Boxlight Corp Q4 FY2021 Earnings Call

Thank you and welcome to the Boxlight Fourth Quarter and Full Year 2021 Earnings Conference Call. By now, everyone should have access to the press release issued this afternoon. This call is being webcast and is available for replay. The remarks today will include statements that are considered forward-looking within the meaning of Securities Laws, including forward-looking statements about future results of operations, business strategies, and plans, customer relationships, market trends, and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management's current knowledge and expectations as of today, and are subject to certain risks and uncertainties and may cause actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in the company's most recent Form 10-K, Form 10-Q and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements. On this call, management will refer to non-GAAP measures that when used in combination with GAAP results, provide additional analytic tools to understand the company's operations. The company has provided reconciliations to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the Investor Relations section of the company's website at investors.boxlight.com. With that, I'll hand the call over to Boxlight's Chairman and Chief Executive Officer, Michael Pope.

Hello, everyone, and thank you for joining the call. Despite significant uncertainty in the world today, including growing concerns with the war in Ukraine, an ongoing battle with COVID-19, rising energy costs, rapid inflation, continued supply chain and logistics challenges, and overall volatility in global equity markets, we continue to see growing demand for our interactive solutions and our outlook is overwhelmingly positive. We have reported double-digit or greater revenue growth for five consecutive quarters, a positive profitability trend, and significantly improved working capital. Just two years prior, we reported the full-year 2019 results with $31 million in orders, $33 million in revenue, and an adjusted EBITDA loss of $6 million. We are a dramatically larger company today benefiting from both market expansion and strategic acquisitions. For the full year 2021, on a proforma combined basis with FrontRow, we generated $250 million in orders, $215 million in revenue, and $21 million in adjusted EBITDA. We are gaining on our key competitors with an aim to achieve the top industry position in each of our product categories. For the fourth quarter excluding FrontRow, we reported $44 million in revenue, exceeding our guidance of $40 million and delivered organic growth of 38% over the fourth quarter of 2020. The financial results of FrontRow were not included in our Q4 financial statements because we completed the acquisition on December 31. However, due to significant one-time costs incurred to complete the acquisition and related financing, we experienced inflated operating expenses. Additionally, supply chain and logistics costs remained high during the quarter, impacting our gross profit margin. As a result of these additional expenses, we reported a fourth quarter adjusted EBITDA loss of $2 million. We concluded the fourth quarter with an improved balance sheet, including $18 million in cash, $53 million in working capital, and $52 million in net assets. For the current year, we are experiencing stronger-than-expected customer order intake as well as growth in our sales pipeline, and have lifted our guidance for the full year to $250 million in revenue and $26 million in adjusted EBITDA. For Q1, we expect $44 million in revenue and $2 million in adjusted EBITDA. On December 31, we formally closed the acquisition of FrontRow, a leading provider of classroom audio and campus communication solutions for the education market. The purchase price was $23 million, net of $12 million in acquired working capital. Given the company generated greater than $7 million EBITDA for 2021 prior to transaction adjustments, the resulting valuation was very attractive at less than 4x EBITDA. We had identified classroom and campus audio solutions as our top growth opportunity, and FrontRow was a clear strategic fit. We are now integrating the company into our Boxlight ecosystem and benefiting from a broader solution suite along with our combined sales resources and global reseller channel. We are also in a position to expand our communication systems with fully integrated audio and video throughout an entire campus, a significant competitive advantage. For the full year 2022, we expect FrontRow to contribute greater than $32 million in revenue and $8 million in EBITDA. Also on December 31st, we secured a $58.5 million loan from White Hat Capital Partners, providing funding to complete the FrontRow acquisition, refinance existing debt with Sallyport Commercial Finance and Lind Global Asset Management, and allow for general working capital. The facility provides an additional $10 million in borrowing. During Q4, we published case studies to detail the successful implementation of Boxlight solutions in a broad range of education and enterprise environments. They included Quarrydale Academy and Cardiff Metropolitan University in the U.K., Ord Public Schools and Phoenix Unified High School District in the U.S., and STARCAR Rental in Germany. One of our case studies featured our strong relationship with Clayton County Public Schools, the fifth largest school district in Georgia. We are working closely with Clayton County to provide teachers and staff with customized training and support and have renewed our professional development contracts with the districts for a third year. Another success story, showcasing our utility in higher education featured Joseph Chamberlain College in the U.K., which upgraded from under-performing competitor screens to our impact interactive panels and CM series digital signage displays, along with Clevertouch live, our flexible and customizable content management platform. Our case studies and success stories reaffirm our dedication to being a trusted ally for our customers by providing turnkey solutions that are cutting-edge, comprehensive, and can be fully integrated into a diverse communication environment. Adding to the many accolades we have received from industry leaders, our Clevertouch brand won two awards during Q4: Best in show for the impact plus interactive touch screen and best in show digital signage for Clevertouch live. We continue to innovate and release several product updates and feature additions that differentiate us from the competition, including a new generation of interactive and non-interactive flat panels, enhancements to our MimioConnect blended learning platform, improved tools for our links whiteboard annotation and lesson plans software, the ability to access our Cleverstore 3 education app via a web browser, additional screen-sharing tools using Clevershare 5, and the addition of sensor technologies to monitor air quality in meeting spaces, among others. Of course, our success to this point along with our ability to continue to deliver growth and profitability is a direct result of our talented and dedicated employees and our supportive channel partners. With that, I will now turn the call over to our President, Mark Starkey, to provide additional insights.

Thank you, Michael. And I'd like to say Happy Saint Patrick's Day to everyone on the call. Q4 was another record quarter for Boxlight, and I would like to take this opportunity to thank all our staff and our customers who have helped contribute to our success during the quarter. During Q4, we booked $42 million of orders from our partners, up from $33 million for the same period last year. That represents organic growth of 25% year-on-year. For the full year, our order intake was $216 million compared with $57 million in 2020, representing 283% year-on-year growth. Some of our key orders received during the quarter included $3.1 million from Unit DK in Denmark, where we retain our number one market share position and 23% share of interactive displays. In the U.S., we had significant orders from Bloom for $2.6 million, Central Technologies based in Tennessee for $2.5 million, DNH Distributing for $2.2 million, $1.9 million from ACT Advanced Classroom Technologies, and $0.9 million from Data Projections in Texas, to name but a few. Overall, our market share of interactive displays in the U.S. has more than doubled over the past two years to greater than 7%, according to Futuresource. In Australia, we continue to hold the largest market share of 26% of total IFPD sold and received a further $2.2 million of orders from our partner, ASI. In France, we received $1.3 million of orders from our partner, Speechi, and in the UK, where we have 16% of the IFPD market share, we received orders from over 100 partners including $1.1 million from Roche AV and $0.9 million from IDMS. This highlights the quality and diversity of our customer base, especially across the U.S. and EMEA. We are also developing very successful partnerships in Australia, South Africa, and South America. During Q4, we also had our first major win in Japan where our Clevertouch solution was selected for ease-of-use with the student Apple devices. In Russia, we have temporarily suspended our business relationship with our partner in St. Petersburg. Although we do not expect any significant impact in our revenues and growth as a result of the war in Ukraine. As previously mentioned, we signed the exclusive contract with Trucks, now Bloom, which was a merger between our two largest partners, T&E and Trucks. The contract gives Bloom exclusive rights to sell Clevertouch in 49 of the 50 states in the U.S. and Canada. Q4 was our first quarter of trading with the new contract, with a number of salespeople who are actively selling Clevertouch in the U.S. increasing substantially from 40 heads to over 200 heads. I can now report that our sales pipeline has expanded significantly. We currently expense over $20 million of qualified opportunities. Clevertouch is now being actively sold in all 50 states, including Canada, whereas just a few months ago, Clevertouch was only present in 20 states. This means that both of our IFPD brands, Mimio and Clevertouch, are being practically sold across all states in the U.S. by our channel partners. The acquisition of FrontRow fits very well into our portfolio and gives us a fantastic audio solution for the K-12 marketplace. We expect that the acquisition will be accretive to our collective revenue and, more importantly, to our gross profit, which we anticipate will continue to improve throughout 2022. As a result of the increase in gross profit margin along with top-line sales growth, we expect $26 million in adjusted EBITDA this year, equating to more than 29% organic growth in adjusted EBITDA for 2022. In terms of end-users, we had another quarter of fantastic wins. One notable win was with Midland ISD in Texas, where we continue to roll out Clevertouch panels across the whole school district. In total, we expect Midland ISD to take over 4,000 screens. Midland continues to buy our solution predominantly because of our Clevermessage solution, enabling schools to push alerts across the district. In Switzerland, we received an order via our local partner for 150 86-inch impact plus screens from the city. They noted that the Clevertouch MDM solution was the main reason for selecting our screens. Our STEM business is also starting to gain traction as COVID restrictions begin to ease. In Poland, we received an order of 370 3D printers, including MyStemsKit platform, activity, and curriculum content to be supplied to schools across the country. There are 13,000 schools in Poland, and each school is required to have at least two 3D printers. Our solution was recommended to the Polish educational authorities. And we expect further significant orders in the coming quarters. Our software revenues continued to rise as we pursue a dual strategy of selling our million and Okta software on the SaaS and OEM agreements to customers such as Samsung, new line, and school districts, as well as embedding our Mimio and Clevertouch software solutions into our own products. Our OKTOPUS OEM software revenues increased from $0.7 million in 2020 to $1.3 million in 2021, an increase of 90% year-on-year. Sales of Mimio software increased from $96,000 in 2020 to $1 million in 2021 following our first order of MimioConnect in March 2021. Combined, our software revenues grew by over 200% from $0.8 million in 2020 to $2.4 million in 2021. We also launched a new cloud-based version of links whiteboard in September 2021 and have had an unprecedented response. Using Google Analytics, we've noted that in the past five months since launch, we have had 523 thousand live sessions on links, with an average duration of 54 minutes each. That equates to more than 53 years of lessons being delivered on our platform in the first five months since link whiteboard was launched. We are therefore confident of delivering more than one million lessons over the linked platform in its first year. And we will look at the best ways to monetize the solution moving forward. Ultimately, the fact that we own a growing suite of software IT enables us to differentiate our products from the competition. In summary, Q4 was a very strong quarter in terms of order intake and revenue, and our solution is leading in the market. We continue to develop our key partnerships and the lines across the globe and I look forward to another record quarter in Q1 with that, I will now turn the call over to our CFO, Patrick Foley.

Thanks, Mark, and good afternoon everyone. To further expand on what you've already heard from Michael and Mark, I would like to add a few figures to provide context to Boxlight's international operations. Our total revenue in Q4 was $44 million. EMEA was 55%, or $24.3 million, of which the UK represented 34%. The Americas accounted for 38% or $16.5 million and the rest of the world was 7%, or $3.2 million, which was mainly Australia. The top ten customers represent approximately 44% of total sales in Q4, with the single largest customer accounting for approximately 9%. The top 20 customers represent approximately 57%, where the mix is slightly different from previous quarters where this was running around 66%. For our sales product mix and margins in Q4, hardware remained the largest proportion of total revenues at 91%. These were largely sales of interactive flat panel displays, which represented 90% of this total with related accessories being the balance of 10%. The balance of all our total revenues came from software, services, and STEM solutions. Gross margin for the quarter was 21.2%. The IFPD margin was about 20%, which would have been slightly higher; however, as previously reported, with increased global shipping costs, where we're still seeing four times normal rates, have reduced margins by up to four percentage points. We anticipate that the higher costs will remain. As noted in previous quarters, we have experienced some supply chain challenges, including interruptions to inventory production schedules, as well as continued delays in shipping and receiving goods. We've seen manufacturing costs increase due to these issues, which have impacted gross margins. In Q4, the education sector represented 91.5% of all interactive display sales, with about 73% of these being 75-inch panels and 86-inch panels, which follows the consistent trend we have seen throughout 2021. I will now review our fourth quarter results, the financial results for the three months ended December 31, 2021. Revenues for these three months were $44 million, compared to $31.9 million for the three months ended December 31, 2020, resulting in 38% organic growth. Gross profit for the three months ended December 31, 2021 was $9.3 million, compared to $3.6 million for the same period in 2020. The gross profit margin for these three months was 21.2%, an improvement of 100 basis points compared to the three months ended December 31, 2020. Gross profit margin adjusted for the net effect of acquisition-related purchase accounting was 28.1%, compared to the 26.4% reported for the three months ended December 31, 2020. As reported in previous quarters this year, gross margins have been adversely impacted by approximately four percentage points due to increased freight and customs costs caused by supply chain challenges associated with the effects of COVID-19. Additional pressure on margin has been seen on the cost of manufacturing, which has led to an adverse impact of approximately 4% in the quarter. Total operating expenses for the three months ended December 31, 2021 were $14.9 million compared to $11.1 million for the same quarter in 2020. The increase primarily arose from headcount and other related overhead expenses and significant one-time costs related to the FrontRow transaction and WhiteHawk financing. Other income expense for the three months ended December 31, 2021 was a net expense of $2.2 million, compared to a net expense of $1.9 million for the same period in 2020. Other expense increased primarily due to $1.6 million losses recognized upon the settlement of debt obligations. The company reported a net loss of $7.1 million for the three months ended December 31, 2021, compared to a net loss of $8.6 million for the same period in 2020. The $7.1 million loss includes more than $1.5 million of costs associated with WhiteBoard financing and the FrontRow transaction, as well as the retirement of the Lind and Sallyport. The net loss attributable to common shareholders was $7.5 million and $8.9 million for the three months ended December 31, 2021 and 2020, respectively. After drafting the fixed dividends to Series B preferred shareholders, which was $317,000 in 2021 and $338,000 in 2020. Total comprehensive loss was $6.9 million and $3.2 million for the three months ended December 31, 2021 and 2020, reflecting the effect of cumulative foreign currency translation adjustments on consolidation, with the net effect in the quarter of a $275,000 gain and a $5.3 million gain for the three months ended December 31, 2021 and 2020, respectively. The EPS for the three months ended December 31, 2021 was a $0.11 loss per basic and diluted share compared to a $0.17 loss per basic and diluted share for the three months ended December 31, 2020. EBITDA for the three months ended December 31, 2021 was a $5.1 million loss compared to a $6.4 million EBITDA loss for the same period in 2020. Adjusted EBITDA for the three months ended December 31, 2021 was a $2 million loss compared to a $356,000 loss for the three months ended December 31, 2020. Adjustments to EBITDA include stock-based compensation expense, gains/losses recognized upon the settlement of certain debt instruments, gains/losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with acquisitions. At December 31, 2021, Boxlight had $17.9 million in cash and cash equivalents, $53.4 million in working capital, $51.6 million inventory, $201.4 million in total assets, $52.5 million in debt resulting from our new WhiteHawk debt facility, net of debt issuance costs of approximately $7.1 million, $53.3 million in stockholders equity, 63.8 million common shares issued and outstanding, and 3.1 million preferred shares issued and outstanding. For the 12 months ended December 31, 2021, revenues were $185.2 million compared to $54.9 million for the 12 months ended December 31, 2020, resulting in a 237% increase due primarily to the acquisition of Sahara in September 2020 and increased demand for our solutions. Gross profit for the 12 months ended December 31, 2021 was $46.5 million compared to $9.9 million for the 12 months ended December 31, 2020. The gross profit margin for the 12 months was 25.1%, compared to 18% for the previous year. Gross profit margin, adjusted for the net effect of acquisition-related purchase accounting, was 26.8% compared to 27.1% reported for the 12 months ended December 31, 2020. As previously reported, gross margins have been adversely impacted by approximately four percentage points due to increased price and customs costs caused by supply chain challenges associated with the effects of COVID-19, and this is anticipated to continue into 2022. Additional pressure on margin has been seen on the cost of manufacturing due to component shortages, which have had an adverse impact of approximately 3.9% in the 12 months to December 31, 2021. Total operating expenses for the 12 months ended December 31, 2021 were $49.1 million compared to $22.6 million for the 12 months ended December 31, 2020. The increase primarily resulted from additional overhead costs associated with the full-year cost of the acquired Sahara operations. Other income and expenses for the 12 months ended December 31, 2021 was a net expense of $7.9 million compared to a net expense of $4.3 million for the 12 months ended December 31, 2020. The increase in other expense was primarily due to $4.9 million of increased expense due to losses recognized upon the settlement of certain debt instruments. The company reported a net loss of $13.8 million for the 12 months ended December 31, 2021, compared to a net loss of $16.2 million for the 12 months ended December 31, 2020. The net loss attributable to common shareholders was $14.7 million and $16.5 million for the 12 months ended December 31, 2021 and 2020, respectively. After deducting fixed dividends to Series B preferred shareholders of $1.3 million in 2021 and a fair value reevaluation deemed contribution of $367,000 following the redemption amendment with the Series B shareholders, which was signed June 14, 2021. Total comprehensive loss was $15.3 million and $10.9 million for the 12 months ended December 31, 2021 and 2020. Reflecting the effect of cumulative foreign currency translation adjustments on consolidation, with the net effect year-to-date of a $1.5 million loss and a $5.2 million gain for the 12 months ended December 31, 2021 and 2020, respectively. The EPS loss for the 12 months ended December 31, 2021 was $0.23 loss per share compared to a $0.39 loss per share for the 12 months ended December 31, 2020. EBITDA for the 12 months ended December 31, 2021 was a gain of $66,000 compared to an $11.6 million loss for the 12 months ended December 31, 2020. Adjusted EBITDA for the 12 months ended December 31, 2021 was $12.1 million, compared to a loss of $1 million for the 12 months ended December 31, 2020. Adjustments to EBITDA include stock-based compensation expense, gains/losses recognized upon the settlement of certain debt instruments, gains/losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with acquisitions. And with that, we'll open up the call to questions.

Ladies and gentlemen, the floor is now open for questions. Please hold a moment while we poll for questions. Your first question is coming from Scott Buck with H.C. Wainwright. Your line is live.

Hey, guys. It's Scott Buck. How are you doing?

Hello, Scott.

Very good. Very good.

I appreciate the time. My first question, I'm just curious if you could talk a little bit about the leverage you might have to pull to combat not just the supply chain headwinds, but now we're dealing with inflation as well?

Yes, both are challenges. We've been dealing with supply chain challenges for a couple of years now. So that's something that we feel like we have a relatively good handle on, on what the expectations are. The hope is that will start to improve, but we're not planning on that in the near term, but we're managing that with better planning. In addition to that, with the new credit facility we brought on, you remember we brought on WhiteHawk as our new lender, $15.5 million was the closing, but we have access to another $10 million facility to help with growth, and that's going to help us start to bridge that gap. We are turning the corner. Up to this point, we've gotten to where we are, even with dramatic growth, needing to spend cash to get where we are. This is the year where we start to turn the other way, and we're going to start to bring in positive cash flow. Cash from the business will start to fund the business moving forward.

That's helpful, Michael. And on the competitive environment, very nice-looking guide for 2022. Do you guys have a sense of what is the pie getting larger versus you guys taking a larger piece of the pie?

Yes, we're seeing both. The market is definitely expanding. Over the past year, we experienced significant growth, particularly in interactive flat panels, which represent the bulk of our business, but there has also been growth in other areas. This trend is expected to continue this year. According to research from Futuresource Consulting, they anticipate growth of nearly 20% in the U.S., with EMEA seeing around 10% growth. Globally, we are looking at growth in line with industry expectations. We believe we can grow alongside the market and potentially at a faster pace if we capture market share from our competitors. We have doubled our market share in recent years, currently holding over 7% of the total interactive flat panel display market, not including China. We aim to exceed 10% within a few years, possibly reaching the teens or even 20%, in line with where our largest competitor is positioned.

That's really helpful color. And then last one for me, just on the operating costs going forward. What should we think of it kind of run-rate OpEx here, maybe Q4 pulling out those one-timers?

Yeah. There will be several different factors to consider in terms of when you see the financials we are publishing. The run rates going forward will have a greater amortization piece now included in our OPEX as we move forward post the completion of the FrontRow transaction. So we will see increased OPEX; however, from an adjusted EBITDA perspective, we will be backing out. So we'll remain pretty consistent quarter-on-quarter. Some items in Q4 were slightly elevated, so our normal range going forward will be slightly below that on a quarter basis in terms of normal OPEX, but there will be increased amortization as a result of the recent purchase.

Got it. That's very helpful. I appreciate the additional color, guys. Congrats on the quarter.

Thank you.

Thank you, Scott.

Your next question is coming from Byron Meo with 1031 Private Exchange Group. Your line is live.

Hi. Congratulations on your increase in sales over projections. That's very nice. I know you expected the gross margins to improve as your sales volume and economies of scale progressed. I'm wondering, looking over the next year or two, where do you see gross margins once supply is remedied?

Well, I appreciate the question, Byron. A couple of thoughts on that: One is as a business, we're focusing more on our solutions outside of interactive flat panels. Today, IFPDs form around 80% of our business, and we're looking at selling much more of our accessories, including the audio solution we brought on with FrontRow, and selling other classroom solutions. Beyond that, we have our software solutions in STEM. We have several solutions there and a professional services team, but all these other solutions are high-margin, often 40 plus points margin or even 50 plus points margin. So as our product mix improves and we're less concentrated on interactive flat panel displays, our margins will actually improve, which is one focus. A second is growing our enterprise vertical. Today, we're 90% in education. We're focusing more on enterprise, which is a growing opportunity with much higher margins typically, often around 50 points, even on hardware and enterprise. So as we become more successful, you'll see margins improve. Additionally, with scale, we are going to be better at buying, which will help as we build out our broader solutions. We are looking to increase prices wherever we can as that will also contribute to margin improvement. We hope that as the economy improves, production costs and logistics costs come down, that this will affect margins as well. If you're looking at a couple of years, we really should be north of 30 points, and ideally closer to around 40 points of margin in the future, as we optimize with the total solution we are selling today.

That's a great answer. Thank you. Just one last question.

Michael, I'd like to add to that as well.

Yeah, please do.

Just quickly. We just followed off the two great cases from the completion of FrontRow. Looking at the financials, you will see in the margin mix moving forward is a very profitable business. So the margin mix will lift naturally with that inclusion, as well as we move forward. Secondly, we have made previous comments about increasing prices, which we've implemented and are now improving margins. Our purchasing power, due to the volume of our interactive flat panels sold globally, has increased, giving us good leverage for ongoing discussions with our manufacturer.

Thank you. And one last question for you. Growth through acquisitions. Are you guys eyeing any future potential acquisitions like FrontRow, anything on the table possibly going forward to expand your horizontal or vertical?

Yes. We have come a long way over the last couple of years, growing from a $30 million company to now a $250 million company. With that scale, we attract much more attention in the industry. We're seeing a lot more opportunities than we did in the past. I would say that on a weekly basis, if not every couple of weeks, we see potential new opportunities; this is not necessarily because we are pursuing it, but companies are coming to us to join our growth. We're not actively looking right now as our focus is on taking advantage of the companies we have brought together, driving strong revenue growth, and improving profitability. However, if the right opportunity arises, we would certainly consider it, and the economics would also need to be favorable, like they were with FrontRow, where we acquired them for less than four times EBITDA, which will pay for itself quickly.

Thank you.

What we've seen with FrontRow is beneficial. We can integrate solutions from FrontRow with our existing offerings. This synergy creates more value, enabling us to provide integrated solutions that differentiate us in the marketplace. The FrontRow acquisition has just been completed, and we are very positive about what will happen in the next 12 months.

Your next question is coming from Brian Kinstlinger with Alliance Global Partners. Your line is live.

Great. Thanks. Since you didn't file your Super 8-K, can you remind us what the gross margins are for FrontRow? And then what is the combined gross margin implied in your $26 million EBITDA guidance?

Yes. The gross margin on our FrontRow acquisition is approximately 50% and you'll see it in the historical financials, which will continue going forward. Based on the mix, that will lift the reported overall margins to about 27%. As we improve margins on the interactive flat panels and include other products, that will improve as well.

Great, that's helpful. You mentioned your new exclusive agreement with Trucks, which started at the beginning of October. It's been nearly six months, so I'm curious how that's working. First, are you gaining market share from the truck sales? Secondly, how do you see trucks selling your solution versus others? Are they selling yours more, are they even selling competitors' solutions now that they are differentiating? Just take us through how you're seeing that market play out.

Michael, would you want to address this one, or should I take it?

Go ahead, Mark, and I will jump in as needed.

Yes, it's been five months since we signed an exclusive contract with Bloom. We needed to work out the details of implementation. Previously we had about 40 salespeople from T&E selling Clevertouch, and now we are working with over 200 salespeople from Bloom. They sell not just Clevertouch but also other competitive screens. We are seeing significant volume from these salespeople, with over $20 million in qualified leads in our pipeline. I'm optimistic about this partnership with Bloom, and we have huge opportunities there.

Can you remind us what you quantify actually the revenue from your trucks and current relationships in 2021? You mentioned $20 million of qualified leads. How does that compare to actual revenue generated in 2021 format?

I have to pull that number; it would take time to get back to you on that.

Brian, to give you an idea, Bluum, as they are now known, was approximately 9% of all sales in Q4. They were our largest customer then. For the full year, they will account for a single-digit percentage, but it will be significant. It will be likely high-single-digits as a percentage of total sales.

I assume that was much lower if we look at all of 2021, is that accurate?

It would have been significant for both full years, but it is growing. We set growth targets with Bluum, and they are hitting those targets, so we are seeing good growth. However, it was still a lower percentage for the full years of 2021 and 2020.

The $20 million outlook reflects what we see over the next three to four months in terms of order intake, right? So it does not reflect the full-year outlook.

Thanks. I appreciate the clarification. Lastly, since COVID, we've talked about the federal stimulus money—there's been so much money sent to K-12. Where are we with that? Are we still looking at another year or two years’ worth of this being a catalyst in the United States? Just walk us through the timeline.

Yes, right. The stimulus money that was directed to education through ESER funds was implemented in three tranches. The bulk came in ESER 3, and that money is being spent now. We are getting orders from districts that indicate they are utilizing that funding to accelerate technology implementation. The expectation is that these funds will last through 2024. It could potentially extend beyond that, as deadlines have been extended on previous tranches. Most projections indicate high growth in sales of educational technology in the U.S. over the next couple of years. However, it is expected that there may be contractions in 2025 as spending normalizes.

Is there a number such as there's $X billion in stimulus money over that time period, or is that unclear how much is available?

Yes, it's clear. The total education funding approximately amounts to $190 billion. The largest portion is for K-12, with $13 billion, $54 billion, and $122 billion allocated through varied ESER funds. So, over the timeline, it's about $280 billion for education.

When was that $120 billion released?

That would include the three tranches. March 2020 provided $13 billion, December 2020 brought $54 billion, and March 2021 allocated the $168 billion. So, roughly $280 billion in total aimed at K-12 education.

A key aspect to highlight, Brian, is, as Michael mentioned, the significant growth in the education sector over the next two years. Additionally, we are already noticing the corporate environment taking up technology. More meeting spaces are transitioning from non-interactive to interactive screens due to the rise of remote collaboration tools like Teams and Zoom. We expect the market in enterprise will become as large as education over the next three to five years.

Yes.

Thank you for the conversation and insight.

We have no further questions from the lines at this time. I would now like to turn the floor back to Michael Pope for closing remarks.

Great. Thank you, everyone for joining the call and for your support during the 2021 Earnings Call. We look forward to speaking with you again in May when we report our Q1 2022 results.

Thank you, ladies and gentlemen. This concludes today's conference call. You may disconnect at this time, and have a wonderful day. Thank you for your participation.