Nano-X Imaging Ltd. (NNOX) Earnings Call Transcript & Summary

Good day, and thank you for standing by. Welcome to the Nanox First Quarter 2021 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Cavanaugh, Investor Relations. Please go ahead.

Good morning, and welcome to the Nano-X Imaging First Quarter 2026 Investor Call. Earlier today, Nano-X Imaging Ltd. released financial results for the quarter ending March 31, 2026. The release is currently available on the Investors section of the company's website. With me today are Erez Meltzer, Chief Executive Officer and Acting Chairman. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements regarding the company's financial results, research and development, manufacturing and commercialization activities regulatory process and clinical activities and other matters. These statements are subject to risks, uncertainties and assumptions that are based on management's current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing the company's views as of any subsequent date. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of the non-GAAP to GAAP measures is provided with our press release, with the primary differences being non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses non-GAAP general and administrative expenses and non-GAAP gross loss per share. With that, I'd now like to turn the call over to Erez Meltzer.

Good morning, and thank you for joining us today for the Nano-X Imaging First Quarter 2026 Financial Results Conference Call. I'm pleased to report that as previously indicated, we are beginning to see early signs of revenue from Nanox.ARC. We are seeing momentum across multiple fronts from record deployments to expanding partnerships, supporting our technology and business model. We have worked diligently over the past 2 years to place a new technology in the medical imaging market. This process takes significant time and effort. We have learned mainly lessons during this time and we are using those lessons learned to help reshape our go-to-market strategy. Specifically, we have made various adaptations to our company strategy and operating model to better position us for long-term success. Changing behaviors is a long process, and we need to educate customers not only on the medical utility of the Nanox systems but also demonstrate while using them will benefit their practices financially. Here are some of the changes we have implemented based on lessons learned. First, we have restructured our U.S. commercial model to emphasize partnerships. This multichannel approach supplements our direct sales efforts and provides broader market coverage more efficiently. In the first quarter alone, we secured multiple commercial agreements in the U.S. with established medical equipment distributors who have existing relationship and credibilities in the market. Second, we are prioritizing deployments of Nanox.ARC systems at high visibility reference sites like [ RadNet ], the largest outpatient imaging center operator in the United States, where it is now commercial use and integrated into routine clinical workflows. Third, we created the Nanox imaging network to seek out business segments, which offer potentially higher reimbursement rates such as workers' compensation groups and concierge medical providers. Fourth, we initiated a restructuring process designed to optimize our cost structure, improve capital efficiency, reduce burn rates and better align our operations with our long-term business objectives. I will share more details about all of these changes in my remarks today. While shifting the standard of care in medical imaging is a long-term endeavor, we believe these adjustments will better align our resources and position us to capitalize on the substantial market opportunity of Nanox.ARC. With that, let me share some of the accomplishments we have achieved since our last call. We are seeing the early signs that our multichannel model is beginning to work with deployments increasing, scan-based activity started to contribute to revenues increased scanned volume at active sites and partners beginning to generate pipeline and initial commercial activity and engage directly with customers to support sales and adoption. The Nanox imaging network proof of concept is also beginning to contribute to our progress. As a reminder, this is a focused initiative targeting segments such as workers' compensation, concierge medicine and outpatient specialty care where positive reimbursement development may support higher [ first ] scan pricing. We are exploring opportunities across three segments: a large integrated health care campus, an independent rehab and pain clinic and an orthopedic physicians practice. These engagements will support our strategy of driving adoption across enterprise specialty outpatient and physician-led settings. Important, I'm very excited to share a strategic deployment. The [ Nanox RX ] system has been operational for several months at the [ RadNet ] sites. [ RadNet ] is the largest outpatient imaging center operator in the United States, and has deployed a Nanox.ARC system and one of its facilities where it is now in commercial use and integrated into routine clinical workflow. Based on this experience, we are exploring opportunities for expanded deployment across additional outpatient imaging centers and for clinical research, including early lung nodule detection. We believe this represents an important step in demonstrating the Nanox.ARC clinical value in a major outpatient imaging settings and we are excited to continue this collaboration. I'd also like to talk about how we are working to get our growing commercial relationship activated. In the first quarter, we secured multiple commercial agreements in the U.S. with established medical equipment distributors that have a strong market presence, credibility and existing customer relationships. Collectively, these agreements represent the potential for approximately 360 CapEx system sales over the next 2 or 3 years. During the second quarter, our primary focus was on onboarding these partners, training their teams, aligning go-to-market activities and building the operational foundations required to support commercialization. We are now beginning to see the early results of these efforts, including initial leads for the Nanox.ARC and engaging with their customers and driving early commercial opportunities. That said, commercialization in medicine imaging takes time the transition from signed agreements to active sales installation and revenue recognition depends on various factors that may affect commercialization, including site readiness regulatory processes. For example, some segments may involve additional regulatory and [ SOC 2 ] requirements. We've also advanced partnerships in Latin America where we signed a distribution agreement with [ Topmed SAC ] in Peru late May. Additional agreements are in advanced stages of negotiation. Importantly, these agreements are already contributing to a growing pipeline of potential system deployment and expanded deployment opportunities, generating new sales leads, which have resulted in new discussions with medical imaging providers. We expect to announce more partnerships soon, further existing our commercial reach and market penetration. We believe these highly focused medical imaging partners will play a key role in accelerating the commercial adoption of Nanox.ARC and helping us reach an inflection point in the growth of our business. Indeed, we are now leading the shift towards a more CapEx-driven commercial model, supported by our partner network and initial purchase activity. We believe this evolution can contribute to revenue growth while helping reduce future cash needs and enhance our path to breakeven. And finally, let me also provide an update regarding our South Korean operations. As previously announced, we initiated a restructuring process designed to optimize our cost structure, improve capital efficiency and better align our operations with our long-term business objectives. We have now commenced the implementation of that restructuring plan. At the same time, we are evaluating additional alternatives to further optimize the economics of our South Korea operation and maximize the value of the related assets. These alternatives include a broader restructuring initiative that originally contemplated a potential sale of South Korea operations and related assets or an orderly wind down of all the parts of those operations. No decision has made at this stage and our evaluation remains ongoing. What is important is that we are taking a disciplined approach to capital allocation and operational efficiency and are evaluating all available options throughout the lens of a long-term shareholder value. Looking ahead, we remain focused on three key priorities: continuing to scale our deployment numbers, converting our pipelines of direct sales and partnerships discussions into purchase order and signed agreements and supporting our partners to drive system sales and utilization. The foundations we have built positions us well for sustained growth throughout 2026 and beyond. We believe we are at the beginning of transforming access to medical imaging globally and the progress we have made this quarter reinforce our confidence in the path ahead. Turning to our AI business. I'd like to update you on the previously announced clinical trial partnership with [ Cedar-Sinai ] in Los Angeles. This strategic health system partnership continues to support our clinical validation efforts. Based on the retrospective pilot at [ Cedar-Sinai ], we created and return on investment calculator for the downstream economy of follow-ups for the patients that will be flagged by the AI cardio solution. This calculator shows that analyzing a random group of 5,000 cases we can expect almost 1,800 patients with the RC classification, out of which 49 will be categorized as severe cases. This is expected to generate $3.8 million in the first year from downstream follow-ups to the medical center. More importantly, identify severe cases early supports earlier clinical intervention, which may help improve patient outcomes. For another AI customer update, following a highly successful prospective pilot and supported by a paper presented at the World Congress on osteoporosis last month, the 259 General Air Force Hospital in Greece, has transitioned to a revenue-generating commercial deployment. We view this as the meaningful milestone achieved in advancing the commercial rollout of our AI solutions. Highlights from the paper demonstrates that the AI bone solution was significantly better at correctly flagging vertical fractures and estimated that utilizing the solution showed a 14-fold increase in identified fractures compared to radiologists with no solution and a nearly fivefold improvement in endocrinologists who utilize the solution to evaluate images. Beyond expanding our AI capabilities, we have begun to realize some of our anticipated synergies and between Health IT, Nanox.AI, Nanox.ARC and U.S. [indiscernible]. As an example, we have recently completed integration and performed a customer demo utilizing non-algorithm with a health IT partner [ PacSystems ]. We have presented the Nanox.ARC to multiple health IT customers, and we have gained new business for both U.S. [indiscernible] from Health IT by partnering together on a new opportunity, and the flow of opportunities is also coming back to IT from its sister divisions. The pipeline of cross division led generation is growing by the week. Regarding our new Health IT business, year-to-date, we've executed contracts with several new clients and received additional services add-on orders from existing clients. In terms of implementation, we have had customer solutions go live this year. This includes some sales made pre-acquisition that have since been implemented, and I want to confirm that we have begun to receive monthly recurring revenues from those accounts. Next month, Nanox.AI will be featured at the [ SSCP ] Annual Scientific Meeting in San Diego, where Dr. Blast a member of our Advisory Board will present early results from our multisite AI-informed clinical trial. The data highlights two important points. First, that AI-enabled opportunistic coronary calcium detection can help drive earlier preventive care; and second, that our cardiac solution, also known as Health CCS performs reliably across multiple U.S. clinical sites and real-world workflows. Together, these studies built the case that AI-enabled opportunistic CAC detection is both clinically reliable and clinically meaningful. I'd like to share a few additional updates on our OEM relationship and pursuits. Varex tubes are undergoing the final integration process to become our main X-ray tube source for the [ Nanox RX ] systems. Regarding the Oak Ridge National Laboratory prototypes, tube assembly has begun, and we anticipate testing completion and delivery in early Q3. We have initiated Nanox technology assessments with multiple global industry leaders in the security and inspection fields and we'll update as soon as appropriate. Overall, interest in the Nanox chip source technology remains quite strong. And as stated, we are in various stages of development, fabrication, testing and technology assessment on multiple fronts. Before I hand the call over to our financials, I would like to address our previously issued 2026 revenue targets. Since providing this target earlier this year, we have continued to advance our commercialization efforts across the business and have made meaningful progress across a number of commercial, operational and strategic initiatives. At the same time, we have experienced longer-than-anticipated time lines between the execution of commercial agreements, system deployment, activations, commencement of services and the related recognition of revenue. As we have gained additional experience across multiple markets and customer deployments, we have seen the timing of revenue generation and revenue recognition can vary significantly and is influenced by a number of factors that are often outside of our control, including site readiness, infrastructure, completion, customer implementation schedules activation timing, utilization ramp-up and third-party execution. While we remain encouraged by the customer interest, commercial activity and market adoption, these factors can materially affect the timing at which revenue is recognized in a particular reporting period. As a result, we no longer expect to achieve the revenue target previously announced for 2026. Importantly, what we are seeing is not a reduction in our confidence in the market opportunity, customer demand or the value proposition of our solutions. We continue to expand our installed base, advanced customer implementation and execute against commercial agreements that contemplate the deployment of hundreds of systems over the coming years. We also continue to grow and advance our businesses across imaging, AI, teleradiology, OEM and health IT. Based on our experience to date, the variability associated with deployment time lines, implementation schedule and the revenue recognition, we have concluded that the annual revenue guidance is not currently the most effective way to evaluate the progress of our business. Accordingly, we do not currently intend to provide annual revenue guidance going forward. Instead, we intend to focus investors on the operational, commercial and strategic milestones that we believe are more meaningful indications of our progress, including deployments, activations, utilization growth, customer adoption, service expansion and execution against our commercial agreements. We remain highly confident in the long-term opportunity across our imaging, AI, teleradiology, OEM and health IT businesses. We believe the progress we have made to date positions us well for long-term growth, and we remain focused on disciplined execution and building long-term shareholder value. With Nanox getting closer to an operational inflection point, let me step back and remind the challenges that we set out to address and vision behind it. Our vision is to expand access to medical imaging and support a shift toward more preventive health care. Today, imaging remains constrained by cost, complexity and infrastructure, which limits access across many care settings. To address this, we developed our proprietary digital x-ray technology, which enabled the cloud connected and AI compatible Nanox.ARC systems and support broader deployment and simpler operation across a range of clinical environments. With development behind us, our focus is now on execution converting pipelines into deployments activating sites and integrating systems into routine clinical use throughout our direct efforts and partner network. To better support our growth, we have recently taken steps to streamline the organization and align our cost structure with this stage while remaining fully focused on commercialization. Going forward, progress will be driven by continued deployments, site activity and expansion throughout our partnerships. Taking together the progress we have made to date across deployment partnerships and operational alignment is beginning to translate into a more visible and developing commercial trajectory. Before we begin the financial review, I'd like to note that as previously announced, our CFO, Ran Daniel is in the process of transitioning out of his role. As far as this transition, [ Guy Nathan ] on will be joining the company and is working alongside the team to ensure a smooth handover. Today, financial review will be presented by me and [ Guy ] is with me here today. Revenue for the reported period was $4.3 million compared to revenue of $2.8 million in the comparable period. All figures refer to the quarter ended March 31, 2026, and all comparable figures refer to the comparable quarter of 2025, unless otherwise stated. The increase largely stems for an increase of $0.9 million due to the consolidation of [ Aso ] Healthcare IT, now Nanox Health IT and an increase of $0.5 million in our revenue from our teleradiology services. Gross loss for the reported period was $2.6 million on a GAAP basis compared to a gross loss of $3 million non-GAAP gross loss for the reported period was $0.2 million as compared to a gross loss of $0.4 million. Revenue from teleradiology services for the reported period was $3.1 million compared to revenue of $2.6 million. The company's GAAP gross profit from teleradiology services for the reported period was $0.7 million gross profit margin of approximately 24% compared to $0.4 million, gross profit margin of approximately 17%. Non-GAAP gross profit of the company's teleradiology services was $1.1 million, gross profit margin of approximately 36% and compared to a gross profit of $1 million, gross profit margin of approximately 39%. The increase in the revenue was mainly attributed to our customer retention and increased volume of the company reading services. During the reported period, the company generated revenues to the sales and deployment of its imaging systems, which amounted to $1,067 compared to revenue of $3,000. The revenue stems for the sales and deployment of to now's [ Connex ] units in the amount of $1,018 deployment of its imaging systems in the amount of $11,000 and the revenue due to our OEM services in the amount of $38,000. The company revenues from its AI and software solutions for the reported period was $1 million compared to revenue of $0.2 million revenue of $0.9 million was generated in the reporting period by Nanox Health IT. The company gross loss from its AI and software solutions for the reported period was $1.7 million on a GAAP basis compared to a gross loss of $1.9 million. Non-GAAP gross profit to the company's AI and software solutions for the reported period was $0.3 million compared to $81,000. Research and development expenses net for the reported period were $4.8 million compared to $5 million. Sales and marketing expenses for the reported period were $2.2 million compared to $0.9 million, mainly due to an increase of $0.8 million in salaries and wages and $0.3 million in sales and marketing activities. General and administrative expenses for the reported period was $5.2 million compared to $5.1 million. GAAP net loss of the reported period was $14.3 million compared with a net loss of $13.2 million, the increase of $1.1 million was largely due to the increase of $0.9 million in operating expenses. Non-GAAP net loss attributable to the ordinary shares for the reported period was $11.1 million compared to $9.4 million mainly due to an increase of $1.4 million in the non-GAAP operating expenses. Please refer to the non-GAAP adjustments which were included in the financial portion of the PR that we have issued to date. Turning to our balance sheet. As of March 31, 2026, the company had total cash and cash equivalents, short-term deposits long-term restricted deposits of $44.2 million compared to $60 million as of December 31, 2025. over the reported period, the company experienced negative cash flow from operations of $14 million and an additional $1.8 million on a purchasing property and equipment, mainly for the building of [ ARCX ]. Management expects that the company's cash and cash equivalent and net deposits as of 31st of March 2026 are not sufficient to support the company operations under its current operating plans for at least 1 year, from the date of the press release. These factors raise substantial doubt as to the company ability to continue on an ongoing concern. On a preliminary annual [indiscernible] basis, the company estimates that its cash and cash equivalent net of short-term bank loan to be approximately $27 million as of the date of the press release, management in continuing in the process of seeking to raise funds in the private equity and capital markets as the company will need to finance its operations. However, there is no assurance that the company will be able to obtain such funding to the extent additional funding is provided by the sales of security for the insurance -- the issuance incurrence of the indeptable -- indebtedness ordinary shareholder ownership, interest may be diluted and the terms of the financing may adversely affect rights of ordinary shareholders, imposed restrictive covenants on the company and result in an increased fixed payment obligations. In order to finance our operations, we may also raise funds through collaborations, strategic partnerships or marketing, distributing distribution of our licensing arrangement with the third parties, which may require us to relinquish valuable rights to our technologies, future revenue streams, research programs or products or grant license on terms that may not be favorable for us. In addition, the company is exploring the use of mitigation actions such as [ spostolic ] expenses that are not based on firm commitment. If we're unable to raise additional funds, when needed, we may be required to delay reduce or eliminate our product development or future commercialization efforts or grand track to develop market products that we would otherwise prefer to develop market by ourselves. The consolidated financial statements do not include any adjustments that may necessary should the company be unable to continue as a core concern. We ended the quarter with property and equipment net of $30.6 million compared to as of December 31, 2025. The increase was mainly attributable to purchase of property and equipment in the amount of $1.8 million during the reported period. We had approximately 69.6 million shares outstanding as of March 31, 2026 and December 31, 2025, respectively. During the first quarter of 2026, the company granted officers, employees and consultants of the company a total of approximately 1 million RSUs. And to the concluding remarks. While commercialization has not gone as rapidly as had planned 2 years ago, we remain confident in the ultimate success of the comprehensive suite of Nanox Rx solutions. Looking ahead, we remain focused on three key priorities: continuing to scale our deployment numbers, converting our pipeline of partnership discussions into signed agreement and supporting our partners to drive system sales and utilization. The foundations we have built in the beginning to result in growing deployments and positions us well for continued progress through 2026. We remain focused on the execution and believe we are building the right framework to support sustained commercialization over time. We believe we are at the beginning of expanding access to medical imaging and the progress we have made this quarter reinforces our confidence in the path ahead. Thank you for joining our call today. And as always, we appreciate your continued support. Operator, please open the call to questions.

[Operator Instructions] Our first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann & Company.

So two from my end. Firstly, could you talk about the teleradiology business? And you did call out customer retention, increased rates and increased volumes. Could you kind of drill into that a little bit for our benefit as far as rates go and number of customers and volumes and utilization?

I heard the teleradiology and what's the second question, Jeff?

Could you talk about the rates and the customers and volumes and utilization?

Of the teleradiology?

Yes, please.

So as you can see, since the acquisition of U.S. [ Arad ], we have managed to more than double the sales the revenues that comes from the teleradiology. This is mainly due to increase of the number of customers. Right now, it's a few hundred customers. Of course, they vary from one to another. One can do like a few hundred thousand dollars and the other can do a few thousand dollars. And what we are trying to do is also change the mix to the benefit of high-priced readings such as MRI and CP on the expense of X-ray. Now of course, we don't choose what the customer is scanning so we have to do -- we do it all, but I would say that 1 of the trends that we see that we see a lot of increase in the scans of the MRI and the CT according to me. And this is one of the trends that impacted the increase in revenues. We saw the increase year-over-year, and we'll probably see hopefully an increase. We monitor it on a weekly basis and even the number of scans that are being read are higher than last year. The one thing that I would say is that I mentioned about the cross-selling between Nanox units. So on one hand, U.S. [ Arad ], the teleradiology business gave us a lot of opportunities to sell the ARC and new customers to sell the AI and new customers to sell the Nanox [indiscernible] IP. But on the other hand, every ARC that we deploy and the -- it's a new system that before they didn't have X-ray or CT they ask us to provide the services in addition to the scans of the paper scan, they ask us to provide the reading services. So teleradiology are adding to, I would say, they are reading a meaningful part of the scans that the ARC is scanning, and I think you will see a growth in this one as well.

And then secondly, Erez a follow-up. Can you talk about the cadence of deployments for the balance of the year? I know you did call out units at various stages of which some will come online in the back half. What should we expect for ARC units coming online for second quarter and the balance of the year?

I will talk on the balance of the year. We mentioned that right now we have in the business partners. This is, of course, in addition to the direct sales that our salespeople are doing. We mentioned that we have currently 360 units that we sign agreements in the next 2, 3 years. I think that we mentioned that the [ Howard ] estimate their part for 60 this year. And this is in addition to all the other efforts, which are being done to find more business partners that we mentioned. This is only in the U.S. In the rest of the world, we mentioned that Greece is coming up. Romania is coming up, Peru is coming up, Argentina is coming up. Czech we sold already. In France, we have a system already. So there are many of them and more countries are -- right now, we are planning to do. The most important element, and I think that for those of you who have listened carefully to my script today, [ RadNet ] is an interesting one. The system is there for quite some time. As you all know, [ RadNet ] is the largest imaging -- medical imaging chain in the U.S., probably one of the biggest in the world. and the system that was tested commercially by the way, and clinically in the last -- during the 2026 and even a bit before, was successfully implemented. And the plan right now is indicated previously to expand this collaboration to more systems across the sites of [ RadNet ]. Last but not least, we mentioned that right now, we are planning once again, everything depends on the -- on regulation, on approvals, on permits, on site preparation, et cetera, but we are planning to install 21 sites of the Nanox Imaging network, which, by the way, out of which one site, which is a retail is already scanning. And two, as of yesterday, two sites, the system arrived to the site. And as soon as they complete the preparations, it will start scanning.

Our next question comes from the line of Scott Henry with AGP.

A couple of questions. First, a little bit of a follow-up, but how should we think about 2Q? There's only a couple of days left in the quarter. So we should have a pretty good sense at this point. Sequentially, should we expect Q2 to be stronger than Q1. I'm not looking for specifics, but just curious your thoughts, obviously, given that It's June 25.

Yes. I think that probably we'll be ready with these numbers shortly. And as soon as they are already, we're going to share them.

Okay. Fair enough. And then spending levels, how should -- I mean it sounds like you're going to rationalize some of the cost. Should we expect spending as far as total operating expenses to start to decline sequentially? Just wanted to get a thought on how we should think about that in the rest of the year.

The answer is yes. First of all, the outcome of the reduction in the Korean operation and the fact that we are doing all the efforts in order to save. We cut some costs in other places. We have reduced the headcount in -- mainly in Israel by 15 employees and cut the scope of employment of others. So based on early indication that we have for June, we can expect a reduction in the burn rate.

Okay. Great. Final question on the AI business. Certainly, the numbers getting notably higher. At what level would we expect that business to be breakeven as far as gross profit. Should we think about that as a 2027 event or a late '26? Just want to get an idea how to model that.

Yes. So initially, we have indicated in the past that probably at the tail or the end of 2026, we are going to be cash neutral or breakeven or -- but I would say that it may be pushed to by quarter or so. So I would say early 2027, probably. Based on the...

No, for clarity, I was just -- I was asking about the gross profit for the AI division. Should that -- as you reach $2 million a quarter, would that be breakeven for -- as far as gross profit, not spending, just I'm just trying to model that out.

Okay. The -- so the answer is a bit easier. From a gross profit since the gross profit of the AI and IT is very high. I would say in the probably in the '80s. So the answer is probably earlier than what you have asked for.

Our next question comes from the line of Sarah James with Cantor Fitzgerald.

This is Gabby on for Sarah. I can appreciate removing the revenue guidance in terms of visibility. But could you help us if you view the first quarter as sort of run rate once I back out the consolidation of Nanox, Health IT. And just kind of any sort of framing on how you expect -- what a more realistic 2026 revenue target is?

I'm not sure I understand the question. Can you elaborate or...

Yes. So with the removal of the $35 million revenue guidance, as I think about the rest of the year, can I think about the first quarter 2026 as sort of a run rate for the rest of the year? Do you expect revenue to ramp? Just anything that helps us with the full year.

So first of all, the fact that we have removed guidance as saying that anything that we're not going to work hard in order to be there where we want it to be. but I think that it probably may be pushed. I think that I've indicated in my remarks that we are planning to ramp up from Q3 and for because in Q1, following the RSNA, we signed most of the agreements with the business partners, okay? We have indicated that we have another few of them another a few of them that are coming soon as well as other as well as the other countries in rest of the world, Europe and Latin America. And Q2, which is currently where we are right now. The was mainly focused on the onboarding of the people, training the salespeople getting the list of 10, many tens of customers that we have already engaged in meetings with business partners. So our channel managers and the business partners are going to these customers and meeting them. And I would say that Q3 will probably be the implementation.

And I'm currently showing no further questions at this time. Erez, would you like to provide any further remarks?

Yes. Maybe I would say that we expect that Q2 will be better than Q1, whether it's much or more or a little, this will be shared probably in the very near future. And I would end with what I said earlier, we are really confident that we are taking the right steps. Yes, it's step by step. And -- but the way that we operate, the way that we put a framework for the success and for the scale is something that will enable us to justify the confidence in our ability to transform and become what we want to be and what our mission is.

Thank you. This does conclude today's conference. Thank you for participating. You may now disconnect.