Nick Pinkus: Hey, congratulations on another strong quarter. First question I’ve got is, you touched on this in the last question, but could you elaborate some more on the potential synergies of bringing Flagship and CloudFirst together?
Charles Piluso: Sure. The first piece is that Flagship has 25 very large accounts. And approximately 3 or 4 months ago, Chuck Paolillo, our CTO, has been managing all of the service delivery and operations and engineering of both CloudFirst and Flagship. So that was the first stages of that. So one of the benefits is leveraging all of the technical folks that we have in the company, which is a huge benefit. On top of that, we have a Director of Sales, and we have a major account team and folks concentrating on distribution on the data center side. For those companies that do not have an IBM platform, which is pretty much all of them. So we’re with three or four other major competitors. So what ends up happening is by bringing it together where we have some very good major account type business development, very experienced sales folks combined with our overall team, we think that placing that together under one leader will be a good advantage to us.
So we’ll have — we had a problem in the beginning with flagship, frankly, on the cross-selling of the subscription-based services. And that has taken too long probably 18-months to two years and when Tom Chemistry got involved over there, education started happening more and more, how salespeople can make more money by selling subscription-based services. The clients are also moving over from equipment to cloud-based. So there’s some great synergies there to take those 25 very large accounts in addition to the other accounts and moving those higher-margin services that are our product that we create out of our six data centers. So we think that the operations is there now, now we’re bringing together the sales in bringing together the sales piece of it.
On the accounting side, we always have it set up with the controller as a reported solid line to the CFO to Chris and dotted line to the Presidents and to Management. So it’s really the next step for us on the sales side to improve cross-selling and bringing it together. I don’t know if that helps, Nick, does it.
Nick Pinkus: It does. Thank you. And you also mentioned plans to build partnerships and create new distribution channels in the U.K. Can you talk a little bit more about the U.K. strategy?
Charles Piluso: Sure. So we are going out every day, there’s a number of e-mails that go out to — we have a list of 1,000 MSPs, managed service providers. We really — it’s hard to tell whether they’re IBM, whether they’re x86 and where they are. But we’re trying to focus more on the IBM side only for the fact that — this is — we know the migration has taken place, and there are not many competitors that are doing it. I’m not saying there are zero competitors, but we could be one of them in this very, very large marketplace of Europe. So starting with the U.K., so we have e-mails going out saying we’re willing to make the investment. We have the cash in the bank. And like we do in the United States and Canada, co-op marketing dollars, support, training, all the marketing material and help them roll out a program.
So that’s kind of what’s in the e-mail that’s going out to these MSPs. And we hope to line up with, frankly, 10 to 15 would be a fantastic start. And with that, then Hal and I will go over to the U.K. and spend a little time and finding out who — what folks want to be in business with. If one turned into an acquisition, that would be great. But right now, we’re looking on the partner side.
Nick Pinkus: Okay, thank you. You also talked about the nurture list on this call and in the past, it seems like it’s an important part of the strategy. Can you talk about how you plan to take advantage of this nurture list?
Charles Piluso: You want to comment. Maybe can Hal can cover it.
Hal Schwartz: Yes, yes. No problem. So it’s part of our overall authority-based marketing and sales strategy. So we have a publication — educational publications that we produce, and we are reaching out to this list and signing these people up to get them early to get on our distribution list and get them early in the buying cycle. So this has proved out to be a good strategy and very successful to this point. And we’ve also companies that are further along the buying cycle, we will arrange an appointment with a sales specialist and that’s also proved to be successful. So it helped us increase our opportunities substantially and is helping grow our pipeline.
Nick Pinkus: Thank you. And then one last question. This is more of a macro question. But there have been an exploding number of cases of ransomware, major companies like Johnson Controls, ICBC, which I’m sure you guys know is one of the biggest banks in the world. It actually had a — it disrupted the treasury markets and it seems like the problem of these attacks is not getting any better. It’s actually getting a lot worse. So I was hoping you could talk about how this is affecting the market and the demand for disaster recovery. You take the big companies like this would — big companies like these would have something in place. But apparently, they don’t.
Charles Piluso: I’m going to answer that in two parts. I’ll do the first and Hal can do the second. The first part of it, I’ve made so many sales calls early years in the business and even recently, and when you sit down with offices of the company and you talk about disaster recovery, for the most part, they’re in the dock. There’s more awareness now, but if you ask them how long it would take you to recover various critical systems, their expectations are not in line with what the technology folks within their own company know. So there is a little bit of darkness and expectations not matching up, just as I mentioned in the earnings call with one company with an unexpected downtime. So this alignment really is not there. Along with the fact that a lot of these problems are also caused by employees that are not educated and the companies are not educating them enough, they help create the problems themselves.
But as to the growing need for cybersecurity and our services, Hal, you want to touch on that piece? How you see it growing.
Hal Schwartz: Yes. There’s definitely a huge demand for it. And part of the reason is that a lot of companies don’t have a holistic approach to security. Many even large enterprises are not required to meet or gain certification and security standards. And these standards, look at the overall big picture for training, best practices and the like. So there’s a huge demand out there from companies that want to gain this knowledge and implement that strategy. And that is part of our overall growth strategy for 2024 is to attack that market and gain traction there.
Charles Piluso: Go on, sorry.
Nick Pinkus: No. It seems to me that it’s only a matter of time when you have a company like ICBC that’s not putting the right controls in place, and it’s disrupting treasury markets. This isn’t really a question, but it seems like it’s only a matter of time before there’s going to be more regulation requiring these services.
