Issuer Direct Corporation (NYSEMKT:ISDR) Q2 2020 Earnings Conference Call July 30, 2020 4:30 PM ET
Brian Balbirnie – Founder and Chief Executive Officer
Steve Knerr – Chief Financial Officer
Conference Call Participants
Brock Erwin – CleverInvesting
Luke Horton – Northland Securities
Ian Cassel – MicroClub
Eric Weinstein – Chancellor Capital
Ladies and gentlemen, thank you for standing by, and welcome to the Issuer Direct Corporation Second Quarter 2020 Earnings Conference Call. Today’s call will be conducted by the company’s Founder and Chief Executive Officer, Brian Balbirnie and its Chief Financial Officer, Steve Knerr.
Before I turn the call over to Mr. Brian Balbirnie, I’d like to read you the company’s abbreviated Safe Harbor statement. I’d like to remind you that statements made in this conference call concerning future revenues, results from operations, financial position, markets, economic conditions, product releases, partnerships and any other statements that may be construed as a prediction of future performance or events are forward-looking statements, which may involve known and unknown risks, uncertainties and other factors which may cause actual results to differ materially from those expressed or implied by such statements. Non-GAAP results will also be discussed on the call. The company believes the presentation of non-GAAP information provides useful supplementary data concerning the company’s ongoing operation and is provided for informational purposes only.
With that said, Mr. Balbirnie?
Thank you, operator. Welcome, everyone and thank you for joining us this afternoon to discuss the company’s second quarter results. At the market close, we issued a press release announcing our results for the quarter. During today’s call, we will be referencing these results as well as talking about the second half of the year. For your convenience, a copy of the press release is now available in our Investor Relations section of our website, and also in our ACCESSWIRE newsroom for your reference during today’s call.
We are thrilled with the second quarter results in so many ways: record revenues, which were up 18% year-over-year; operating income; EBITDA and cash flows from operations were also historical records. Thankfully, we have a great story to tell. This story resonates well within the markets that we’re serving. And in that regard, customers continue to expand to also record levels this quarter, which allowed us to produce these P&L records across the board.
I will now turn the call to Steve for a review of the second quarter in detail. After his remarks, I will discuss some key metrics we’re tracking for the first half of the year and into the remaining part of the year. Steve?
Thank you, Brian and good afternoon everyone. As Brian mentioned, Issuer Direct had a record quarter in terms of revenue, operating income, cash flow from operations, EBITDA and customer count. However, this is not a time for us to rest on our laurels, but instead to build on this momentum into the second half of the year and beyond. While the COVID-19 pandemic has been challenging for us, starting to work remotely, canceling schedules and in person conferences and slowing down overall market transactions and activity, it has also allowed us to pivot some of our products and caused some of our customers to lean more on virtual technology, which helped drive some of our increase in revenue during the quarter, something I will now discuss in more detail.
Total revenue for the second quarter of 2020 was $4,884,000, an increase of $746,000 or 18% compared to $4,138,000 for the same period of 2019. For the first 6 months of 2020, revenue totaled $8.9 million, an increase of 7% or $583,000 from the first 6 months of 2019. Driving the growth was revenue from our platform and technology revenue stream, which increased $640,000 or 24% and $660,000, or 12% for the 3 and 6 months ended June 30, 2020 compared to the same periods of the prior year.
The increase for both periods was threefold: first, we generated increased revenue from our virtual products, including virtual annual meetings, virtual conferences and an overall increase in demand for our webcasting products, resulting primarily from the COVID-19 pandemic; second, we generated additional revenue from ACCESSWIRE, which increased 19% and 10% for the 3 and 6 months ended June 30, 2020, compared to the same period of the prior year. This increase was due to both an increase in customers and an increase in revenue per release as we started to benefit from our digital marketing and e-commerce platforms that kicked off during the first quarter – during the end of the first quarter. Absent the investment commentary revenue from the first 6 months of 2019, ACCESSWIRE revenue for the first 6 months of 2020 would have increased 30% compared to the prior year. And third, we generated increased revenue from licenses and Platform id. The COVID-19 pandemic has created a headwind in terms of entering into new subscriptions as customers are more reluctant to sign annual contracts. As a result, we signed 35 new contracts with an annual contract value or ACV of $225,000, down compared to the second quarter of 2019, which totaled 44 new contracts with an ACV of $322,000.
However, we continue to net new contracts each quarter, which has increased recurring revenue and led to our overall total of 295 contracts with an ACV of just over $2.2 million, up from 255 contracts with an ACV of approximately $2 million at the beginning of 2020. As a percentage of overall revenue, platform and technology revenue increased to 68% and 67% for the 3 and 6 months ended June 30, 2020, compared to 64% for the same periods of 2019. Services revenue increased $106,000 or 7% during the second quarter of 2020 as compared to the same period of 2019. The increase is partially due to an increase in revenue from our print and proxy fulfillment services due to an increase in projects related to annual meetings as well as an increase in revenue from transfer agent services, primarily due to a one-time project that was pushed from Q1 to Q2 as a result of the COVID-19 pandemic.
Additionally, revenue from webcasting services increased as a result of the increase in demand for our virtual webcasting products. These increases were offset by continued decline of revenue from our ARS services. For the first half of 2020, Services revenue decreased $77,000 or 3% compared to the first half of 2019. The decrease is due to the aforementioned decrease in ARS revenue as well as decline in revenue from our transfer agent Services due in part to the slowdown of transaction processing from the depository trust company and banks and brokers.
Moving to gross margin, our overall gross margin percentage was 72% and 71% for the 3 and 6 months ended June 30, 2020, compared to 70% and 69% for the same periods of the prior year. The increase in gross margin was led by expanded margins in our platform and technology revenue stream, which reported gross margin percentages of 78% and 76% for the quarter at 6 months ended June 30, 2020, compared to 73% and 74% during the same period of 2019. The increase was due to scale in our webcasting business as a higher revenue on a relatively fixed cost structure at the higher margins. Gross margin percentage from our Services revenue stream were 61% and 59% for the 3 and 6 months ended June 30, 2020, compared to 63% and 61% for the same periods of the prior year.
Switching to operating income, operating income was $1,001,000 for the second quarter of 2020 and $1,249,000 for the first half of 2020, compared to operating income of $130,000 and $277,000 during the same periods of the prior year. The increase in operating income is due to the higher revenue and margins I just spoke about as well as a decrease in operating expenses.
General and administrative expenses decreased $125,000 or 9% and $270,000 or 10% for the 3 and 6 months ended June 30, 2020, compared to the same period of 2019 due to a decrease in bad debt expense related to a large reserve that was taken during the first and second quarters of 2019 as well as a decrease in stock compensation expense. These decreases were partially offset by increases in rent and personnel expenses. Product development expenses decreased $178,000 or 52% and $321,000 or 47% for the 3 and 6 months ended June 30, 2020, compared to the same period of the prior year due to a decrease in head count, partially offsetting these decreases was an increase in sales and marketing costs, which increased 9% during both the 3 and 6 months ended June 30, 2020, due to an increase in personnel costs as well as an increase in digital marketing that I spoke about earlier. On a GAAP basis, net income and net income per diluted share more than tripled as we generated net income of $772,000 or $0.21 per diluted share during Q2 2020 compared to $212,000 or $0.05 per diluted share during Q2 2019. For the first 6 months of 2020, net income was $998,000, or $0.26 per diluted share compared to $417,000 or $0.11 per diluted share.
Looking at some non-GAAP metrics, EBITDA for the second quarter of 2020 increased 146% to $1,354,000, or 28% of revenue compared to $550,000 or 13% of revenue during the second quarter of 2019. EBITDA for the first half of 2020 increased 78% to $1,976,000 or 22% of revenue compared to $1,108,000 or 13% of revenue during the first half of 2019. Non-GAAP net income for the second quarter of 2020 increased 104% to $974,000 or $0.26 per diluted share compared to $477,000 or $0.12 per diluted share during the second quarter of 2019. Non-GAAP net income for the first half of 2020 increased 38% to $1,372,000 or $0.36 per diluted share compared to $995,000 or $0.26 per diluted share during the first half of 2019.
Moving on to the balance sheet and cash flow statement, we generated record cash flows from operations as we generated an additional $1,477,000 during the second quarter of 2020 compared to $259,000 during the second quarter of 2019. On a year-to-date basis, cash flow from operations was $2,079,000 for the first half of 2020 compared to $795,000 during the first half of 2019. On the balance sheet, our deferred revenue balance increased from $1,812,000 as of December 31, 2019, to $2,015,000 as of June 30, 2020, an 11% increase.
Overall, as I mentioned, we achieved good results for the quarter. This only motivates us for more. We believe in our team and our product sets and have seen the results of more scale within the platform. We will continue to enhance our products and work on achieving customer growth while keeping our eye on the challenging markets we are currently facing.
I will now hand it back over to Brian, who will provide some updates on the business and what we have planned for in the second half of the year. Brian?
Well done, Steve, thank you. In our last call, we spoke a bit about how we were pivoting some of our product platforms to be virtual. I guess you can say that pivot performed well for the quarter. Even though we’re candidly still learning what the market needs are what we can provide and most importantly, how it can sustain and create new categories for us. We will spend more time discussing this in a few minutes. But for now, I’d like – I think it’s prudent to provide some commentary on the results for the quarter that Steve just highlighted.
The second quarter was likely the most interesting quarter in our history. Virtually, our entire team was remote. We continue to learn how to recruit, hire, develop, sell and deliver in this distributed way with what now illustrates great success. That alone is an accomplishment, but to do it and achieve record revenues of $4.9 million is something our employees should be all proud of. It’s nice to have energy moving into the back half of the year. Our teams are excited as they come out of this quarter, learning a lot about our customers, their needs and how to continue to adapt, improve and evolve ourselves in this world, something we’re all focused on achieving again here in the third quarter. If we can’t tell, I am really proud of our team and the commitment they had in every life cycle of the customer journey.
Last quarter, we talked about record customer numbers. Again, on a year-over-year basis, our customer counts continue to show strong sign of growth in combination. Our private company business continues to outperform our expectations, where customers were up 39% from 997 to 1,390 year-over-year. Our public company customers also grew during the quarter, a couple of percent to 1,477 from 1,440 last year, in combination a record number of customers, totaling 2,867 or 18% over last year. I don’t think I need to comment anymore on customer counts, except to repeat one thing that I have continued to say over the last several quarters both internally and externally. And that is the most important thing that we can do is win new customers. We do that, and the rest takes care of itself. While we have done just that and revenues show, margins improved a couple of percent and our platform and technology business continues to grow as an overall percentage of our business, like we’ve spoken about. But I will add one thing to this critical KPI of new logos, and that is something that we are maturing into, and that is to be a market leader in communications company, a company focused on a newswire, events business and reoccurring communication technologies that we license to our customers.
When you look at that business, it tells us everything about where we’re headed. It has 30-plus percent year-over-year growth. It drives higher gross margins and generates as good or better cash flows on the rest of our business. So point being, please understand we intend to align our reporting styles with this strategy to ensure our shareholders and prospective shareholders understand the value drivers of our business. The more legacy and seasonal types solutions we have today will not go away entirely. But will become essentially compliant on other revenues. We are working to try to get this done by year-end and his presentation of new financial information. We are excited about simplifying this, both for our investment community, but also for our refined strategy in the market. This refinement comes with added investment into our digital marketing strategy, something we have had success in the second quarter. But no, we will see even more customers subscribing to our communications offerings in the future because of the strategy. Today, we’re seeing this heavily swayed towards ACCESSWIRE, which we are more than happy to take at this point, but our goal is to ensure that we broaden our communications offerings to our customers. In the second quarter, we continue to learn more about how our platform could help our customers in a virtual way. We talked about this briefly in the last quarter call. Little do we know what and how impactful would be for the results for the quarter.
During the quarter, we benefited from new product offerings that we’ve spoken about in our prior call. Steve touched on these just slightly a minute ago. Our virtual product lineup consisted of our virtual annual meeting, non-deal road show and deal road show solutions, Analyst Day and Investor Day products, all 100% virtual and delivered by our webcasting solutions that we acquired from Onstream at the beginning of 2019. In addition, we began to see our investor conference business go virtual. But the lion’s share of that will come to us here in the back half of the year. Most of these virtual products were new out of gate and in the last quarter and will become a permanent part of our product lineup in the future.
Our news business has continued to show strong signs of growth since inception. Just a little over 5 years ago, in that mean time – in that time, we have taken a handful of distribution points to thousands, revenues from a couple of hundred thousand into several million, customers from a couple of hundred also into the thousands and sustained gross margins in the high 70% since. Albeit great, this is honestly small compared to where we believe this business can go.
When we look at the total addressable market, we see over $600 million of newswire spend each year globally. Today, we have approximately 1% of that and honestly believe that we can get to 3% to 5% by the end of 2022. This happens in two ways. The first, pure sales and marketing push; and second, product innovation via both organic and inorganic means. These product innovations will have two effects on the market. First, it will drive down spends for the siloed PR firms; and two, create a virtuous force of customers seeking an entire storytelling platform beyond just PR. We believe these coupled effects over the next 18 to 24 months will yield us these market share goals. Obviously, we have to innovate, to be successful in our sales and marketing strategy and continue to push the envelope in our brand. This likely is a good time to talk about some of these planned product innovations coming in the second half of the year.
In our events business, we continue to learn from what we’ve done. As an example, we launched a virtual annual meeting product in mid-March. High aspirations given that there are only 2 real companies that provide an enterprise product in the space, Broadridge and LUMI, Issuer Direct in the third late to the game, as the other 2 providers have spent years trying to commercialize this product offering. We generated subscriptions and service revenues of approximately $250,000 in the quarter from this product. Found brand-new customers, up sold some new – some current customers, which is now set forth in a new product on our platform for years to come. We estimate that there are approximately 6,000-plus annual meetings in North America. Majority were already planned and set forth by the time we came to market. So we’re excited to see what this product does for us next year. We are laser-focused on doubling or tripling this business next year and being even more competitive option than the incumbents.
Our physical event business, many referred to as our investor conferences is easier to ascertain. No one is traveling anywhere. And as we said in the past quarter, the pipeline evaporated entirely. Thankfully, we’re starting to see momentum here virtually. As I believe, it just took time for customers to come to grips with no physical events and exhausting all possible delays into what is now a healthy Q3 of booked events for us. We believe that a virtual component is going to be a prevalent way to conduct meetings in the financial space, at least until Q2 of next year and perhaps even hybrid options beyond. Regardless, we’re working on ways with our bank organization customers, conference and event managers to now take our virtual and/or physical combinations of events. We just care about being the platform that they have chosen and are thankful for the opportunity to grow and adapt with them.
I’d like to go back to ACCESSWIRE for a minute. When we think about product innovations, we think about the storytelling process. This is at the heart of every company. When telling their story, you begin to use essential applications to draft this message like Google Docs, Microsoft Word or Apple Pages, we’re compatible with these drafting tools. But so is every other newswire. In order to be different, we need to push the boundaries. We need to give our customers the ability to collaborate, track changes, ask each other questions in real-time create a platform where they don’t want to leave. Agencies and customers can collaborate as would IR practitioners and executives. This ad is called our dynamic distribution and delivery system, where customers can select from hundreds of different combinations of distribution globally. And lastly, extend the story to all mediums, wire, website, social and journalists. We intend to roll almost all of this out by the end of the year, further driving value to our customers. I think many of you know that many of the incumbents have not innovated in decades. While some have done so through small advancements, acquisition and brand changes, we are committed to this innovation, the process and our plan. This innovation is key to our growth strategy. It will help us retain our customers, continue to add new and further disrupt an industry.
Moving along, I think it’s important to discuss the company’s capital allocation strategy. Obviously, there are essentially 5 areas in which a company could contemplate or formulate their strategy. M&A, invest in organic growth, repurchase shares, pay down debt and pay dividends. We are committed to 3 distinct portions of this capital allocation that we feel will provide a prudent path to ongoing operational growth, long-term shareholder value and sustainable earnings power. In order to achieve these 3 things, we need to do the follow: leverage our balance sheet to do acquisitions when they present themselves. It’s important to be prudent. And we feel optimistic about the opportunities that we are doing work on; secondly, invest in our business, our people, our technology, especially our sales and marketing, to tell our story in a bigger way and grow our overall business; and thirdly, buy back our own stock, where and when possible, buy it back, utilize the cash flow from operations to do so unabated. And when the repurchase plan authorize has been completed consider adding to it. That being said, as you will read in the quarterly filings here before 5:30, we have approximately $450,000 remaining in our repurchase plan of $2 million the Board allocated sometime back. We are committed to fulfilling our commitment here, and we will consider adding to it in the coming quarters. To accomplish this, we have adjusted some elements in the plan and will be sensibly in the market buying back our stock. To touch on M&A, because I know many of you are focused on this possibility, as we are, we have been busy doing work on several stories that we feel can add to our platform of becoming a market leader in the communications space. I think it is fair to mention that this is as transparent as we can be given our obligations for material nonpublic disclosure. But there is no secrets, we are optimistic to do something that complements our communications business. These opportunities will round out our offerings, provide for a stickier experience for our customers with an eye toward building this value to increase the average spend of a customer, not because we raised prices, but because we integrated and innovated unlike our peers.
In closing, I want to thank everyone for listening to today’s call. Although we had a great second quarter, we are as motivated as ever to keep this up in the back half of the year. This is a risk known by all of us. Like last quarter, I will say the same thing to you. I feel good about our platform, our ability to pivot and stay agile. I love the grip we have and the battle for every customer that we win, a good percentage of the time. And if we are going to lose, we will make the competitor feel our presence by pricing them down. We have a leading newswire that gains customers virtually every day. We have a webcast platform and conference product that is plentiful demand and opportunities. These are the here and the now and not forgotten is our entire ecosystem for when Issuers can once again focus on strategic decisions, our Platform id product offering will be there for them.
Operator, could we please begin the Q&A portion of the call.
[Operator Instructions] Our first question comes from Brock Erwin with CleverInvesting. Please proceed with your question.
Hey, guys. Great job on the virtual annual meeting product that you guys got out this quarter. I know your team put in a lot of work to get that thing out the door. And I think it really speaks the nimbleness of your team and also the ability to pivot quickly when an opportunity presents itself. So anyways, getting to my question, I was a bit surprised to see a decrease in expenses related to product dev headcount, can you just talk about the reasons for that? And is that just a onetime thing? Or do you expect that to continue going forward?
Thank you for the comments, Brock. I appreciate it. Nice to talk to you as always. It’s a great question, we have – if you think, if you look at the last couple of quarters, we have seen an up and down in our product dev spend categories. We look to outside consultants to help come in to get through bigger lifts in some of our projects and tend to scale back down. We have made new investments in that platform again in that team that you may see that come back up again here in Q3 as we ramp up for some of the items we talked about in the back half of the year. A lot of our platforms are really front end driven changes, back end architecture and infrastructure is built. So the heavy lifts there are done and in wonderful shape. So a lot of the things that we are doing today, are very front end focused that we contend to bring staff in and out as needed.
Okay. Great. That helps. Thanks for answering my question. And just one more question. So last quarter, you talked about new e-commerce self-service platform that you are working on, I think, primarily for private company customers, can you just give us an update on how that’s going? And what kind of things are you learning from your customers? And maybe compare and contrast how – like what their needs are with your public company customers. Thanks.
Yes. That’s a great. Yes, the second quarter, we saw a significant increase in the majority of our private company, customers came to us from this e-commerce initiative and digital strategy. We want to continue to learn there, figuring out from first touch to first release, the total cost and round-trip times that it takes. And really what the right recipe is for us to crank that along and move it faster. So I think in quarters past, we would see a 14 to a 30-day sales cycle, sometimes in a private company. We are seeing come down to sub 4 to 5 days now. If we can continue that trend we will continue to spend and increase it to obviously increase the headcount to support that in hopes of enlarging some of those clients. What we are learning a lot about today is, what are the additional needs beyond that story, right? What’s that first item that they came to market with, and what are the additional products that they may need to help them tell that story or engage a journalist. And those are some of the products that we are looking at innovating here as well as inorganically as well, right? On the M&A side is there are things that can bolt in, that helps keep this customer using our platform more often, perhaps than maybe every quarter just telling a story, but they conceivably be involved in using the system every month. So eventually, it ends up being more of an MRR type of engagement to some of these folks. And that’s where we are headed and where we are focused there.
Thank you, Brock.
Our next question comes from Mike Grondahl with Northland Securities. Please proceed with your question.
Hi, guys. This is Luke Horton on for Mike today. Congrats on the record second quarter. It sounds like you guys killed it. So for progress on the ACCESSWIRE, how soon after the TD Ameritrade transaction, can you be integrated with Schwab? And then how is the activity with the others currently using ACCESSWIRE?
Luke, yes, I appreciate the comments. Yes. The catalyst for TD Ameritrade was really our public company clients, right? We began to see the answer of the question, do you go to all these trading platforms and brokerage terminals? And we were able to answer that with TD. Last quarter, we did do that with Schwab in their professional trading platform, which also further helped us and keep our customers consistent with our platform and use on our newswire system. So I think that we are answering these questions now, meaning, in other words, can you pick up distribution like USA today and do that, can you pick up specialty circuits. We continue to do those every month and not that they are not important distribution points, we tend to not talk about them on calls like this. But we are getting to the point now where the public company engagement sales process doesn’t have some of these ghost objections anymore about not using our platform because you don’t go to a single point of interest. It really is now down to – we view you as a viable competitor and solution option for us to consider. So now as you move upstream into the enterprise style accounts or more mid-cap to large cap, it becomes contracts and pipeline management and being able to move the sales process through that. So we refined our sales teams to have a little more SDR kind of executive behaviors along with our strategic account teams to be able to accomplish that. Thankfully, on the private company side, we don’t see distribution as an obstacle there. The only obstacle candidly there is us learning that other company business at a quicker pace than we have, so we can continue that ramp-up in our aspirations of increasing our market share the way it is. But Schwab is scheduled to get back to the latter part of your question, to complete the full rollout by the end of this quarter. So I think that’s pretty much it when it comes to that distribution element that we can close the door on and really roll up our sleeves and get to work there.
Awesome. And then one more here, so for sales and marketing sounds like it’s sitting with enough capacity right now. So what about the tech and product development as far as are there any new hires needed here?
Yes, yes. We made one critical, one here right at the end of the quarter, a project manager and scrum leader, very senior individual to help drive some of these projects. We do have some open roles coming in the back half of the year there. We have got probably an additional 3 to 5 head sales counts as well planned for the back half of the year. So as we talked about, right, one of the areas of spend and investment for us is going to be continuing to push our sales and marketing, our product innovation team to be able to keep up and put the company in the best position possible.
Awesome. Thanks, guys. Congrats again on the quarter. I will be back in the queue.
Thank you very much.
[Operator Instructions] There are no further questions at this time. Excuse me, someone jumped into the queue. Our next question comes from Ian Cassel with MicroClub. Please proceed with your question.
Hi, Brian. Thanks for taking my question. Mine is about ACCESSWIRE. I saw that it grew around 19%, 20% year-over-year. I am just curious, the company, is that the type of a 20% growth, is that how investors should be thinking about ACCESSWIRE into the future? Or do you hope to accelerate that number? Thank you.
Yes, it’s a good question. And one should be satisfied with that, but I think that our shareholders who know us that we are were not. I candidly think the number needs to be about 30% to 35% to get to the growth numbers that we want to get to. As we were talking about in some of the comments and previous questions, areas of spend and investment definitely have to be there in order for that to happen, digital sales strategy as well as investing in headcount there to make that happen. And I feel confident that, that product brand as it sits, can achieve that, and we can get to those percentage growth numbers. And then with the add-ons of additional products can even accelerate that further in the future.
Excellent. Thank you.
Thank you, Ian.
Our next question is from Eric Weinstein with Chancellor Capital. Please proceed with your question.
Thanks. Fantastic quarter. In terms of ACCESSWIRE, I am guessing that normalized growth was actually better than reported growth because of probably still some headwinds from investor commentary from last year, maybe a couple of percent better. Do you have the number for what investment commentary was in last year’s second quarter?
Yes. We didn’t actually even talk about that. That’s a good point, but it was negligible, Eric, it was sub $50,000, right. It wasn’t as significant as one we thought. The materiality really fell off after Q1.
Great. And then in terms of increasing market share, getting the story out, how do you plan to do that in terms of investing in growth? Is it direct sales? Is it more spending on marketing and digital advertising? Or are there distribution partners in the works? What’s the plan for growth?
Yes. It’s kind of a bifurcated process. The first is not to continue to say the same thing, but digital sales and digital ad spend is a big part of how you achieve and find private companies. That’s where we have experienced success. To your second point, our agency business, we have a director of agency sales that’s entirely focused on newswire distribution to agencies across North America. We are beginning to build traction there. Starting to see some revenues come that are meaningful to our business. And so we are going to invest in additional headcount there to help that direct channel and build that agency program. We candidly believe that the $600 million plus spent in News that 20% to 25% is directed and controlled by agencies. And absent up until the last couple of quarters, we really haven’t been focused on the agency side of the business. So having additional head count there. And content marketing being driven to those folks, that’s going to be a second part. And the third part, I think, candidly, is still not ignoring our public company practice, right? We still do well there. And we believe our communication subscription led by newswire will continue to find ways of value into the small and mid-cap space as we continue to make headway with. So I think it’s a little bit of all three, but not definitely just one.
Great. Thanks a lot.
Thank you. Eric.
[Operator Instructions] Ladies and gentlemen, we have reached the end of the question-and-answer session. At this time, I would like to turn the call back over to your host, Brian Balbirnie.
Rob thank you. We appreciate it very much. You and the team do a fantastic job for us. And especially during this time of year when you are also terribly busy. So I appreciate that. I just wanted to close with one final comment. I begin to see several people talking about these tropical islands that are enticing remote workers to come stay for a year. Although very tempting, I am sure it would benefit our entire staff, and they would love it. But not to worry, it’s not something that we are going to spend money on there. But for those of you that do, please enjoy it, stay safe, and we will talk to you soon.
This concludes today’s conference call. You may disconnect your lines and have a great day.