Chuck Piluso: Well, if we do a stock buyback, which we probably should, because it’s ridiculous where the price is. We have $8 million to $10 million in assets deployed into six data centers, and we have more cash in the bank that — and looking at everything that we do with limited competition in a huge marketplace, it’s really very upsetting frankly to everybody that’s internally, and I’m sure some of the investors as well. But if we buy back stock, it’s like really saying to ourselves that we don’t have use of that money. And I believe we do have use of that money, but if it continues to dropdown, we’ll keep looking at stop buyback options. But I do believe we have use of that money. I think we have to produce quarter over quarter growth.
And as we show quarter over quarter revenue growth and profitability, hopefully people will pay attention and we’ll have a different market cap. I think if we continue to look at the right kind of acquisitions, we put out several term sheets last year, and we have to due diligence on it, we decided not to move forward with them. So, we’re pretty busy with looking at acquisitions. I think that will make a difference possibly and people will pay attention, but then there’s always the assimilation that comes along with that acquisition that takes time and is some sometimes painful. So, we’re looking at all options, but where the stock price is today it’s — if someone’s looking to move it from a $1.70 to $2 and all of a sudden they sell, I would say that’s not what we’re up to.
We’re in a significant business CloudFirst alone. It’s a $36 billion annual recurring addressable marketplace in the U.S. and Canada. We’re not saying that we’re going to get a 100% of the market, but let’s just think about 2%, 3%, 4%, 5%, 10% of that. And today there’s around six to seven competitors and Amazon, Google and Microsoft do not have the services that we have so whether they are getting that in the future, I’m not sure. But for the most part, when we see that stock price, it’s upsetting. And if it goes down more, we will look at stock buybacks because it doesn’t make any sense. But right now, we are not entertaining that. We haven’t put anything before the Board. We want to spend the money on acquisitions, and we want to spend the money on deploying the capital to grow our distribution channels and technical teams.
I don’t know does that help?
Adam Waldo: Yes, it helps a lot. If you can permit me, one clarifying follow-up on this topic. So, it sounds like dividends rolled out for a lot of good reasons, internal growth returns look higher, and share buyback returns look higher. Is it fair to say that acquisitions though are pretty high bar in terms of the financial returns, adjusted for integration risk given the high financial returns that basically risk free nature of buying back your own stock?
Chris Panagiotakos: Let’s say that, as an example, we find a competitor that has $3.5 million in 30-month average term contracts and remaining contract value of $10 million, and we buy that customer base, and they have a sales organization. It’s not just the president that has baptized every one of his customers’ children. I would say for the most part, that’s a good acquisition when we look at that. So, we want to continue before we entertain buying back the shares, I think, we should see how better we can use that to grow this business north of $35 million.
Adam Waldo: Tremendously helpful.
Chuck Piluso: I think it’s a quarter-over-quarter growth story. We have to produce that. And I think folks will pay attention, but I think we need to really get north of a certain revenue numbers in order for us to pull out of the stock price. But hopefully, people pay attention. It’s a long-term growth on it, and the addressable market is significant. UK, Europe has lot — these systems in it as well. It’s significant. And on top of that cybersecurity, where Flagship is highly focused on, now, I just think it’s a good story. Look at the whole thing is up to execution. So let’s see how we do.
Adam Waldo: No, that’s very helpful. Appreciate the detailed insight into your thinking and good luck.
Operator: Our next question is from Matthew Galinko with Maxim Group. Please proceed with your question.
Matthew Galinko: Hey, guys. Again, thanks for my follow-up here. Chuck, I think you mentioned making an investment through Flagship in cybersecurity and your work with IBM. Can you go a little bit further into that? What’s the investments look like and what specifically in cybersecurity? And when would we start — when would you plan to start seeing return on and the investments you are making in 2023 on that?
Chuck Piluso: I would say, over the next three to six months. I think we should see Tom ramping that up with the sales organization. We’re going to be adding sales folks to business development teams to Flagship and focusing first on their existing accounts that they have as well as Nexxis and CloudFirst accounts. IBM is working very closely with Tom and with the group there. They have a great, great group at Flagship. So, I can’t give you the exact programs that are going on. You can always speak with Tom if you want, Matt.But there are programs underway right now with IBM and Flagship. And remember, it’s not new that cybersecurity is not new to us. CloudFirst offers certain types of cybersecurity on their infrastructure. We’ve always had certain security with encryption on all of our disaster — on most of our disaster recovery software and services.
So — and also, I believe that Flagship has sold IBM software to the Atlanta Falcons. So, it’s not new to them, but this is really additional programs and additional software that would be rolling out.
