Please standby. Good day and welcome to Oblong Inc. Third Quarter 2021 Earnings Results Conference Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brett Maas, Hayden IR. Please go ahead..

Thank you. I'd like to welcome everybody today's call. Hosting the call today are Oblong's Chairman and CEO Peter Holst, and CFO, David Clark. Please be aware, some of the comments made during our call may contain forward-looking statements within the meaning of Federal Securities Laws.

Statements about our beliefs and expectations containing words such as may, could, would, will, should, believe, expect, anticipate and similar expressions constitute forward-looking statements.

These statements involve risks and uncertainties regarding our operations and our future results that could cause actual results to differ materially from the management's current expectations.

In addition, today's call includes non-GAAP financial measures and a reconciliation of such measures to GAAP measures is contained in the press release issued today.

We encourage you to review the safe harbor statement and risk factors contained in the Company's earnings release and filings the SEC including without limitation most recent annual report on Form 10-K and other periodic report that identify specific risk factors that may also cause actual results or events to differ materially from those described in the forward-looking statements.

Copies of the Company's most recent reports on Form 10-K and 10-Q may be obtained on the Company's website oblong.com or the SEC website sec.gov. The Company does not undertake to publicly update or revise any forward-looking statements after the call or date of this call.

I'd also like to remind everyone this will available for replay through November 24. A link to the website replay of the call is also provided in the earnings release and is available on the Company's website at oblong.com. I'd like to now turn the call over to CEO of Oblong, Peter Holst. Peter, the floor is yours..

Thanks, Brett and thank you everyone for joining the call today. Before I get started, I'd like to make sure that we pay tribute to our veterans who have defended our country and have been incredibly heroic. I'd like to say thank you for defending our way of life and our freedoms that we enjoy today, first and foremost.

Today, we're going to talk a little bit about how what some of our accomplishments over the course of the third quarter. We're actually going to reverse engineer this a little bit.

We're going to start with the financial statements first, and then, I'll take everyone on the call through progress updates for the Company and some of our accomplishments throughout the quarter, as well as some of the things we're really looking forward to hear over the coming months ahead.

So I'll quickly turn this over to David, and have him take you through the financial statements and report for the quarter..

Thank you, Pete. Good afternoon everyone. Our revenue for the third quarter of 2020 loans was $1.8 million, compared to $3.3 million for the third quarter of last year.

This decrease in revenue from last year is mainly due to the effects of the ongoing global pandemic, on our channel partners and customers, as they evaluate how and when three open their commercial office space.

Revenue for the third quarter was relatively consistent with the first two quarters of 2021 as revenue for each of the three quarters this year is within the range of $1.8 million to $2 million. Net loss for the third quarter of 2021 was $662,000, compared to a net loss of $2.1 million for the third quarter of last year.

During the quarter, we recognize a gain on debt extinguishment of $2.4 million in other income. This resulted from full forgiveness of our PPP loan during the third quarter. Our adjusted EBITDA loss was $1.7 million in the third quarter of 2021 compared to an adjusted EBITDA loss of $1 million for the same period last year.

This increase in adjusted EBITDA loss was primarily due to lower revenue and gross profit, partially offset by reduced operating expenses. Turning to our balance sheet, we are pleased to have strengthened our balance sheet during the last 12 months. At the end of the third quarter of 2021, we have total cash of $10.8 million.

And since our PPP loan was fully forgiven during the third quarter, we now have no remaining debt on our balance sheet. With that, I will now turn the call back over to Pete..

Thanks Dave. Today, we're going to talk about the ongoing kind of challenges in the industry, but more importantly the incredible opportunities in front of us. It's pretty obvious that how we now work and how we plan on working has in fact indelibly changed.

There will be new technologies to support new ways of work, there will be new spaces, new redesign, and new inspirations for employee engagement in the future, they will be ultimately integral to success in the new model of working.

We believe there are four key trends now related to digital transformation, particularly when it comes around the collaboration space. One of the first trends is how our business as an organization being digitally transformed, and when many businesses were not built to be digital in the first place.

Our business is equipped with the tools and infrastructures to innovate under these very diverse circumstances? How can businesses collaborate and connect to the degree which collaboration and connection are accelerated digitally? And lastly, how will digitization, collaboration and connection and infrastructure be securely protected in a growing space? Many of you have heard the word hybrid work over the last nine to 12 months, as many people have gone home and have not yet returned to the office.

There's been a significant amount of research recently to suggest that while work from office resurgence hasn't yet happened, a new model will slowly be forthcoming as 2022 evolves. Successful hybrid workplaces will ultimately be very elastic over the next five years.

These spaces and amenities that we've long since known will be optimized in a way that employees will want to come in and optimize their office experience. One day, perhaps it's 35% of the staff and the next 90%, it may depend on a specific event or a specific meeting that one may have to attend.

In any scenario companies will want to use technology that entices users in office while also engaging remote participants to the maximum capacity possible.

So there's new expectations for the remote office and as hybrid workplace becomes the norm, the metrics and the technologies needed to maximize, and more importantly, engage the workforce are incredibly critical to ensuring productivity.

Distributed workforces that required digitization and automation tools that support them, and remote work will intensify, that need for human connection. They will be part of creating and engaging spaces and improving the employee experience when workers are in the office.

But more importantly, when you're remote, you'll want that same level of engagement, and many technologies are now being developed and designed around optimizing that level of remote engagement.

As we look at the shifts to the hybrid workspace in the future, it suggests that there may be anywhere from two to three times more of the market opportunity for ideation and collaboration spaces over the next five years. If you see the graphic on the left, as hybrid workspaces take root the purpose of the office will have to evolve.

So historically 60 to 70% of office space has been individual and support spaces and the other 30 to 40 have been collaborative and social spaces.

What we now see through some of our partners in the real estate market is many corporate real estate planners, facilities planners, information technology planners are contemplating substantial redesigns of their corporate footprint over the next one, three and five years.

That'll ultimately result in what we believe is two to three times more ideation or collaboration, more importantly, more engaging spaces than what we've seen before in the past.

I'm going to talk a little bit of a subject that is been much popularized in the media lately and that's the metaverse, and really how Oblong creates an interesting bridge to the next generation of computing.

So as many of you have heard, the metaverse has been answered about significantly, particularly through the life of Facebook now called Meta and the likes of Microsoft, one has a very distinct consumer view of the world and the other a far more traditional corporate view of the world.

And for those of you that don't know, metaverse essentially is a digital realm that connects us in a significantly different manner than the physical world that allowed them -- in theory, it allows you to conduct commerce, engage with -- engage with your coworkers, your friends in a much, much different way through augmented reality or virtual reality by using specific purpose-built devices that connect you to those corporate content repositories.

What we think of the metaverse is in many ways, it's been around for a very long time. There's been some fantastic companies out there that have been designing eyewear, looking at content around designing second and third-party world's for probably the better part of 15 years.

Missed in comment, we've had from one of our customers lately is, our technology has and it's completely disruptive, right. So, the paradigm we've been living for the last 20 years. And so in many ways, we think Oblong's last 20 years of intellectual property and gathering of information from customers, is really all built up for this moment in time.

As some of you know, long before the metaverse actually existed, Oblong was actually building experience use using spatial and gestural interaction with information.

Many of them have been commercialized and populated in the Hollywood realm, but quite frankly, over the last 15 years in particular, the companies built up a substantial amount of intellectual property around the notion of connecting with data in a way that uses your hands or uses motion to extend yourself beyond your physical world into the digital world.

So how do we see that transformation occurring? In many ways, mezzanine, our current product that we offer today is really the logical progression between conventional collaboration and what the metaverse promises in about 5 to 10 years.

Technology is typically slow to evolve and while there's a significant amount of opportunity in that space, that we believe, is incredibly fascinating.

We believe a shared workspace both physical and virtual, also known as hybrid, that allows collaborators to contribute to manipulate and to fluidly arrange multiple streams of content in parallel and simultaneously within cross and between office and remote collaboration spaces is in fact where Oblong does best.

So ultimately, we believe that this hybrid universe is meaning metaverse, if you will, that exists today is really predicated on connecting data and information, both in rooms and on a remote basis.

And Oblong has long been procured by visionaries, and people that are early adopters, people that are looking for high levels of presentations, high levels of engagement. And in many ways that was sort of the precursor to what the metaverse promises in the future.

As most of you know, where we have a high degree of expertise in connecting rooms today, and full disclosure, obviously, the rooms have been quite quiet, unfortunately, through the pandemic. We do see a small resurgence starting to happen in various rooms in different cities across the United States right now, and certainly a few in Europe.

But our room to room expertise is really, it's without equal right now. Because of the way we have gestural and spatial kind of conductivity in rooms, because of the way we can create presentations and ideate through digital canvases, it's a very unique proposition that most companies simply haven't deployed yet.

Our current product mix today, we offer three different products, as most everybody knows. We have products that are really based on your digital footprint in your conference rooms. We have depending on screen sizes and screen types and configurations.

We really have a mezzanine room for anybody out there, right that's looking to really enhance engagement as users come back to the office.

In many ways, Oblong represents that conceptual tool, that ideation tool, that visionary tool, that if people were to come back to the office, they would have sort of a purpose right our mezzanine desk to come back to the office.

You would see something like this and you would immediately start engaging with it versus the old sort of Fuji way of doing things such as plug things in, get one share or one piece of content at a time on the screen. Whereas in our case, everyone shares, everyone uses the canvas to its maximum potential.

So as I said earlier, we believe the future of work is in fact connected, very connected, and ultimately very hybrid. We need to synchronize interaction. We need to have multi screen display workspaces. And we need to have concurrent multiuser interaction. That encourages participation.

There's no waiting to share your screen or contribute to the conversation, you want creativity to flow. And in order to do that, you've got to create spaces and environments that allow data connected to the human to seamlessly interact and engage with everyone simultaneously.

That's ultimately what we might label as contextual collaboration or cognitive collaboration. But ultimately, you get to decisions much, much quicker when you have more information presented in front of you. Our next path going forward is really room to remote and it's our future product.

It's designed to offer remote users, a very similar experience to those in conference rooms. And when you look at how the hybrid workforce is about to evolve and really where it's headed, you can see a path where 70%, 80% of employees today will in some capacity be remote in the future.

Another great trend that's happened in the last 12 months is, as people have gone into their homes, they have upgraded their technology stack significantly.

So many folks who have long lived on laptops or tablets, with very, very small footprints in real estate, have now gone to 33-, 36-, 50-inch screens in their offices now, because they too want to have that sort of multistream, multiconference experience.

So our next gen offering is currently not completely available right now and offered at multishare.us, as a cloud based multistream collaboration service. Its purpose is to deliver an elegance and equally engaging experience to collaborators both in the physical and digital worlds.

Very, very similar as a precursor to what the metaverse promises in a full digital world. We believe, we're a bridge and effectively between those two worlds.

Here's just a caption of what you might see if you go to our website here at this point, to see this notion that there'll be multiple collaborators, people will have different visual interpretations of what they can see, people can share multiple screens simultaneously, you can see more, you can do more.

Wanted to share some customer use cases with our investors. Just to give you a sense of really why, right? Why the purpose of mezzanine exists today. So this is a quote from a gentleman called or construction a large construction Company and what read the entire quote.

But the note of it, the concept of it is the ability to use mezzanine and bring everyone together in one place really turns a five-week effort into a five hour effort. And it really came down to their ability to have incredible amounts of data cast across multiple screens simultaneously. We've deployed a great solution for JLL in Europe primarily.

They've deployed a concept called next, for the next room, next technologies, where they've essentially created digital twins.

And you see an office like this and I've actually been in the space where you would bring in potential customers, and you would be -- Oblong's technologies used effectively to move from Screen A to B to C to D across the entire space and it's dynamic, right? You actually can put the device in the customers' hands.

They can start to engage with the information and they get a really feel for how this technology works. JLL has done an incredible job of reducing transactions time, by as opposed to doing full walkthroughs of their commercial spaces, they do three-dimensional flyovers and they do three-dimensional walkthroughs of these potential spaces.

And so clients can see 15 or 20 spaces in an hour window versus having to see them over multiple days.

Accenture has long been a customer of ours, and they really think about decision-making at Accenture, right? How do we populate data and information in a way that we can get maximum throughput, maximum productivity? They really are about deep client engagement. And so they use this as an incredibly dynamic presentation tool.

IBM Security, they also use our technology today, embedded in everything they do with the ex-force command center. So you can get a representation of it here. The FAA today uses our tool again in their operation center.

You can see how offices are set up there and sort of you have a conference room on the left and you have workstations behind you, but everyone is seeing the same thing in the same time, right? The level of engagement is, is ultimately optimized. I'll talk quickly about just customers and partners.

Mezzanine is deployed across a number of diverse verticals today and across recognizable global brands. Here's a small representation. And the point really here is, absent the pandemic, Oblong has an incredibly wonderful and diverse customer base.

Many of them we have kept in touch with, many of whom are looking to extend their footprint as they arise and come out of the pandemic. And this is just a great representation of some of the brands we have done business with and really continue to do business with today.

In order to get to some of those customers historically, we've used a number of channel partners for distribution.

And while we've often talked about Cisco, as a significant partner for distribution, many of these folks on this list today are key partners across the United States and Europe and EMEA, who we have crafted long-term and deep relationships with, who also are keenly interested in looking at ‘22 and beyond, and seeing what the future brings.

So, we've made a substantial effort to reach out to many of these folks in the last three to six months, as we see the light at the end of this period, and many of them are very, very interested in trying to bring new solutions and new technologies to the forefront because frankly customers are demanding something new.

They're demanding, something more engaging, and Oblong is really at the forefront of engagement. And lastly, I'll just close with what I believe are some, some near term objectives that I'd like to share with the audience.

So by year end, we're looking to expand our engineering and marketing efforts in anticipation of a really broader market reopening throughout ‘22, we intend on delivering a beta of our cloud service by year end, say we have an alpha and it's readily usable and available, where we intend to create integration prototypes with leading collaboration cloud services.

So you could, you could look at this conceptually as the network effect, we intend to integrate through APIs into other people's collaboration services to some degree, right? What we offer today is this incredible sort of fibered experience between the room user and the remote user.

And our path forward really in order to create a tremendous market opportunity will be both direct and indirect from a go-to-market perspective. And we will use partners and partner with some of the larger collaboration cloud services that are out there today.

And lastly, we're going to and we have been already actively pursuing inorganic growth opportunities to M&A that addressed the four key themes as mentioned earlier. Many of the themes revolve around productivity and engagement.

And there's no shortage of companies out there who are doing wonderful things and machine learning and artificial intelligence. And I think, they'll see Oblong pursue of many of those themes aggressively hear over the next four to six months and use advisors as needed.

For the first half of '22, we will complete and deliver our next generation cloud service into the market.

Assuming a gradual market reopening does in fact occur, we will expand our marketing and sales efforts that we've been doing throughout the course of Q3 and Q4 to deploy mezzanine into existing and prospective and a growing list of potential customers.

And lastly, we'll really expand our integration partner opportunities right beyond the traditional collaboration networks.

And so, while our product has historically been centered in pure native collaboration spaces, we believe there's a much, much, much larger ecosystem out there to allow for people to engage with content from within their existing platforms.

So if you think of Salesforce.com or Dropbox, or companies like that, that have their own clouds, and carry a tremendous amount of content, you might be able to escalate to a multishare session or escalate into a mezzanine session, right, in a room as it becomes available.

And so, a tremendous amount of work next year will go into doing a lot of integration into other people's clouds as we evolve the product. So with that, I'd like to hand the call back to the operator and look for potential questions..

Operator:.

Thanks so much, Justin. Again, we appreciate everyone's taking time to attend today. We believe there are some fantastic opportunities as things like the metaverse evolve. I do think Oblong is really an opportunity and a bridge for users to evolve themselves into what technology will be in the next 5 or 10 years.

And really appreciate everyone's time and attendance today. Thank you very much..

Thank you. That does conclude today's conference. We do thank you for your participation. Have an excellent day..