PowerFleet, Inc. (NASDAQ:PWFL) Q2 2020 Earnings Conference Call August 6, 2020 9:00 AM ET
Chris Wolfe – Chief Executive Officer
Ned Mavrommatis – Chief Financial Officer
Conference Call Participants
Mike Walkley – Canaccord Genuity
Jaeson Schmidt – Lake Street
Scott Searle – Roth Capital
Gary Prestopino – Barrington
Glenn Mattson – Ladenburg
Good morning. Welcome to PowerFleet’s Second Quarter 2020 Conference Call. Joining us for today’s presentation is the company’s CEO, Chris Wolfe; and CFO, Ned Mavrommatis. Following their remarks, we will open the call for questions.
Before we begin, I would like to provide PowerFleet’s Safe Harbor statement that includes cautions regarding forward-looking statements made during this call. During the call, there will be forward-looking statements made regarding future events, including PowerFleet’s future financial performance.
All statements other than present and historical facts, which include any statements regarding the company’s plans for future operations, anticipated future financial position, anticipated results of operation, business strategy, competitive position, company’s expectations regarding opportunities for growth, demand for the company’s product offering and other industry trends are considered forward-looking statements.
Such statements include, but are not limited to, the company’s financial expectations for 2020 and beyond. All such forward-looking statements imply the presence of risks, uncertainties and contingencies, many of which are beyond the company’s control. The company’s actual results, performance or achievements may differ materially from those projected or assumed in any forward-looking statement. Factors that could cause actual results to differ materially could include, amongst others, SEC filings, overall economic and business conditions, demand for the company’s products and services, competitive factors, emergence of new technologies and the company’s cash position.
The company does not intend to undertake any duty to update any forward-looking statements to reflect future events or circumstances. Finally, I would like to remind everyone that this call will be made available for replay in the Investor Relations section of the company’s website at www.powerfleet.com.
Now I would like to turn the call over to PowerFleet’s CEO, Mr. Chris Wolfe. Sir, please proceed.
Thank you, Prasila. Good morning, and thank you for joining us today. I hope everyone is staying safe and doing well over these past five crazy and challenging months.
PowerFleet’s global employees are managing to stay safe and operating the business effectively. Our performance for the second quarter was solid, especially considering the headwinds and challenges presented by COVID-19. Nonetheless, we delivered steady top and bottom line results with revenue of $25.8 million and adjusted EBITDA of $2.1 million. On top of this, our 550,000 subscriber base remained intact with recurring and services and subscription revenues holding up extremely well.
Our financial results also showed our team’s ability to quickly rightsize our cost structure to improve our profitability. They also reflect our team’s unwavering commitment to our customers and partners globally to meet the unprecedented challenges of today’s remote work environment. I continue to be incredibly proud of our team and a remarkable job they’re doing executing against our revised business plan and objectives given this environment.
PowerFleet’s technology plays a critical role in helping our more than 8,000 customers operate safely and be more effective during this challenging time. Our customer base is comprised of some of the largest companies in the world, such as Walmart, Nestlé, General Mills and Procter & Gamble, to name a few, who will rely on our technology to ensure that the global supply chain remains uninterrupted and goods are flowing to their destinations in a timely manner.
PowerFleet like all businesses has not been immune to COVID. April and May really challenged our business, our customers and our end markets. However, we were able to secure several million-dollar opportunities in the quarter.
Additionally, the numerous cost-saving initiatives we implemented in late March and early April significantly improved our cost structure, providing more leverage to our bottom line as we drive revenue growth. This was certainly the case in Q2, where we saw adjusted EBITDA improved by $1.9 million compared to the prior quarter, despite our revenue in Q2 being $5 million lower. As you will see, our results and our capital position allows us to terminate our at-market equity offering at this time.
Now I’ll turn the call over to Ned, who will cover this in our financial results. Afterwards, I’ll provide an overview of our recent sales and operational highlights and outlook. Then we’ll open the meeting up for questions. Ned?
Thank you, Chris, and good morning, everyone. Our financial results for the second quarter of 2020 include consolidated results for both I.D. Systems and Pointer Telocation Ltd., which we acquired on October 3, 2019. Keep in mind that the comparable year ago period only includes stand-alone financial results from I.D. Systems.
Now with those qualifications, let’s look at the numbers. Revenue for the second quarter of 2020 increased to $25.8 million from $16.3 million in the same year ago period. High-margin recurring and services revenue was $16.4 million or 64% of total revenue compared to $5.6 million or 35% of total revenue in the same year ago period. Product revenue, which drives future service revenue, was $9.4 million or 37% of total revenue compared to $10.6 million or 65% of total revenue in Q2 of last year. Gross profit increased to $14 million or 55% of total revenue from $7.1 million or 44% of total revenue in Q2 of last year.
Now turning to our expenses for the second quarter of 2020. Total operating expenses were $14.7 million compared to $9.6 million in Q2 of last year. Looking at the various components of WebUX, selling, general and administrative expenses were $10.3 million compared to $5.6 million in Q2 of last year.
Research and development expenses were $2.6 million compared to $2 million in Q2 of last year. Depreciation and amortization expenses were $1.8 million compared to $443,000 in the same year ago period. OpEx in the second quarter of 2019 included $1.6 million of acquisition-related expenses versus non in Q2 of 2020.
As we talked about on our last call in response to COVID-19, at the end of March, we proactively implemented several cost-saving measures, which began to see the benefit from – in Q2. The $14.7 million of WebUX in the second quarter was down $3.5 million or 19% from the prior quarter. We have additional levers to pull to further reduce costs should the situation with COVID worsens.
Turning to our profitability measures. GAAP net loss for the second quarter of 2020 totaled $3.8 million or $0.13 per basic and diluted share. This compares to GAAP net loss of $2.6 million or $0.15 per basic and diluted share in Q2 of last year. Adjusted EBITDA, a non-GAAP metric, which we define as earnings before interest, taxes, depreciation, amortization, stock-based compensation and non-recurring items for the second quarter of 2020 totaled $2.1 million or $0.08 of total revenue. This is an improvement from adjusted EBITDA of $129,000 in Q2 of last year.
Our liquidity position remained strong. At the end of Q2, we had $21.5 million in cash and cash equivalents and working capital of $28.9 million. As Chris mentioned, we initiated the 10-day termination process of our ATM facility on August 4, 2020, with the official termination to take effect on August 14, 2020. We will make no further sales of shares under the ATM facility.
To date, we sold 846,000 shares, raising approximately $4.2 million in gross proceeds. We expect to use the proceeds for the ATM facility to pay down high interest rate debt. Our focus continues to be on working capital management and cash collections. I’m encouraged to report that for the six months ended June 30, 2020, we generated $4.4 million from operations, which is an improvement from the $2.3 million used in operations in the comparable period of 2019.
In summary, we believe our diversified customer base, predictable high-margin recurring revenue and prudent approach to cash management will help us ensure we successfully navigate these uncertain times.
That concludes my prepared remarks. Chris?
Thanks, Ned. While our business was impacted in Q2, like most businesses in the U.S. and around the world, we were encouraged to see business beginning to pick up in June, and that activity has continued in early Q3. We signed several significant logistics deals in Q2, including Ruskin Packaging. This new customer selected our solar tracking solution and freight camera to help maintain visibility of not only location but also load status for its private fleet of trailers.
Our LV-500 tracking solution is the industry’s first multi-powered asset tracking solution, leveraging solar panels, super capacitors and long-lasting primary batteries for unmatched service life and critical event visibility.
Another recent logistics win was Day & Ross, one of Canada’s largest fleets who also selected our LV-500 tracking solution and our freight cam. The total agreement is valued at more than $1 million, and we began shipping units in July.
In our industrial segment, we signed a very large technology solutions provider in Q2 and began shipping units. This $1 million opportunity will be shipping in Q3. This was a notable win because the customer did a very extensive evaluation of our solution versus our competitors, of which PowerFleet scored the highest by a very wide margin.
The large logistics company we signed in Q1 for our high-end industrial product PowerFleet enterprise has been fully implemented at two sites. We have five sites in progress and plan to implement additional six sites in Q3 and Q4. We’re encouraged by the progression of this development. As you all know, we had a four-week moratorium on visiting their plants in Q2. Our partnership with Jungheinrich continues to exceed expectations. In fact, Jungheinrich took 40% more units than originally contracted in the first year of the partnership. Because of this momentum, in July, we extended and expanded this agreement.
For those newer to our company, in mid-2019, Jungheinrich, who is a top four industrial truck OEM, tapped us to develop a highly integrated telemetry platform for their industrial vehicles, combined with sophisticated fleet management software in Europe. Based on the partnership success, we are now helping Jungheinrich expand their market penetration in EMEA and North America by enabling the customers to run safer, more cost-effective intra logistics operations. We have really enjoyed working with Jungheinrich team and look forward to our being equally successful with Jungheinrich’s affiliated North American partnership, Mitsubishi Cat of America.
Internationally, we’ve seen our core connected vehicle business in Israel pick up to near pre-COVID levels. On top of this, our team there is making significant progress, building up our business in non-fleet management IoT solutions. An example of this work is with MDA, an Israeli emergency response organization, whom we are deploying thousands of remote monitored defibrillators. Another example of our non-fleet management IoT solutions is our temperature and valve monitoring solutions for food manufacturers.
Recently, our Cellocator division signed its first deal in Costa Rica for over 3,000 units, and we are exceptionally proud to have been selected by the French Red Cross to support their humanitarian efforts around COVID and Ebola in Africa with a successful proof-of-concept monitoring medical-related shipments. This opportunity has the potential to generate up to $5 million in annual revenue and is bidding on several global tenders totaling over 100,000 potential units.
As I talked about in our Q1 call, our longstanding partner, Avis was greatly impacted by COVID in Q2. Over the last several months, we’ve been working with them to support their efforts in rightsizing their fleet. As states have slowly started to open and people are traveling more by automobile, we’ve seen an uptick in Avis vehicle activity as they bring vehicles back online.
Additionally, conversations continue with one of the world’s largest rental car companies. And although the project has been delayed due to COVID, we are still engaged and looking forward to moving forward when the business – we are still engaged and looking forward to moving forward when their business stabilizes.
We are also demoing our combined global fleet visibility software as a solution to both Avis and the other large rental car company. This is an outcome of our integrating our rental car platform for Avis and Pointer’s connect platform over the past several months. This platform is OEM agnostic, allowing rental car companies to view and manage their mixed OEM fleets under one umbrella.
While we are certainly encouraged by the improved business conditions in June and July, the erratic nature of COVID in the U.S. in various geographies as well as social and political unrest makes it hard to predict how our business will be impacted in the near-term. However, our pipeline remains robust and continues to expand. We have not seen major deals get canceled or lost, but several have been suspended or delayed, pending business revival when countries and states go back to work.
Acquisition-related integration activities around our acquisition of Pointer Telocation last October are proceeding, and cost synergies are being realized, as you can see by our results. Future cost savings in 2020 and 2021 are being targeted as we further consolidate our software-as-a-service platforms, consolidate software licenses, consolidate our bill of materials and optimize business processes.
While our business continues to operate according to our post-COVID plan, we are also encouraged by the strength of our financial foundation, as Ned pointed out. Our optimized cost structure, along with our robust cash position of more than $21 million, gives us confidence that we are poised to accelerate growth when we achieve a new normal in business and economic activity. We remain confident in our ability to extend our position as one of the world’s most powerful global IoT companies focused on fleet and asset management. And as I said, very important things.
With that, we’re ready to open your call for questions. Operator, please provide the appropriate instructions.
[Operator Instructions] And we’ll take our first question today from Mike Walkley with Canaccord Genuity. Your line is open.
Hey, thanks for taking my questions. Hope everybody is healthy and doing well on the call today. Chris, first question for me is, I know you’re not providing guidance, but it does sound like things improved in June and July. Can you maybe just help us think about the linearity of the quarter? And as things open up, how hardware shipments might improve as you’re able to reach and install some of your customers?
As I stated, I think across the board globally, we’ve actually seen the uptick in business. It’s really hard, though, as I also mentioned, because of the uncertainty. And I think until the election is over in November, there’s still going to be some – the social unrest, the political uncertainty and then what’s going with COVID and schools opening. So I’d really hate to like step out and say something that – there’s no way I can predict. But it will be – what I can say is that customers are engaging.
We’re actually out in the field doing implementations. And – as a great example of that, as I mentioned, is that large logistics company and did number of installs that we’re doing at their plants, which we couldn’t even get into in Q2. I also mentioned Israel. Actually in July, there – year-over-year sales in Israel were actually exceeded. So again, there’s great points of excitement, but I just don’t want to get too exuberant.
Great. No that’s fair. And then Ned, again, overall, a great job on the cost structure and the better-than-expected bottom line results. Just with some of the reductions and synergies realized throughout the quarter, on a sequential basis, how should we think about OpEx? Is it going to trend down again just given a full quarter of some of these reductions? Or if you could just help us think about kind of an OpEx run rate for the back half of the year.
Thanks, Mike. The run rate is going to be similar to Q2. So we don’t expect further reductions – unless we need to, we don’t believe we do because we have – but we expect OpEx to stay flat for the remainder of the year.
Great. And last question for me, and I’ll pass it on. Just on the services business just end markets, maybe where you did see some declines and if those customers like Avis come back or how you maybe are working with some of the struggled industries? And then maybe some of the other industries where you’re seeing good sticky trends with your customer base?
This is Chris. I’ll take that. In some geographies that were hit harder than others, like in Brazil, yes, we did have probably a bigger dip in our, what I call, our recurring services revenue there. Again, it wasn’t material by any nature. But it was customers that were postponing their payments or basically asking for some forgiveness or discounts. In Mexico, by the way, we actually saw year-over-year growth.
So even though they’re hit hard by COVID, which is just kind of interesting, they’re actually doing phenomenally well. I mean I think Mexico alone is 13% over last year’s plan. Same with Argentina. So again, it’s really a hit and miss around the globe. I’d say in the U.S., our biggest impact is what we’re working on with Avis, where we’re helping them by discounting somewhat their recurring revenue while their fleets downsize.
Now that being said, as we still bill for every unit, we just give them a discount month-by-month as we watch their units come back online. So – and we work with Avis on that, as a matter of fact, almost on a weekly basis. So again, it’s – nothing has been material, and it’s just been a case-by-case basis if customers come to us and ask for assistance.
Great. Thanks for taking my questions.
Yes. Thanks, Mike.
And we’ll take our next question today from Jaeson Schmidt with Lake Street. Your line is open.
Hey guys, thanks for taking my questions. Just following up on one of Mike’s questions. I know you’re not providing guidance, but just given sort of the improvement you saw in the later part of Q2, are you fairly confident that Q2 is going to be the bottom for the year though?
I would actually step out – again, I can’t – we don’t know because, again, we don’t know what the worst possible thing could happen. But I don’t see it getting worse in Q2. I mean I think the momentum is actually there. If the economies just can stabilize – keep stabilized, it doesn’t even need to improve for us to improve and get the election over with. I mean I think you’ll get some of the uncertainty out of the market. I don’t see it ever getting worse in Q2 unless, again, COVID has some weird comeback that we’re not anticipating.
Okay. That’s helpful. And then just curious if you’re seeing any change in either direction in the size of the deals you’re engaging customers on?
That’s a great question because I think across the board, with our acquisition of Pointer and Cellocator, I think size matters. If you think about it a year ago, as I.D. Systems, we were around $50-something million, going on $60 million that year. And combined, we’re a much larger company. And I would say the number of tenders that we are participating in now and the size of those tenders, as I mentioned, with Cellocator, over a 100,000 vehicles. Some of those tenders are – it’s – are quite large. That’s just Cellocator.
I mean on our Industrial Truck side, I’ve mentioned in the past that we have several large opportunities there, some are getting pushed because some strategic accounts are pushing out their capital expenditures, but no one’s told us that they’ve canceled those. So again, I would say the size of the deals has increased significantly. And again, the traction that we’re seeing even on – in our pipeline is improving. And I think the deals like Day & Ross, when those hit the Street, Day & Ross has actually brought us other accounts, people they know in the industry. So again, I think success breeds success. And we’re starting to see that.
Okay. And the last one for me, and I’ll jump back in the queue. Ned, how should we think about gross margin going forward? Services gross margin rebounded nicely in Q2. Is this sort of a new sustained level?
Yes, especially on the service, this is our – due to the integration of the merger as well as some of the cost-saving initiatives. So we expect the service gross margins to continue to be at this level. The product gross margin can fluctuate a couple of points up and down, depending on which product line makes up the revenue. But in either case, obviously, the initiatives that we put in place, obviously, you see the improvement in the gross margin.
All right. Thanks a lot guys.
And we’ll take our next question from Scott Searle with Roth Capital. Your line is open.
Hey, good morning. Thanks for taking my questions. Just to follow-up quickly on Jaeson’s question on the gross margin front. To dive in, product gross margins had a very good quarter. Ned, it sounds like some of that is mix, but was there anything else in there? I know Pointer had lower gross margins going in. So have you rectified some of that? Is there a onetime benefit in there? Is that the normalized kind of level we should be expecting, all things being equal? And as well, I’m not sure if I heard anything on the installation team’s time line. I think last quarter, you talked about them being booked out several weeks. Could you give us an update where that is? And then I had a couple of follow-ups.
Sure. I’ll talk about the product gross margin, Scott, and then Chris can talk about the installation team. But the – definitely, the acquisition and being vertically integrated had a big benefit on the product gross margin. So that’s – as we continue to integrate the companies, that benefits the combined company and the product gross margin. And the second thing, mix has an impact on our product gross margins because we have different business lines that have different product gross margin profile. So for example, our Industrial Truck business in the U.S. is a very high margin product business. So when that business is strong during the quarter, you could see the product margin be higher.
Okay. And I’ll take the field installers. Just so everyone knows, we actually have our own, what we call, train a trainer approach. So we have a group of field installers who are phenomenal, by the way, field engineers, I’d say, they’re not just installers. They’re fully booked. And as a matter of fact, they’re booked out probably through Q3 right now. I mean I don’t have the exact date, but I know they’re fully booked and active. And we accordion our installation capabilities with third-party certified installers. And right now, we have several of those fully engaged as well because of some of the deals that I mentioned earlier.
Got you. Great. Thank you. And Chris, maybe to follow-up on Jungheinrich. It’s nice to see the expansion of that relationship. It takes you into some other markets, right, and outside of Europe. How big of an opportunity can that be as we get into 2021, 2022? I mean what kind of attach rate and share would you be expecting relative to the Heinrich – Jungheinrich annual units that are shipped?
Again, the concern I have with giving you a number – by the way, we’re phenomenally bullish on this opportunity. I mean people don’t remember, it’s like we signed for a minimum contractual of taking 2,000 units a year. So that’s a multimillion-dollar opportunity for us last year. They took 40% more than that last year. And especially, they kept taking even through COVID. They’re impacted just like everybody else is globally with the COVID turndown. So that’s kind of where I’m hesitant. That being said is they did bring us into, and I mentioned, Mitsubishi Cat of America because they are affiliated there.
So that’s a brand-new channel for us, selling to the Mitsubishi Cat organization here in the states, and that will complement our dealer sales here in the states as well. So I would say it’s – if they can stay at this pace in their growth rate, it’s like – I think it’s a phenomenal opportunity. Now that being said, everyone needs to keep in mind, the Jungheinrich builds, again, not in COVID times, but they built about 150,000 forklifts a year. And our goal is obviously to become part of the build process. So we’re working on that with them and working on our next-generation road maps with them to see if we can get a substantial piece of that overall build versus just what we’re doing today.
And lastly, if I could. You talked about the competitive landscape or at least one competitive bid where you were thoroughly evaluated, came ahead up front. I’m wondering if you could give us an idea about what your win rate is looking for? Like if we’re looking at the second half, there are a lot of larger opportunities that were potentially there. It doesn’t sound like they’re going away, possibly delayed, but was really representing, I think, a lot of upside potential in the second half of this year. So could you kind of refresh us in terms of how you’re thinking about your win rate going forward? That would be helpful. Great, thank you.
Yes. Thanks. Our win rate – I mean, obviously, it varies by geography, varies by our market that we’re in because there are different competitors in the various markets, whether it’s Logistics, Industrial Truck or what we call our connected car vehicle market. Just in the Industrial Truck side, I don’t know – if we have new investors that have just joined us, we are the market leader in what we call, another analyst actually uses the word, the Switzerland of device management. We’re basically neutral, and we play over every OEM. And a matter of fact, that is in our core DNA across every vertical. So it doesn’t matter if you’re class one to five cars, pickup trucks, et cetera, we run across every vehicle.
The same with industrial trucks. It doesn’t matter whether you’re a Jungheinrich, Raymond, Toyota. We basically make your fleets homogenous. So in the Industrial Truck side, we win probably 90% of the deals that have multiple types of equipment. In the Logistics side, again, we run over every type of truck and every type of trailer chassis container. The issue there is it’s a very competitive space. And so we’re getting our share of wins there. But it’s a very big market, which is good. And so again, I think on – it’s a blend. But I think right now, we’re poised with our product portfolio to come out on top, probably 65% of the time and head to heads.
And we’ll take our next question today from Gary Prestopino with Barrington. Your line is open.
Hi, good morning, everyone.
Most of my questions have been answered, but I just want to get an idea on – with your product revenues, could you refresh your memory, how do you book that when it’s installed? Or when it’s a signed contract?
Gary, it’s Ned. The product revenues when it’s shipped and title transfers.
Okay. So could we assume that – or is it – making the assumption that things were basically shut down for a month, 1.5 months in the quarter. Would that portend that the product revenues for the next couple of quarters or at least the next quarter could be down sequentially? Or is that a bad assumption?
I mean, no, I think it is a bad assumption. Obviously, the biggest shutdown was, obviously, during the beginning of the second quarter. We saw order activity pick up in June. We haven’t seen anything being shut down in the third quarter. So we don’t see any reason why it would be down.
Yes, okay. All right, thanks. That’s what I wanted to get it. I appreciate it. Thank you, guys.
And we will go next to Glenn Mattson with Ladenburg. Your line is open.
Hi. Yes, building on another question from earlier about the win rate and things like that. Just are you able to – I’m curious if you’re able to hold pricing firm or if there’s any price competition going on in some of the deal’s – recent deal activity?
Good question. I think it, again, varies by geography and also by the market. So just to go through logistics, very competitive. The good thing is, I think our product feature set and value prop for the money is better. So we can usually demand a premium. But again, it’s a very competitive space. So we do have to compete in the logistics area more on price, but we are able to hold a premium.
The Industrial Truck space, as I mentioned, we are the premier multi-OEM fleet management provider. We – things are competitive. The OEM – we actually compete against OEMs. So they can subsidize the equipment on their vehicle, but customers don’t really care about that, to be honest with you, if they have multiple types of equipment because it doesn’t do you any good to have Crown’s telemetry product on one and Jungheinrich telemetry product on another and then Raymond’s. You can’t work that way in a facility. So when we’re in a head-to-head in a multi-OEM environment industrial, we can hold our prices up fairly well.
And then on the vehicle side, again, when I say vehicle, that’s like the rental car and the smaller side. It’s a very competitive space, but I think our product quality in that side – and by the way, our product quality across the board wins the day. I can honestly say that. It’s – the feature set gets your attention, our customer service and our – and the way we treat customers keeps them. The quality at the end of the day will get them coming back and buying more. And I think that’s another way how we win. People figure out that we have the highest quality for the feature set. And that helps us uphold our pricing.
Okay. Thanks. And Chris, maybe you can just give us some more color on – it’s a very broad geographic footprint now post the acquisition. And you’re a much bigger company than you used to be, but you’re still not that large compared to your geographic dispersion, let’s say. So with flare-ups happening all the time, whether it be south of America or regions in the U.S. or in the Middle East or wherever.
Can you just talk about the challenges of logistically, how you manage that? And perhaps, can you get – is there – just thinking about the risk here, is there like the possibility you can get stuck with inventory in one part of the world where things shut down and you could use it somewhere else or sort of like that? Just – could you just give us some color as the business – the challenges of being so geographically dispersed. Thanks.
Yes. Just so everyone’s aware, in my prior life, I used to run a division of Qualcomm. And again, that division, we had – we were on all continents. Literally, we were even doing business in Antarctica. So it’s not something that it’s foreign to myself. And a matter of fact, I have a phenomenally seasoned management team. I think I have the best management team I’ve had in my whole career.
The CEOs running those geographies are very seasoned people. They are very mature, very professional. They worked with their local health ministries and also taking advantage of what the government will do to help them as well as making sure their employees are safe. I cannot give my global team enough accolades. That all being said, is we don’t – again, we only keep enough inventory.
Our goal is – and we’ve always done this to some extent, is to keep about two quarters of inventory at the local level. And so by the way, our inventory has increased over because, obviously, things shut down. So people – we didn’t use the inventory. But the good thing is that’s our safety stock, right? So we have enough search potential for some of these large deals that come in. But at the same time, we’ll probably start using some of that inventory up over the next two quarters as we see business activity. It keeps increasing at the level it is.
But again, by geography, I’d say, some areas I mentioned earlier, actually growing in this pandemic, and we don’t see that stopping. There’s nothing to indicate it’s going to get any worse. And even, I would say, the hardest hit was Brazil. And even though it’s down, it’s not – it’s actually surviving, and its contribution is stabilized. And as I mentioned, too, Israel, even though they’ve had a resurgence in COVID, the business activity for us is actually, year-over-year, better. So I couldn’t do this without the leadership in each geography. Any other questions?
Thank you. No. This does conclude our question-and-answer session. I’ll turn the call back to you, Chris, for closing remarks.
Okay. Thank you. Thank you for joining us today, and we have a very active IR calendar during Q3. Ned and I will be virtually attending the Canaccord Genuity Conference August 12; the Barrington Research Fall Investor Conference, September 9; the 9th Annual Gateway Conference, September 10; the Jefferies Virtual Software Conference, September 14 and 15; and the Lake Street Capital Market’s BIG4 conference, September 17. We will be webcasting our presentations at some of these conferences, the details of which will be in the Investor Relations section of our website. Thank you, again, for your time today. Please stay safe, and we look forward to speaking and giving you an update again soon. Thank you.
Thank you for joining us today for our presentation. You may now disconnect.