it's gonna eliminate contact centers, as an example. we're seeing it a little differently but we don't see the market's treating it like it's gonna eliminate contact centers as an example We don't believe that will happen. we don't believe that will happen It's like the driverless cars today. it's like the driverless cars today I'm looking out the window right now, I don't see very many, but I see a lot of cars where there's digital features looking in your blind spot, stopping automatic, you're backing up if someone's behind you. i'm looking out the window right now i don't see very many but i see a lot of cars where there's digital features looking in your blind spot stopping automatic you're backing up if someone's behind you There's a lot of things it has enhanced over the last 10 years as they've talked about having driverless cars and we'll all be sitting in the back seat while cars drive us around. That may happen in the future. You have to be in the game, but it takes a lot longer than the market thinks, and it sometimes it doesn't happen. You look at electric vehicles, they were be-all and end-all, and as I was coming in this morning, I heard again of another company, I think it was Honda or something, writing off billions of dollars again 'cause their EV isn't quite working. 'Cause in all these systems and software, people are involved. There's a lot of things it has enhanced over the last 10 years as they've talked about having driverless cars and we'll all be sitting in the back seat while cars drive us around. there's a lot of things it has enhanced over the last 10 years as they've talked about having driverless cars and we'll all be sitting in the back seat while cars drive us around That may happen in the future. that may happen in the future You have to be in the game, but it takes a lot longer than the market thinks, and it sometimes it doesn't happen. you have to be in the game but it takes a lot longer than the market thinks and it sometimes it doesn't happen You look at electric vehicles, they were be-all and end-all, and as I was coming in this morning, I heard again of another company, I think it was Honda or something, writing off billions of dollars again 'cause their EV isn't quite working. 'Cause in all these systems and software, people are involved. you look at electric vehicles they were be-all and end-all and as i was coming in this morning i heard again of another company i think it was honda or something writing off billions of dollars again 'cause their ev isn't quite working 'cause in all these systems and software people are involved Sometimes people wanna talk to a person, not a machine, when they call into a contact center, unless it's a very easy question, 'cause they wanna explain it and get the proper answer back. That still is a little ways off. We're working towards it. We have to be in it. It's an important thing to be involved in. It's an important thing to look at, and we are certainly doing all those things to keep up with the technology, but in a practical way, not a promotional or, I'll call it hype way, where the promotion far exceeds the reality today. That doesn't mean that won't change in the next couple of years. We therefore have groups that do AI. We have people learning AI. If it changes, we can catch up quickly and be involved. Sometimes people wanna talk to a person, not a machine, when they call into a contact center, unless it's a very easy question, 'cause they wanna explain it and get the proper answer back. sometimes people wanna talk to a person not a machine when they call into a contact center unless it's a very easy question 'cause they wanna explain it and get the proper answer back That still is a little ways off. that still is a little ways off We're working towards it. we're working towards it We have to be in it. we have to be in it It's an important thing to be involved in. it's an important thing to be involved in It's an important thing to look at, and we are certainly doing all those things to keep up with the technology, but in a practical way, not a promotional or, I'll call it hype way, where the promotion far exceeds the reality today. it's an important thing to look at and we are certainly doing all those things to keep up with the technology but in a practical way not a promotional or i'll call it hype way where the promotion far exceeds the reality today That doesn't mean that won't change in the next couple of years. that doesn't mean that won't change in the next couple of years We therefore have groups that do AI. we therefore have groups that do ai We have people learning AI. we have people learning ai If it changes, we can catch up quickly and be involved. if it changes we can catch up quickly and be involved

Speaker 1: No, that's great, Sadler. Just last question for me. How much, I guess, of the targeted CAD 2 million-CAD 2.5 million cost savings from the restructuring did you realize this quarter, and how should we think about margins playing out for the balance of the year? No, that's great, Sadler. no that's great sadler Just last question for me. just last question for me How much, I guess, of the targeted CAD 2 million-CAD 2.5 million cost savings from the restructuring did you realize this quarter, and how should we think about margins playing out for the balance of the year? how much i guess of the targeted cad 2 million-cad 2.5 million cost savings from the restructuring did you realize this quarter and how should we think about margins playing out for the balance of the year

Speaker 7: It's interesting. When you redo restructuring, because we're in many countries, sometimes it takes six months. You gotta keep the people on and pay them. Again, you'll see some restructuring we're continuing to look at and do. You have to have consultations with them, and that can take a month or two to do, so it delays some of it. Again, that's another item that we've got to look at. We're approaching it, again, like everything we do. We try and approach it in a practical manner, and it's continuing to do. We still have some more restructuring still to do going forward. We match costs and revenue. If revenues get tougher or something happens, we've got to match the cost to that revenue. It's interesting. it's interesting When you redo restructuring, because we're in many countries, sometimes it takes six months. when you redo restructuring because we're in many countries sometimes it takes six months You gotta keep the people on and pay them. you gotta keep the people on and pay them Again, you'll see some restructuring we're continuing to look at and do. again you'll see some restructuring we're continuing to look at and do You have to have consultations with them, and that can take a month or two to do, so it delays some of it. you have to have consultations with them and that can take a month or two to do so it delays some of it Again, that's another item that we've got to look at. again that's another item that we've got to look at We're approaching it, again, like everything we do. we're approaching it again like everything we do We try and approach it in a practical manner, and it's continuing to do. we try and approach it in a practical manner and it's continuing to do We still have some more restructuring still to do going forward. we still have some more restructuring still to do going forward We match costs and revenue. If revenues get tougher or something happens, we've got to match the cost to that revenue. we match costs and revenue. if revenues get tougher or something happens we've got to match the cost to that revenue We look through all our businesses, we measure everything. We're like a baseball team. We know how many times they're up, how many we hit for, and how many times do they walk. We measure everything in our business, and we always look at it to see where we can make further efficiencies improvement. The other thing I'll say is turnover is minimal in this market now, at least for us. I hear layoffs of everyone else that they claim to be AI is why they're doing those layoffs. What I would say to you, which is an interesting question, when they say that, you should ask what software solution did they actually do in AI that allowed the layoffs. You might find that AI wasn't the cause of the layoffs in many cases. That's a good question to ask. You did some AI. We look through all our businesses, we measure everything. we look through all our businesses we measure everything We're like a baseball team. we're like a baseball team We know how many times they're up, how many we hit for, and how many times do they walk. we know how many times they're up how many we hit for and how many times do they walk We measure everything in our business, and we always look at it to see where we can make further efficiencies improvement. we measure everything in our business and we always look at it to see where we can make further efficiencies improvement The other thing I'll say is turnover is minimal in this market now, at least for us. the other thing i'll say is turnover is minimal in this market now at least for us I hear layoffs of everyone else that they claim to be AI is why they're doing those layoffs. i hear layoffs of everyone else that they claim to be ai is why they're doing those layoffs What I would say to you, which is an interesting question, when they say that, you should ask what software solution did they actually do in AI that allowed the layoffs. what i would say to you which is an interesting question when they say that you should ask what software solution did they actually do in ai that allowed the layoffs You might find that AI wasn't the cause of the layoffs in many cases. you might find that ai wasn't the cause of the layoffs in many cases That's a good question to ask. that's a good question to ask You did some AI. you did some ai What's that solution that caused Amazon to lay off 30,000 people? I mean, tell us what it was if the cause of the layoffs were AI? We find AI isn't doing it, but not those type of numbers. Unless they just were overstaffed and they're fixing a problem. We get that. What's that solution that caused Amazon to lay off 30,000 people? what's that solution that caused amazon to lay off 30,000 people I mean, tell us what it was if the cause of the layoffs were AI? i mean tell us what it was if the cause of the layoffs were ai We find AI isn't doing it, but not those type of numbers. we find ai isn't doing it but not those type of numbers Unless they just were overstaffed and they're fixing a problem. unless they just were overstaffed and they're fixing a problem We get that. we get that

Speaker 1: Great. Thank you. Great. great Thank you. thank you

Speaker 4: Your next question comes from Kevin McVeigh with UBS. Your line is now open. Your next question comes from Kevin McVeigh with UBS. your next question comes from kevin mcveigh with ubs Your line is now open. your line is now open

Speaker 3: Great. Thanks so much and really helpful context. Hey, I wonder, you know, obviously, AI has been in the market, and obviously there's a lot of questions on it, but just from a different perspective. From a funding perspective and from a budget perspective, are the clients deploying it in parallel with your solutions? You know, just in terms of any shifts in behavior you'd call out, because I happen to agree with you that it's going to be an enabler as opposed to wholesale displacement. Are you seeing, you know, in terms of running parallel with you folks or, you know, any specific behaviors you'd call out? Great. great Thanks so much and really helpful context. thanks so much and really helpful context Hey, I wonder, you know, obviously, AI has been in the market, and obviously there's a lot of questions on it, but just from a different perspective. hey i wonder you know obviously ai has been in the market and obviously there's a lot of questions on it but just from a different perspective From a funding perspective and from a budget perspective, are the clients deploying it in parallel with your solutions? from a funding perspective and from a budget perspective are the clients deploying it in parallel with your solutions You know, just in terms of any shifts in behavior you'd call out, because I happen to agree with you that it's going to be an enabler as opposed to wholesale displacement. you know just in terms of any shifts in behavior you'd call out because i happen to agree with you that it's going to be an enabler as opposed to wholesale displacement Are you seeing, you know, in terms of running parallel with you folks or, you know, any specific behaviors you'd call out? are you seeing you know in terms of running parallel with you folks or you know any specific behaviors you'd call out

Speaker 7: Yeah. You know, this is an odd thing to say, but I'll tell you anyway because we're pretty open. Yeah. yeah You know, this is an odd thing to say, but I'll tell you anyway because we're pretty open. you know this is an odd thing to say but i'll tell you anyway because we're pretty open

Speaker 3: Sure. Sure. sure

Speaker 7: The applications are hard to see how to monetize AI. We set up these two consulting groups, and we believe if we work with customers, maybe we'll see an AI application that works. There's a study done by 55 major companies, and we're in the small business lower end of the market, so it's harder for us to do, where 95% of the proof of concepts didn't work. At least today. It's improving every day and didn't work. We believe if we do work for customers, we might come up with a terrific application that we can take to all our customers. 'Cause maybe we're not smart enough to see it, but maybe there's somebody there who can point us in the right direction. The applications are hard to see how to monetize AI. the applications are hard to see how to monetize ai We set up these two consulting groups, and we believe if we work with customers, maybe we'll see an AI application that works. we set up these two consulting groups and we believe if we work with customers maybe we'll see an ai application that works There's a study done by 55 major companies, and we're in the small business lower end of the market, so it's harder for us to do, where 95% of the proof of concepts didn't work. there's a study done by 55 major companies and we're in the small business lower end of the market so it's harder for us to do where 95% of the proof of concepts didn't work At least today. at least today It's improving every day and didn't work. it's improving every day and didn't work We believe if we do work for customers, we might come up with a terrific application that we can take to all our customers. 'Cause maybe we're not smart enough to see it, but maybe there's somebody there who can point us in the right direction. we believe if we do work for customers we might come up with a terrific application that we can take to all our customers 'cause maybe we're not smart enough to see it but maybe there's somebody there who can point us in the right direction Part of that is why we set up the two AI professional services groups to work with our customers to help them with proof of concepts, because we have the talent to do it, and we want to learn AI. From that, maybe we'll pick up some good ideas. It's always good to get good ideas from others. You just don't know where they come from. We find if we do those services, we might find some that we can use throughout the whole business. That's why we did that. On our own, we're having difficulty seeing today how that works. Even the virtual agent, you know, people are getting frustrated, and after about three times of asking things, they actually hit a button, "Get me to a human being who I can talk to about this." There's still some of that. Part of that is why we set up the two AI professional services groups to work with our customers to help them with proof of concepts, because we have the talent to do it, and we want to learn AI. part of that is why we set up the two ai professional services groups to work with our customers to help them with proof of concepts because we have the talent to do it and we want to learn ai From that, maybe we'll pick up some good ideas. from that maybe we'll pick up some good ideas It's always good to get good ideas from others. it's always good to get good ideas from others You just don't know where they come from. you just don't know where they come from We find if we do those services, we might find some that we can use throughout the whole business. we find if we do those services we might find some that we can use throughout the whole business That's why we did that. that's why we did that On our own, we're having difficulty seeing today how that works. on our own we're having difficulty seeing today how that works Even the virtual agent, you know, people are getting frustrated, and after about three times of asking things, they actually hit a button, "Get me to a human being who I can talk to about this." There's still some of that. even the virtual agent you know people are getting frustrated and after about three times of asking things they actually hit a button "get me to a human being who i can talk to about this." there's still some of that That can change because it's growing rapidly. We understand that, and we're trying to take a practical approach to it. That's why we're doing it the way we're doing it. That can change because it's growing rapidly. that can change because it's growing rapidly We understand that, and we're trying to take a practical approach to it. we understand that and we're trying to take a practical approach to it That's why we're doing it the way we're doing it. that's why we're doing it the way we're doing it

Speaker 3: No, that makes a lot of sense. Just as you think about kind of when obviously another change in the industry a long time ago, shift from voice to some software, right? Has it been at the same pace in terms of how you're recognizing the revenue or, you know, I guess more so just the, I guess, the cost and what you're able to charge for kind of the AI? Because obviously that almost feels like a more dramatic shift when you went from live agent to software. Just any thoughts on, you know, just some perspective because I always try to understand what's happened in the past to try to parallel what could potentially happen with the AI? No, that makes a lot of sense. no that makes a lot of sense Just as you think about kind of when obviously another change in the industry a long time ago, shift from voice to some software, right? just as you think about kind of when obviously another change in the industry a long time ago shift from voice to some software right Has it been at the same pace in terms of how you're recognizing the revenue or, you know, I guess more so just the, I guess, the cost and what you're able to charge for kind of the AI? has it been at the same pace in terms of how you're recognizing the revenue or you know i guess more so just the i guess the cost and what you're able to charge for kind of the ai Because obviously that almost feels like a more dramatic shift when you went from live agent to software. because obviously that almost feels like a more dramatic shift when you went from live agent to software Just any thoughts on, you know, just some perspective because I always try to understand what's happened in the past to try to parallel what could potentially happen with the AI? just any thoughts on you know just some perspective because i always try to understand what's happened in the past to try to parallel what could potentially happen with the ai

Speaker 7: Yeah. The good news is, at least for a management group, there's been a lot of changes over the years. I mean, it used to be called a help desk where you phoned in and got help. Now it's we have many things. It could come SMS messaging, it could come in as an email, or they could call in. In fact, when they do call in, I'll give you a little example. We use software that translates that voice into digital, so to compare everything together to see how an agent's doing. We don't want to miss out on that part of it. Now, in doing that, we started using Google to do that translation. Too expensive. We couldn't do it. We wrote in about three months our own system, which does the translation. Cost went down by 80%. Yeah. yeah The good news is, at least for a management group, there's been a lot of changes over the years. the good news is at least for a management group there's been a lot of changes over the years I mean, it used to be called a help desk where you phoned in and got help. i mean it used to be called a help desk where you phoned in and got help Now it's we have many things. now it's we have many things It could come SMS messaging, it could come in as an email, or they could call in. it could come sms messaging it could come in as an email or they could call in In fact, when they do call in, I'll give you a little example. in fact when they do call in i'll give you a little example We use software that translates that voice into digital, so to compare everything together to see how an agent's doing. we use software that translates that voice into digital so to compare everything together to see how an agent's doing We don't want to miss out on that part of it. we don't want to miss out on that part of it Now, in doing that, we started using Google to do that translation. now in doing that we started using google to do that translation Too expensive. too expensive We couldn't do it. we couldn't do it We wrote in about three months our own system, which does the translation. we wrote in about three months our own system which does the translation Cost went down by 80%. cost went down by 80% 80%, not 8%, 80%. There's a lot of things we're trying to learn by doing this and how to get efficient in doing it. Some of it we use the platform people, because they're very good at it. Some areas it's too expensive to do. We are looking at all those aspects, how to analyze better. Like when we have a virtual agent, you're going to charge more for a virtual agent than you are for one that isn't, 'cause they're taking advantage of not having a person there. You got to be careful. The virtual agent has to be reasonably good or else they say, "What am I doing here?" We're developing it over time. 80%, not 8%, 80%. 80% not 8% 80% There's a lot of things we're trying to learn by doing this and how to get efficient in doing it. there's a lot of things we're trying to learn by doing this and how to get efficient in doing it Some of it we use the platform people, because they're very good at it. some of it we use the platform people because they're very good at it Some areas it's too expensive to do. some areas it's too expensive to do We are looking at all those aspects, how to analyze better. we are looking at all those aspects how to analyze better Like when we have a virtual agent, you're going to charge more for a virtual agent than you are for one that isn't, 'cause they're taking advantage of not having a person there. like when we have a virtual agent you're going to charge more for a virtual agent than you are for one that isn't 'cause they're taking advantage of not having a person there You got to be careful. you got to be careful The virtual agent has to be reasonably good or else they say, "What am I doing here?" We're developing it over time. the virtual agent has to be reasonably good or else they say "what am i doing here?" we're developing it over time That's a very early stage on that virtual agent for us because we're still trying to get the software to do that properly. Remember, you got to tie that to, they say, a large language model. We actually use a small language model because our customers are smaller. We don't have giant contact centers of thousands of people. They generally average between 50 and 250 agents. It's a smaller base of which to deliver, and therefore a smaller time frame. You don't want to keep history for 10 years. We can do something like an agent, monitor them for a month or two, and do an analysis on how well they answered calls. Even the virtual agent, how many times did it actually answer, or did it move you over to a real person? We're still. It's still new. We're trying it all. That's a very early stage on that virtual agent for us because we're still trying to get the software to do that properly. that's a very early stage on that virtual agent for us because we're still trying to get the software to do that properly Remember, you got to tie that to, they say, a large language model. remember you got to tie that to they say a large language model We actually use a small language model because our customers are smaller. we actually use a small language model because our customers are smaller We don't have giant contact centers of thousands of people. we don't have giant contact centers of thousands of people They generally average between 50 and 250 agents. they generally average between 50 and 250 agents It's a smaller base of which to deliver, and therefore a smaller time frame. it's a smaller base of which to deliver and therefore a smaller time frame You don't want to keep history for 10 years. you don't want to keep history for 10 years We can do something like an agent, monitor them for a month or two, and do an analysis on how well they answered calls. we can do something like an agent monitor them for a month or two and do an analysis on how well they answered calls Even the virtual agent, how many times did it actually answer, or did it move you over to a real person? even the virtual agent how many times did it actually answer or did it move you over to a real person We're still. we're still It's still new. it's still new We're trying it all. we're trying it all You have to be there. We're learning a lot by doing it, but there's a lot of moving parts right now, and it takes some time. In doing that, you're doing that while still marketing and still trying to, you know, add revenue and value with what you've got today. Again, I think 70% of our revenue is recurring, but some of that is older revenue on-prem, and there's some customers who are going back on-prem. The latest thing for AI is they don't think SaaS is going to work anymore. You got to read all this stuff. I'm reading it, trying to learn as I go, and there's a lot of different views out there right now, and the true answer is they don't know. We don't know. We're trying to keep our finger in all the games, so we're there. You have to be there. you have to be there We're learning a lot by doing it, but there's a lot of moving parts right now, and it takes some time. we're learning a lot by doing it but there's a lot of moving parts right now and it takes some time In doing that, you're doing that while still marketing and still trying to, you know, add revenue and value with what you've got today. in doing that you're doing that while still marketing and still trying to you know add revenue and value with what you've got today Again, I think 70% of our revenue is recurring, but some of that is older revenue on-prem, and there's some customers who are going back on-prem. again i think 70% of our revenue is recurring but some of that is older revenue on-prem and there's some customers who are going back on-prem The latest thing for AI is they don't think SaaS is going to work anymore. the latest thing for ai is they don't think saas is going to work anymore You got to read all this stuff. you got to read all this stuff I'm reading it, trying to learn as I go, and there's a lot of different views out there right now, and the true answer is they don't know. i'm reading it trying to learn as i go and there's a lot of different views out there right now and the true answer is they don't know We don't know. we don't know We're trying to keep our finger in all the games, so we're there. we're trying to keep our finger in all the games so we're there When a trend we see it's really working, we want to be there to get on it quickly. That's what we're trying to do rather than just expend a lot of money trying to experiment with stuff. We're more likely to make money, and we'll be there a little late, but we'll get there quickly because we're still involved in the game. When a trend we see it's really working, we want to be there to get on it quickly. when a trend we see it's really working we want to be there to get on it quickly That's what we're trying to do rather than just expend a lot of money trying to experiment with stuff. that's what we're trying to do rather than just expend a lot of money trying to experiment with stuff We're more likely to make money, and we'll be there a little late, but we'll get there quickly because we're still involved in the game. we're more likely to make money and we'll be there a little late but we'll get there quickly because we're still involved in the game

Speaker 3: It's very helpful, and congratulations on the execution. It's very helpful, and congratulations on the execution. it's very helpful and congratulations on the execution

Speaker 4: Ladies and gentlemen, as a reminder, should you have a question, please press star one. Your next question comes from Paul Treiber with RBC Capital Markets. Your line is now open. Ladies and gentlemen, as a reminder, should you have a question, please press star one. ladies and gentlemen as a reminder should you have a question please press star one Your next question comes from Paul Treiber with RBC Capital Markets. your next question comes from paul treiber with rbc capital markets Your line is now open. your line is now open

Speaker 5: Yeah, thanks, good morning. Just a question on, you mentioned earlier that you're expanding the due diligence on acquisitions just regarding AI. You know, can you share some thoughts around, you know, what your checklist is or, you know, evaluation criteria to assess AI risk or AI resiliency for acquisitions? Yeah, thanks, good morning. yeah thanks good morning Just a question on, you mentioned earlier that you're expanding the due diligence on acquisitions just regarding AI. just a question on you mentioned earlier that you're expanding the due diligence on acquisitions just regarding ai You know, can you share some thoughts around, you know, what your checklist is or, you know, evaluation criteria to assess AI risk or AI resiliency for acquisitions? you know can you share some thoughts around you know what your checklist is or you know evaluation criteria to assess ai risk or ai resiliency for acquisitions

Speaker 7: To get that, Paul, you're going to have to give me an acquisition and be involved in it, because it's not a little list. Again, it's not just doing AI. We're looking at all aspects of the business, but we've got to sort of see what's the risk of it, the business being disrupted by AI. That's a lot of things to look at. That also means you got to know what AI can do and what it can't do right now. What's that going to be like in a month? What's that like going to be in a year? We're taking it a little slower on that when we're looking at some of the deals. Some of them aren't even in AI, we don't think will change much there, and maybe we're wrong. To get that, Paul, you're going to have to give me an acquisition and be involved in it, because it's not a little list. to get that paul you're going to have to give me an acquisition and be involved in it because it's not a little list Again, it's not just doing AI. again it's not just doing ai We're looking at all aspects of the business, but we've got to sort of see what's the risk of it, the business being disrupted by AI. we're looking at all aspects of the business but we've got to sort of see what's the risk of it the business being disrupted by ai That's a lot of things to look at. that's a lot of things to look at That also means you got to know what AI can do and what it can't do right now. that also means you got to know what ai can do and what it can't do right now What's that going to be like in a month? what's that going to be like in a month What's that like going to be in a year? what's that like going to be in a year We're taking it a little slower on that when we're looking at some of the deals. we're taking it a little slower on that when we're looking at some of the deals Some of them aren't even in AI, we don't think will change much there, and maybe we're wrong. some of them aren't even in ai we don't think will change much there and maybe we're wrong We got to assess that when looking at the risk of any deals now. Another factor you have to look at, one of the key things they do in valuations, they always say, "Well, what's the terminal value?" That could be at five or 10 years out. If you do a valuation, there's always a terminal value. It's pretty hard to tell what that is today, and therefore we're probably a little risk-averse. That may be positive, but it may be a negative, because it means, if we took a little more risk, we might get more done. Investors might like that, shareholders might like that, but I have to live with it. They don't have to fix it if it doesn't work. We're careful, and maybe that slows us down more than it should. We got to assess that when looking at the risk of any deals now. we got to assess that when looking at the risk of any deals now Another factor you have to look at, one of the key things they do in valuations, they always say, "Well, what's the terminal value?" That could be at five or 10 years out. another factor you have to look at one of the key things they do in valuations they always say "well what's the terminal value?" that could be at five or 10 years out If you do a valuation, there's always a terminal value. if you do a valuation there's always a terminal value It's pretty hard to tell what that is today, and therefore we're probably a little risk-averse. it's pretty hard to tell what that is today and therefore we're probably a little risk-averse That may be positive, but it may be a negative, because it means, if we took a little more risk, we might get more done. that may be positive but it may be a negative because it means if we took a little more risk we might get more done Investors might like that, shareholders might like that, but I have to live with it. investors might like that shareholders might like that but i have to live with it They don't have to fix it if it doesn't work. they don't have to fix it if it doesn't work We're careful, and maybe that slows us down more than it should. we're careful and maybe that slows us down more than it should Opportunities are actually greater because everyone's worried. Remember, the promotion by everyone out there is contact centers, as an example, are going to be eliminated. That's not going to happen. Okay. Just like cars aren't eliminated. Driverless cars haven't taken over. That's 10 years when they told me that initially, 'cause as an old guy, I go through all that stuff and remember it. There is, there's a lot of work. More work to be done to say. If you do do it, are investors going to say, "What'd they spend their money on that for? Opportunities are actually greater because everyone's worried. opportunities are actually greater because everyone's worried Remember, the promotion by everyone out there is contact centers, as an example, are going to be eliminated. remember the promotion by everyone out there is contact centers as an example are going to be eliminated That's not going to happen. that's not going to happen Okay. okay Just like cars aren't eliminated. just like cars aren't eliminated Driverless cars haven't taken over. driverless cars haven't taken over That's 10 years when they told me that initially, 'cause as an old guy, I go through all that stuff and remember it. that's 10 years when they told me that initially 'cause as an old guy i go through all that stuff and remember it There is, there's a lot of work. there is there's a lot of work More work to be done to say. more work to be done to say If you do do it, are investors going to say, "What'd they spend their money on that for? if you do do it are investors going to say "what'd they spend their money on that for Keep the cash, because we don't think it's, in five years, it's going to be worth anything. We got to assess all those things, and we do it the best we can, and it changes very rapidly every day. Keep the cash, because we don't think it's, in five years, it's going to be worth anything. keep the cash because we don't think it's in five years it's going to be worth anything We got to assess all those things, and we do it the best we can, and it changes very rapidly every day. we got to assess all those things and we do it the best we can and it changes very rapidly every day

Speaker 5: Thanks for that. The second question is just on the AMG side of the business. I think a lot of the talk has been on IMG and the dynamics there with AI. In terms of AMG, you know, what have you been seeing in terms of customer interest in AI, and either, you know, uptake or delays regarding new software deployments just related to AI uncertainty? Thanks for that. thanks for that The second question is just on the AMG side of the business. the second question is just on the amg side of the business I think a lot of the talk has been on IMG and the dynamics there with AI. i think a lot of the talk has been on img and the dynamics there with ai In terms of AMG, you know, what have you been seeing in terms of customer interest in AI, and either, you know, uptake or delays regarding new software deployments just related to AI uncertainty? in terms of amg you know what have you been seeing in terms of customer interest in ai and either you know uptake or delays regarding new software deployments just related to ai uncertainty

Speaker 7: Yeah. Certainly, and I should mention this too. We always talk a lot about contact center because it seems to be the thing in the, in the market. Our contact center revenue is down quite a bit in the sense of our total revenue these days, because with the other revenue from our transportation, our new deals that we did, and our networks have been increasing while our contact center has been going down because of Lifesize and things that we bought in that space that we're trying to fix up. Our contact center is a little bit smaller. Your question about, let's say networks or AMG. AMG is really networks and transportation. There's less of an issue there right now, but there's a lot. Yeah. yeah Certainly, and I should mention this too. certainly and i should mention this too We always talk a lot about contact center because it seems to be the thing in the, in the market. we always talk a lot about contact center because it seems to be the thing in the in the market Our contact center revenue is down quite a bit in the sense of our total revenue these days, because with the other revenue from our transportation, our new deals that we did, and our networks have been increasing while our contact center has been going down because of Lifesize and things that we bought in that space that we're trying to fix up. our contact center revenue is down quite a bit in the sense of our total revenue these days because with the other revenue from our transportation our new deals that we did and our networks have been increasing while our contact center has been going down because of lifesize and things that we bought in that space that we're trying to fix up Our contact center is a little bit smaller. our contact center is a little bit smaller Your question about, let's say networks or AMG. your question about let's say networks or amg AMG is really networks and transportation. amg is really networks and transportation There's less of an issue there right now, but there's a lot. there's less of an issue there right now but there's a lot You know, They want to have a system AI that goes through and maybe guesses if a person's gonna go off the system. You're talking, let's say, a person redoing their internet or even their phone, you know, CAD 30 a month. That's what they. It's not as big to really apply to know that one or two customers go off. You've got to do it slightly differently. There's less comments from our other areas on AI, but it still impacts them. They still wonder where it's going. The big one in networks is how do you detect fraud? How do you detect cyber? How can AI do that? That's the plus. You know, They want to have a system AI that goes through and maybe guesses if a person's gonna go off the system. you know they want to have a system ai that goes through and maybe guesses if a person's gonna go off the system You're talking, let's say, a person redoing their internet or even their phone, you know, CAD 30 a month. you're talking let's say a person redoing their internet or even their phone you know cad 30 a month That's what they. that's what they It's not as big to really apply to know that one or two customers go off. it's not as big to really apply to know that one or two customers go off You've got to do it slightly differently. you've got to do it slightly differently There's less comments from our other areas on AI, but it still impacts them. there's less comments from our other areas on ai but it still impacts them They still wonder where it's going. they still wonder where it's going The big one in networks is how do you detect fraud? the big one in networks is how do you detect fraud How do you detect cyber? how do you detect cyber How can AI do that? how can ai do that That's the plus. that's the plus The negative is how is AI going to change that, so you've got more risk on cyber, et cetera, because the bad guys are gonna use AI as well to disrupt your organization. If you use more of it, they might be able to implant it somewhere and get it. All these factors are still talked about, a lot of thinking going on them. We look at it. We did it. We've set up groups in both AMG and IMG to do AI. Small groups, four-five, that we wanna do. We have people who've been doing it internally, so we're just gonna focus their knowledge a little bit more and go out to customers and say, "Look, we have a group who knows this stuff. The negative is how is AI going to change that, so you've got more risk on cyber, et cetera, because the bad guys are gonna use AI as well to disrupt your organization. the negative is how is ai going to change that so you've got more risk on cyber et cetera because the bad guys are gonna use ai as well to disrupt your organization If you use more of it, they might be able to implant it somewhere and get it. if you use more of it they might be able to implant it somewhere and get it All these factors are still talked about, a lot of thinking going on them. all these factors are still talked about a lot of thinking going on them We look at it. we look at it We did it. we did it We've set up groups in both AMG and IMG to do AI. we've set up groups in both amg and img to do ai Small groups, four-five, that we wanna do. small groups four-five that we wanna do We have people who've been doing it internally, so we're just gonna focus their knowledge a little bit more and go out to customers and say, "Look, we have a group who knows this stuff. we have people who've been doing it internally so we're just gonna focus their knowledge a little bit more and go out to customers and say "look we have a group who knows this stuff We're not as expensive as the California teams who are out selling this service. It costs CAD millions. We can help you with your projects and maybe we learn something by it. We may get an application from it, and we're on top of the direction of where a lot of people are going. We get it by having this service that we just set up in January. It's starting to show a little bit of traction, but it's very new. It's really done to help us learn more and help us come up with good projects that customers want that we can apply AI to and maybe take to other customers that we have as we learn from work we're doing with customers. The good news for me is they actually pay for it. That's good too. We're not as expensive as the California teams who are out selling this service. we're not as expensive as the california teams who are out selling this service It costs CAD millions. it costs cad millions We can help you with your projects and maybe we learn something by it. we can help you with your projects and maybe we learn something by it We may get an application from it, and we're on top of the direction of where a lot of people are going. we may get an application from it and we're on top of the direction of where a lot of people are going We get it by having this service that we just set up in January. we get it by having this service that we just set up in january It's starting to show a little bit of traction, but it's very new. it's starting to show a little bit of traction but it's very new It's really done to help us learn more and help us come up with good projects that customers want that we can apply AI to and maybe take to other customers that we have as we learn from work we're doing with customers. it's really done to help us learn more and help us come up with good projects that customers want that we can apply ai to and maybe take to other customers that we have as we learn from work we're doing with customers The good news for me is they actually pay for it. the good news for me is they actually pay for it That's good too. that's good too It isn't a big cost to do the AI like many are doing and spending money on. We actually at least cover our costs in doing that type of a professional services business. It isn't a big cost to do the AI like many are doing and spending money on. it isn't a big cost to do the ai like many are doing and spending money on We actually at least cover our costs in doing that type of a professional services business. we actually at least cover our costs in doing that type of a professional services business

Speaker 5: Just one last question from me. Just on Lifesize, you know, I believe you had a new updated version of Lifesize coming out early this year. Could you speak to the customer interest and feedback and maybe pipeline for that new offering? Just one last question from me. just one last question from me Just on Lifesize, you know, I believe you had a new updated version of Lifesize coming out early this year. just on lifesize you know i believe you had a new updated version of lifesize coming out early this year Could you speak to the customer interest and feedback and maybe pipeline for that new offering? could you speak to the customer interest and feedback and maybe pipeline for that new offering

Speaker 7: Sure. I think. Look, Lifesize, it was an interesting project. We made our payback very quickly on that one because if you remember, we bought it out of bankruptcy. We didn't take on liabilities, and even though the revenues dropped, we're still doing quite well. The new product, their product was a good start that we had for that business. As we get into it, they had some third-party products incorporated. They're taking a little longer to get out so we can get better margin on that product, so we're still doing that. It's still got some work to do. Again, we got to introduce the sales staff how to sell this new type of product. All that's going on, it all takes a little longer than everyone thinks. We're trying to build some AI into it. Sure. sure I think. i think Look, Lifesize, it was an interesting project. look lifesize it was an interesting project We made our payback very quickly on that one because if you remember, we bought it out of bankruptcy. we made our payback very quickly on that one because if you remember we bought it out of bankruptcy We didn't take on liabilities, and even though the revenues dropped, we're still doing quite well. we didn't take on liabilities and even though the revenues dropped we're still doing quite well The new product, their product was a good start that we had for that business. the new product their product was a good start that we had for that business As we get into it, they had some third-party products incorporated. as we get into it they had some third-party products incorporated They're taking a little longer to get out so we can get better margin on that product, so we're still doing that. they're taking a little longer to get out so we can get better margin on that product so we're still doing that It's still got some work to do. it's still got some work to do Again, we got to introduce the sales staff how to sell this new type of product. again we got to introduce the sales staff how to sell this new type of product All that's going on, it all takes a little longer than everyone thinks. all that's going on it all takes a little longer than everyone thinks We're trying to build some AI into it. we're trying to build some ai into it It's just taking a little bit longer, but that's still our plan. We're very close to doing better there, and hopefully, we'll get better traction from our revenue side from it. 'Cause virtually right now, we haven't done that much. 'Cause you don't want to put it out there in a customer with third-party products that cost a lot and then tell the customer you wanna take those out and put a new one in. They ain't too happy with those type of changes. In some ways, it's slowed down as we make those changes and get the product better before we start putting it in customers. We are starting to do that now. Hopefully, we'll show some traction on that, but there hasn't been much on it yet. It's just taking a little bit longer, but that's still our plan. it's just taking a little bit longer but that's still our plan We're very close to doing better there, and hopefully, we'll get better traction from our revenue side from it. 'Cause virtually right now, we haven't done that much. 'Cause you don't want to put it out there in a customer with third-party products that cost a lot and then tell the customer you wanna take those out and put a new one in. we're very close to doing better there and hopefully we'll get better traction from our revenue side from it 'cause virtually right now we haven't done that much 'cause you don't want to put it out there in a customer with third-party products that cost a lot and then tell the customer you wanna take those out and put a new one in They ain't too happy with those type of changes. they ain't too happy with those type of changes In some ways, it's slowed down as we make those changes and get the product better before we start putting it in customers. in some ways it's slowed down as we make those changes and get the product better before we start putting it in customers We are starting to do that now. we are starting to do that now Hopefully, we'll show some traction on that, but there hasn't been much on it yet. hopefully we'll show some traction on that but there hasn't been much on it yet

Speaker 5: Okay. Thanks for taking the questions. Okay. okay Thanks for taking the questions. thanks for taking the questions

Speaker 4: There are no further questions at this time. I will now turn the call over to Mr. Stephen Sadler for closing remarks. There are no further questions at this time. there are no further questions at this time I will now turn the call over to Mr. Stephen Sadler for closing remarks. i will now turn the call over to mr stephen sadler for closing remarks

Speaker 7: Well, I wanna thank you all for attending the call and your continued support. It's a very interesting technology environment today. You know, we're handling it in the usual manner, trying to practically do it, not at the bleeding edge, but we're certainly in the game, and we certainly are positioning for the future as well as for the present. You can see that theme with the platforms. Three weeks ago, Copilot was good, Gemini was good, and now it's Claude. Like, if you start picking on one and putting it on all your systems and they change that, what are you gonna do? Go change all your systems? It's still a new area, and we certainly believe that it will help. We believe it will improve efficiency. Well, I wanna thank you all for attending the call and your continued support. well i wanna thank you all for attending the call and your continued support It's a very interesting technology environment today. it's a very interesting technology environment today You know, we're handling it in the usual manner, trying to practically do it, not at the bleeding edge, but we're certainly in the game, and we certainly are positioning for the future as well as for the present. you know we're handling it in the usual manner trying to practically do it not at the bleeding edge but we're certainly in the game and we certainly are positioning for the future as well as for the present You can see that theme with the platforms. you can see that theme with the platforms Three weeks ago, Copilot was good, Gemini was good, and now it's Claude. three weeks ago copilot was good gemini was good and now it's claude Like, if you start picking on one and putting it on all your systems and they change that, what are you gonna do? like if you start picking on one and putting it on all your systems and they change that what are you gonna do Go change all your systems? go change all your systems It's still a new area, and we certainly believe that it will help. it's still a new area and we certainly believe that it will help We believe it will improve efficiency. we believe it will improve efficiency You gotta find the right application to do it, and you can't die in the process. Which, again, many of our competitors are having some trouble. They're all doing AI because they believe that's what investors wanna hear. We're trying to say, "Live through it, do the AI, but let's at least make our cash flow from what we're doing." It's a little different approach. Maybe not as fancy as the others, but steady and if it all blows up, we'll be last man standing. That's what we wanna make sure that we're gonna be there no matter what. If it takes off, we're gonna get there quickly because we are spending time and money trying to get paid a little bit for it by the professional services group. You gotta find the right application to do it, and you can't die in the process. you gotta find the right application to do it and you can't die in the process Which, again, many of our competitors are having some trouble. which again many of our competitors are having some trouble They're all doing AI because they believe that's what investors wanna hear. they're all doing ai because they believe that's what investors wanna hear We're trying to say, "Live through it, do the AI, but let's at least make our cash flow from what we're doing." It's a little different approach. we're trying to say "live through it do the ai but let's at least make our cash flow from what we're doing." it's a little different approach Maybe not as fancy as the others, but steady and if it all blows up, we'll be last man standing. maybe not as fancy as the others but steady and if it all blows up we'll be last man standing That's what we wanna make sure that we're gonna be there no matter what. that's what we wanna make sure that we're gonna be there no matter what If it takes off, we're gonna get there quickly because we are spending time and money trying to get paid a little bit for it by the professional services group. if it takes off we're gonna get there quickly because we are spending time and money trying to get paid a little bit for it by the professional services group We're spending time and money trying to at least keep up with the technology, which is going very quickly. We'll have to see where it all goes. I think as another company said in one of their calls, we're in inning one, and not at the end of inning one. We're at the start of inning one, and we've got to see how it all fares out and where you can use technology like we have in the past to make the investment. This time, that technology is called AI. In the past, it's been called other things. For example, we had to go with cloud with SaaS. You know, now they're saying SaaS will be eliminated. Yeah, I'm not so sure. We just built that area up, so that'd be a little unfortunate. We're spending time and money trying to at least keep up with the technology, which is going very quickly. we're spending time and money trying to at least keep up with the technology which is going very quickly We'll have to see where it all goes. we'll have to see where it all goes I think as another company said in one of their calls, we're in inning one, and not at the end of inning one. i think as another company said in one of their calls we're in inning one and not at the end of inning one We're at the start of inning one, and we've got to see how it all fares out and where you can use technology like we have in the past to make the investment. we're at the start of inning one and we've got to see how it all fares out and where you can use technology like we have in the past to make the investment This time, that technology is called AI. this time that technology is called ai In the past, it's been called other things. in the past it's been called other things For example, we had to go with cloud with SaaS. for example we had to go with cloud with saas You know, now they're saying SaaS will be eliminated. you know now they're saying saas will be eliminated Yeah, I'm not so sure. yeah i'm not so sure We just built that area up, so that'd be a little unfortunate. we just built that area up so that'd be a little unfortunate We are still trying to figure out how best to use it to add value for shareholders. It's not easy, and it's in a very fast-changing environment. That's sort of where we're at on it. It's an honest view, but we're not being left behind. I haven't said much in the past because I don't want to promote something that I'm really experimenting with in many ways right now. Thank you, everybody. Again, I'll look forward to seeing you in the future. We are still trying to figure out how best to use it to add value for shareholders. we are still trying to figure out how best to use it to add value for shareholders It's not easy, and it's in a very fast-changing environment. it's not easy and it's in a very fast-changing environment That's sort of where we're at on it. that's sort of where we're at on it It's an honest view, but we're not being left behind. it's an honest view but we're not being left behind I haven't said much in the past because I don't want to promote something that I'm really experimenting with in many ways right now. i haven't said much in the past because i don't want to promote something that i'm really experimenting with in many ways right now Thank you, everybody. thank you everybody Again, I'll look forward to seeing you in the future. again i'll look forward to seeing you in the future

Speaker 4: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Ladies and gentlemen, this concludes your conference call for today. ladies and gentlemen this concludes your conference call for today We thank you for participating and ask that you please disconnect your lines. we thank you for participating and ask that you please disconnect your lines