AMERI Holdings, Inc. (NASDAQ:AMRH) Q3 2018 Earnings Conference Call - Final Transcript

Nov 15, 2018 • 08:30 am ET

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AMERI Holdings, Inc. (NASDAQ:AMRH) Q3 2018 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Good day, and welcome to the Ameri100 2018 Third Quarter Financial Results Conference Call. All participants will be in listen-only mode. (Operator Instructions) Please note this event is being recorded.

I would now like to turn the conference over to Sanjay Hurry, LHA Investor Relations. Please go ahead.

Executive
Sanjay Hurry

Thank you, Andrew. Good morning, everyone and welcome to Ameri100's 2018 third quarter financial results conference call. The earnings press release referenced on this call is accessible on the Investor Relations page of the Ameri100 website and the SEC website. On the call today are Brent Kelton, CEO; and Barry Kostiner, CFO. After their prepared remarks, management will hold a question-and-answer session.

(Forward-Looking Cautionary Statements)

With that said, I would like to turn the call over to Brent Kelton, CEO of Ameri100. Good morning, Brent.

Executive
Brent Kelton

Good morning. Thank you, Sanjay and thank you everyone for joining us on our call. Before I review our performance for the quarter, I want to take a moment and comment on our recent capital markets transaction. In late July, we entered into a private placement that raised net proceeds of approximately $6 million. These funds were used to deleverage our balance sheet and give us greater operational and financial flexibility with which to pursue solutions sales growth. There are three components to the private placement. First, 3.25 million common shares, second, 22.7 million Class A warrants with an exercise price of $0.31 for an equal number of shares. These Class A warrants will generate cash of approximately $7 million to us when exercised. Third, 19.5 million Class B pre-funded warrants for an equal number of shares.

It is our understanding that the majority of the common shares and Class B warrants have been exercised and sold into the market over the past several weeks, creating intense pressure on our share price and a disconnect, we strongly believe, between the market valuation of Ameri100 and its intrinsic value. What's not reflected in the current market valuation is the significant progress we have made since the start of the year to capitalize on the opportunities that comprise the $200 billion SAP services market and its $39 billion cloud services segment. As the only largely SAP solutions focused publicly traded IT services company in the US, we are focused on these addressable markets to deliver sustainable profitable growth. Our third quarter results demonstrate the benefits of our differentiated strategy and a purposeful focus on both quality of revenue and adjusted EBITDA profitability.

Turning to our third quarter results. Revenues for the quarter were $10.6 million versus $12.5 million in the year ago quarter, reflecting a continued and deliberate mixed shift in revenue to solution sales that are more profitable relative to lower margin staffing revenue. Let me put our focus on higher margin solutions sales into perspective. For the fourth quarter of 2017, as we started to consolidate and integrate our acquired businesses and began to put in place our solutions sales strategy, solutions revenue were minimal at approximately 18%