REZOLVE AI PLCRZLVNASDAQ
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Operator: Good day, and thank you for standing by. Welcome to the Rezolve AI Second Half and Full Year 2024 financial review and 2025 Business Update Conference Call. All participants are in a listen-only mode. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Michael Guido, VP of Invest Relations. Please go ahead.
Michael Guido: Thank you, Sharon. Good morning to everyone in the US and good afternoon to everyone in Europe. Welcome to Rezolve's 2024 earnings conference call where we will be discussing our second half and full year 2024 financial results, as well as providing a 2025 business update. Leading today's discussion are Dan Wagner, Rezolve's Founder and CEO; and Rich Burchill, Rezolve's CFO. We previously reported our 2024 financial results and issued an earnings release on those results, as well as a year-to-date 2025 business update on Thursday, April 24. The earnings release and SEC filings can be found on our Investor Relations website. Today's discussion will include statements that constitute forward-looking information or forward-looking statements. These statements reflect management's current beliefs and expectations and are subject to a number of factors that may cause actual results to differ materially from those statements. These factors include, but are not limited to, those discussed in our SEC filings. These statements do not guarantee future performance, and therefore undue reliance should not be placed upon them. We do not intend to update these forward-looking statements as a result of new information or future developments, except as required by law. Additionally, our discussion will include both GAAP and non-GAAP financial measures. These non-GAAP financial measures should be viewed in addition to and not as the substitute for Rezolve's reported results prepared in accordance with U.S. GAAP. All non-GAAP financial measures referenced in today's call are reconciled in our annual report on Form 20-F for the fiscal year ended December 31, 2024, to the most directly comparable GAAP measures. For more information regarding definitions of our non-GAAP measures, please see our end report on Form 20-F for the fiscal year ending December 31, 2024, and earnings release, which are both available on the Investors section of our website at www.rezolve.com and on the SEC's website at www.sec.gov. Finally, as a reminder, today's conference call is being recorded and the replay will be available on our Investor Relations website. At this time, I'd like to turn the call over to Dan Wagner.
Daniel Wagner: Thank you, Michael. And good morning and good afternoon to everybody. I'm excited to welcome you to our first earnings call as a publicly traded company. Going public is a significant achievement for Rezolve. And I wanted to take a moment first to thank our team for their hard work and their dedication as well as our investors for their support as we look to revolutionize the e-commerce experience for consumers worldwide. As I reflect on where we find ourselves today, I believe it's important to highlight that our journey is the culmination of decades of experience our team has dedicated to advancing search, commerce and cloud technologies. In fact, throughout our careers, we have a long history of being at the forefront of technological change and developing innovative solutions that have created value for merchants and consumers alike. I'd like to briefly highlight some of those achievements to provide greater context for why we believe we're well positioned to successfully level up commerce in a meaningful way. Early in my career, I led a team that created the first commercial online information platform, years before the concept of the World Wide Web was put forward and as a result, we were required to build our own search technologies, our own commerce technologies, as well as our own data centers, because none of those things existed prior to us creating our platform. We operated that business ultimately in 192 countries, taking payment in a variety of ways and licensed our search technology to companies such as IBM, Microsoft and Fujitsu amongst others, eventually selling that business to Thompson, now Thompson Reuters, in 1999. By which time, we had become the global market leader. And this experience resulted in me and my team becoming quite a debt at both search and payments. I then went on to build a cloud-based commerce stack prior to the inception of Salesforce that eventually became market leader in e-commerce spanning both Europe and the United States. That business was eventually sold to Oracle, and it serves as the foundation of its commerce cloud platform today. As a result, I became aware of the opportunities and shortfalls in e-commerce. Today my team and I find ourselves once again at the forefront of a technology revolution with AI, supported by the knowledge and experience we have gained throughout our careers at the intersection of tech and commerce and we believe this is perhaps the most exciting opportunity yet. So let me just now introduce Rezolve AI. Having touched on our deep experience in the areas of search and commerce, I'd like to take a few minutes to provide some background as to why we founded Rezolve in the first place and the reasons we believe we are leading -- we are the leading solution to level up commerce, customer engagement and sales conversion in digital platforms today. Back in 2016, before the idea of AI permeated the public consciousness, we founded Rezolve AI to address the specific challenges of cart abandonment and customer attrition in e-commerce. You see, while seven out of 10 customers visiting a physical retail store leave having purchased an item, the opposite of true is true when a customer visits a digital store. In that case, seven out of 10 customers leave without purchasing an item. This presents a significant challenge, but also a huge opportunity in the $30 trillion global retail sector. We believe this problem is a direct result of consumers inability to get the right answers in a digital environment. You see the way we interact with e-commerce in terms of searching and filtering hasn't changed all that much in nearly 40 years. And so we applied our extensive knowledge and experience in search and commerce to solve this challenge, which by doing so, would have a material impact on our customers' revenues. We started by building our own proprietary large language model, which we call BRAiNPOWA, with the goal of creating the best salesperson on the planet. We built this foundational model specifically for digital channels, training it on over 300 billion tokens and resulting in a 30 billion parameter model with a focus on product catalogs. We imbued it with natural language processing to provide retailers with a better understanding of consumer intent and shopping patterns, as well as an ability to drive actionable insights in real time. In order to create the world's greatest salesperson in an AI platform, we built our LLM with three key skills. First, we trained our model to have deep product and category knowledge. Second, we trained it to have empathy to better connect with the customer, an attribute supported by our patent on prompt analysis. And third, we trained our LLM on the key techniques of closing a sale. Importantly, unlike many solutions touted in the market today, we built a product suite on top of our foundational language model that e-commerce and retail customers can readily implement off the shelf to support the customer purchase journey right now. The BRAiNPOWA product suite is comprised of three market-ready solutions. First, Brain Commerce, which is our conversational commerce piece that allows the customer to attain a more comprehensive set of answers to any query and quickly find products in any one of 96 languages. Second, Brain Checkout, which is a fast checkout solution that allows customers to avoid the challenges associated with the multi-step traditional checkout flow, and also incorporates online and offline capabilities associated with triggers through geolocation. And finally, Brain Assistant, our after sales customer service solution. As we think about our go-to-market strategy in deploying our product suite, we remain focused on three key areas to drive client acquisition and revenue growth. We believe those three key areas are a necessity to create a market leader. First, direct sales, which we continue to build out. Second, strategic partnerships, which we believe can be very helpful in lead generation and the validation of our product suite solution. And third, acquisitions, which we believe provide us with upselling and cross-selling opportunities, as well as a fast route to market presence. When we look at our results for the first half year -- sorry, for the last half year of 2024, we built a solid foundation. With that overview of the business in mind, I'd like to recap 2024 and provide an update on how our business is trending in 2025. In the second half of 2024, we began our next chapter as a publicly traded company. We secured landmark strategic partnerships, and we strengthened our financial position, establishing a solid foundation that we believe well positions Rezolve to drive customer acquisition and revenue growth. As I previously mentioned, we completed our DESPAC process in August 2024 and began trading on NASDAQ on August 16, 2024. Becoming a publicly traded company was a pivotal step for us at Rezolve as it provides us with the ability to access the capital markets, to scale our organization and drive growth. During the second half of 2024, we also secured a number of strategic partnerships, none more important than those with the two of the largest players in AI today, Microsoft and Google. These multi-year partnerships ensure Rezolve AI-powered solutions through our Brain Suite are available to Cloud customers on both the Microsoft Azure Marketplace and on the Google Cloud platform, together providing Rezolve with access to approximately 90% of enterprise retail customers. Furthermore, these partnerships support the adoption of Rezolve's Brain Suite by allowing their cloud customers to credit their Rezolve subscription spend against their cloud commitments and incentivizing sales agents by attributing subscriptions to Rezolve Brain Suite against their sales quotas. We believe these partnerships with two of the leaders in AI and search validate our technology solution and provide a unique opportunity to significantly drive customer awareness and adoption. Additionally, during the second half of 2024, we announced a collaboration with Tether, the largest company in the digital asset industry, to develop a crypto payment solution that we believe will advance the use of cryptocurrency as an everyday method of payment, providing payment optionality for consumers and eliminating transaction fees for merchants. Finally, as 2024 drew to a close, we undertook a number of measures to strengthen our financial position heading into 2025. To discuss those measures in greater detail, as well as our 2024 financial results and 2025 outlook, I'll now turn the call over to our CFO, Rich Burchill.
Richard Burchill: Good morning, everyone, and thank you for joining us on our first earnings call. Just to reiterate what Dan has said, we're excited to be a public company and looking forward to engaging with our shareholders, as well as the greater investment community on a consistent basis moving forward. Let me start by saying Rezolve's business of delivering software as a service supports a powerful financial model for us that is simple, scalable and highly flexible. We generate contracted recurring subscription revenue by licensing our BRAiNPOWA suite of products to retailers and e-commerce customers. And as we scale the business, this powerful model is supportive of both high gross margins and a cost base that is extremely flexible and we can flex with demand. With that being said, there are several key topics we'd like to review today, including the brief recap of our 2024 financial results, highlights of the actions we have taken to strengthen the financial position of Rezolve, as well as some thoughts on business outlook for 2025. Recapping highlights of the second half of 2024, we entered the public markets after completing our DESPAC transaction in August. We strengthened our balance sheet by clearing convertible debt instruments resulting from that transaction in addition to raising additional capital. We signed landmark partnerships with Microsoft and Google, thereby establishing a solid foundation to drive online growth. Let me begin briefly by speaking about 2024 financial results. So we ended 2024 with revenue of $188,000 resulting primarily from ancillary business activities. On non-operating expenses or non-cash operating expenses, those including stock-based compensation, advisors fees, paid with shares, depreciation and amortization for the full year 2024, totaled $28.9 million. As a frame of reference, headcount drives approximately 50% of these cash operating expenses, with approximately 75% of that headcount focus on sales and marketing and research and development with the remainder on general and admin roles. If we add back advisor fees paid as shares, we ended 2924 with a loss of approximately $43.8 million on an adjusted EBITDA basis. It's important to note that we did have a GAAP net loss of $172.6 million. This included $28.9 million related to onetime non-cash items associated with the DESPAC transaction. These non-cash items were primarily driven by cost related to issuance of shares to third-party advisors. Other non-cash expenses include $44.3 million loss on extinguishment of associated convertible debt, promissory notes and advisory loans, and a further $25 million of one-time share-based compensation adds to that $10.6 million of interest expense. Operating cash flow for the full year was a negative $21.6 million with CapEx relatively low at only $3.5 million in the year. Before moving on to our business outlook, I wanted to briefly touch on the actions we've taken in the second half of 2024 and into the first quarter of 2025 in order to strengthen our balance sheets and bolster our liquidity position. Prior to the close of the DESPAC transaction the company incurred circa $94 million in fixed rate convertible debt. $53.8 million of this debt was successfully converted into equity by year-end 2024, leaving $40.5 million at the end of the year. Of this, $31 million was subsequently converted into equity in February 2025, and $3.5 million was repaid with cash. We believe the elimination of these debts from our balance sheet strengthens the company financially. As of the end of the first quarter of 2025, the company's remaining debt on the balance sheet is comprised of $30 million of traditional interest bearing bank loans we recently secured from Berenberg and $6 million of convertible debt and promissory notes, which will be converted to equity over the remainder of 2025. Additionally, the company maintains a strong liquidity position to support growth and strategic initiatives with approximately $18.9 million in cash on hand as at the end of the first quarter of 2025. This compares to a monthly cash burn rate of approximately $2.2 million, primarily driven by employee-related costs, as well as professional service fees. Furthermore, this cash position is bolstered by our access upto 48.3 million shares in our E-LOC, Equity Line of Credits. As we look ahead, we want to provide some thoughts on our business outlook in terms of the full year, 2025. We expect to achieve $100 million estimated annual recurring revenue target by the end of 2025, which will include both organic and acquired revenue. Additionally, we expect cost growth which is highly elastic and primarily driven by headcount, marketing expenses, and hosting costs to increase in line with that revenue as we scale the organization with a focus on revenue generating roles, particularly in sales and marketing. As a result, we now expect to achieve break-even operating performance at $90 million ARR. This update represents an improvement from the prior estimate of achieving break-even at $100 million ARR, as we plan to align our resource additions with revenue growth to position us for success. Let me now turn the call back over to Dan to discuss the momentum we are seeing in the business at the start of 2025.
Daniel Wagner: Thanks, Rich. So we entered 2025 with a solid foundation that we believe well positions the business to acquire enterprise customers and drive revenue growth. And early developments year-to-date have demonstrated clear business momentum as we successfully execute on our go-to-market strategy. Some of our early successes include the completion of key strategic acquisition, the growth of enterprise customers adopting our AI-powered solutions, and the build out of our customer sales pipeline. To begin, we recently announced the strategic acquisition of GroupBy, a leader in enterprise search, product discovery, and merchandising solutions. This acquisition enhances Rezolve's sales force, expands our customer footprint in North America and deepens our commercial relationships with some of the most recognized brands who will gain access to our AI commerce driven solutions. We view this acquisition as part of a greater roll-up strategy that we believe will accelerate enterprise customer adoption of our Brain Commerce technology suite. Turning to our expanding roster of customer partnerships, we believe that the early momentum we've seen in customer adoption has been supported in large part by our strategic partnerships with Microsoft and Google, as well as our strategic acquisition of GroupBy. These enterprise customers include recognized brands across the globe, such as BJ's Wholesale Club, Phoenix Suns, KFC, and Ace Hardware in the United States. Cole Supermarkets in Australia, and more recently, Mexico's premier department store chain, Liverpool, with whom we recently announced a multi-year agreement at nearly $10 million a year. Moreover, we've been encouraged by the commercial improvements our retail partners are experiencing, including stronger customer conversion rates, higher average order values, as well as greater omni-channel adoption with increased usage of services like Click and Collect. This early momentum in customer adoption and in our product solutions ability to drive positive outcomes for commerce has translated into significant commerce activity and usage across our platform, highlighted by over $50 billion in gross merchandise value transacted through our platform in the first part of this year, and over $13.5 million transactions occurring year-to-date through April 19. In addition to the successes in customer adoption and usage, we continue to expand our enterprise customer sales pipeline. It's also important to note that the average deal size we've executed or are pursuing with potential customers in our pipeline has been greater than we anticipated in previous internal estimates. We believe this is attributable, at least in part, to our partnerships with Microsoft and Google, who are driving larger customers to us than we had previously anticipated. As a result of the early momentum, we are seeing in enterprise customer adoption, our sales pipeline, deal size, as well as group price contribution, we continue to expect to achieve over $100 million in ARR target by year end. And overall, I'm extremely pleased with the solid foundation we've built and the tremendous progress the team has made to the start of the year. But there is much to get done in terms of educating the marketplace, driving customer adoption and increasing market share. 2025 stands to be an important and exciting year for Rezolve and I'm thrilled with the momentum we generated to date. We are set to be one of the market leaders in this space. Our objective is to win and build a platform that dominates this category. And we very much thank you for your support to date. I'd now like to turn back the call to Michael.
Michael Guido: Thanks, Dan. Prior to our call, we asked participants, both including analysts and investors, to submit questions that they would like ask to management. We have organized those questions around a few major topics, many of which were asked by multiple participants. So, let's move to the Q&A portion of our call.
A - Michael Guido: Our first question comes from Mike Latimore of Northland Securities and is related to the recently announced Liverpool deal. His first one is for you, Dan. Can you provide additional detail as to how the Liverpool deal came about and to what extent GroupBy and Google played a role in that process? And can you elaborate on any terms of the deal?
Daniel Wagner: Yes, of course. I just want to say that we are thrilled to announce our landmark deal with Liverpool, Mexico, the country's premier department store chain on April the 15th. We believe the deal demonstrates the ability of our product suite to deliver tangible positive results to our enterprise customers, driving higher engagement, greater conversion and increased revenue. In terms of economics, these deals are typically two to three years and this multi-year deal specifically delivers nearly $10 million annually, which is greater than the average deal size we anticipated in previous internal estimates. The Liverpool deal is emblematic of the success in our go-to-market strategy, as Liverpool, which was a customer previously of GroupBy for some of its services, was upsold to our Brain Commerce product solution, which includes the SEO studio, a product which was developed in collaboration with Google by Rezolve. Would you like some more color on that?
Michael Guido: Great. Thanks, Dan. In terms of just terms of the deal, effective day is that deal live today?
Daniel Wagner: Yes. The deal is live today with the SEO Studio and is being enhanced with other -- We're working on other projects together with the people. I was just there actually last week with the management in Mexico City.
Michael Guido: Perfect. Thank you. Our second question comes from Yi Fu Lee of Cantor and is focused on Rezolve's sales pipeline. This one again is for you, Dan. Can you elaborate on the progress you are seeing in the sales pipeline and how each of your go-to-market strategies, including your partnerships with Microsoft and Google, are contributing to that process -- to that progress. And secondly, where are you seeing the most traction?
Daniel Wagner: So we are seeing traction across all three areas of our go-to-market strategy, in both direct sales, partnerships, and through our acquisition. In addition to our early success in customer adoption and usage, we continue to gain momentum in our go-to-market strategy across the board. While we continue to build our direct sales team, which will be a focus of investment for us throughout 2025, we are seeing significant progress in our sales pipeline from our partnerships, notably those with Microsoft and Google, as well as our strategic acquisitions, namely GroupBy. In terms of our partnerships with Microsoft and Google, we continue to see growth in terms of the number of potential enterprise customers and importantly the average size of those potential accounts. So we had originally forecast or estimated that our customers would drive around $1 million per annum in revenue for the company. Each customer would be about $1 million a year customer. But as you can see from the win with Liverpool, that customer is a 10 times of that estimate. So you can see that the value of these customers have the potential to be significantly greater than we originally expected. And although it's been quite recent since our strategic acquisition of GroupBy, it has provided for direct access to an established customer base that's resulted in accelerated opportunities to upsell Rezolve suite and of course again that was highlighted by the announcement with Liverpool. Though it's early, the momentum we've generated so far gives us enormous confidence that our premier partnerships and acquisition strategy have provided the launch pad for our business to drive customer adoptions. Do so at an accelerated rate and at a greater deal size than previously estimated. And we believe that our strategy now is starting to really show that it is founded on quality common sense and can be built on moving forward.
Michael Guido: Great. Thanks Dan. Our next question comes from Tom Forte of Maxim and is a continuation of that go-to-market strategy theme related specifically to partnerships, Dan. On this question, can you provide additional detail as to how Microsoft and Google are marketing Rezolve the potential enterprise customers and driving client wins? And what is that sales cycle look like?
Daniel Wagner: Well, obviously, the sales cycle will change on a per customer basis. Sometimes it can take a number of months and sometimes it can be quite accelerated into a matter of weeks. But in terms of how Microsoft and Google are marketing Rezolve, they're both doing it in a very similar way. And they both see Rezolve as a platform that enhances the stickiness of their services to their customers, their large customers. So right now, both of them are offering incentives to their customers to use committed contractual funds to buy Rezolve and it would decrement those committed funds that they have to Microsoft and Google. So if a customer has a $10 million a year contract with Microsoft to provide services, if they spend any dollars with Rezolve, those come off a dollar to dollar from their commitment to Microsoft. That's great for us, of course. And we don't pay Microsoft or Google any commission. As I said before, this is strategic for them because they want Rezolve as a product in their cloud services to create that stickiness with their customers because it, obviously, ties those customers in long-term to that platform. They're also incentivizing their sales organization by providing sales incentives and also if they make sales Rezolve to respective Google or Microsoft customers, it counts towards their sales quota. So they're incentivized to sell our products as if they are Microsoft/Google products. And as a result of those factors, you've got like a double whammy. You've got the sales organization incentivized to sell our solutions and you've got the customers incentivized to buy our solutions because it comes off their commitment. And of course, it's a sexy product. It's a compelling product that has a product suite that has a real measurable ROI output. And so for all of those things -- for all those reasons, we see really good engagement from both the partners and really good engagement from their respective customers.
Michael Guido: Excellent. Thanks for that additional color, Dan. I want to switch gears a little bit here. Our next question comes from Scott Buck at HC Wainwright and focuses on the topic of M&A. This one is again for you, Dan. Dan, can you walk us through your target criteria when evaluating M&A opportunities? And secondly, can you discuss your approach when funding M&A transactions in terms of cash versus equity?
Daniel Wagner: So first of all, I mean, any target must fit with our model, must be part of -- must be additive to our proposition. Now some acquisitions are going to be geographic, where we might find an organization that has -- that provides maybe a site search, a bit like GroupBy in Spain, for example, right? And by acquiring that company, we not only get customers who are on the horse and cart, we would argue, versus the Model T4 that we're offering, that we can very quickly upsell to our solution. But we can do so in a very easy, elegant way as an upgrade to their existing solution. It also gives us presence in a market that we do not currently operate. It gives us people on the ground, all those kind of things. And given that we are looking to become the global market leader, we want to do that in an accelerated way. Acquiring businesses in different territories gives us a footprint in markets, which otherwise we wouldn't get to for some period of time. We prefer, obviously, to go for [indiscernible] customers that have established businesses. There are situations where we might find companies that have compelling technology that will be additive to what we're doing. We have not as yet seen anyone -- we've not made any acquisitions in that area, but it's possible. And thirdly, we may make talent acquisitions where we bring on organizations that have large AI or natural language processing developers and that will then quickly give us the resources that we need that we would otherwise have to go and source in the market which is more costly and more time consuming. Is that -- would you like me to cover anything else, Michael?
Michael Guido: Yes, just in terms of the second part to that question, in terms of funding the transactions. And your thoughts on that.
Daniel Wagner: Yes I mean, look, we don't want to use cash because we don't we don't want to use the valuable cash we're using to fund our business. And so, the GroupBy acquisition was done using our paper, we paid a very -- what we felt that was a very fair price, $55 million, and we paid it in equity at about $3 a share. So, from a purchase price, we felt we got good value. And from an equity -- from the cost of our equity, obviously we think our equity is depressed, was depressed at $3, is even more depressed currently. So we don't -- we're not very comfortable about using our valuable equity for acquisitions right at this time. However, we're still keen to carry through our strategy. So I would answer by saying that, we will use cash where the cash is not too meaningful, because we don't want to sell equity or use equity at these levels. But equity is the resource that we have the capacity to utilize, mindful of course of the impact it has on a shareholder dilution.
Michael Guido: Excellent. Thanks, Dan. Thanks for that color. Our next question comes from Rohit Kulkarni of ROTH Capital Partners and focuses on Rezolve's competitive advantage. Dan, can you discuss the factors that underpin the advantage Rezolve's proprietary LLM has versus AI solutions available in the marketplace today?
Daniel Wagner: Yes, so AI solutions, so there is this idea of boiling the ocean, that many AI players have this concept of, let's absorb everything that's out there and be the expert on everything. And then when people ask us a question, we'll be able to answer that. That's kind of the fundamental LLM proposition today. Now we were very familiar with how GenAI came about, the algorithms and so on, as I mentioned before with my background. And so, when we started this approach in 2016, we had one objective to create a vertical LLM, to create something very specific that would allow us to solve a very specific problem. So we didn't come at this by saying -- we didn't come at -- we didn't come at this by saying, we have a bag of cement and a pane of glass, and here you are customer, go and build yourself a skyscraper. We came out saying that we're going to provide a skyscraper, right? And offer apartments in that skyscraper. So we wanted to provide a solution to our customer's problem. And right now, the majority of AI technologies out there are building blocks that are provided to customers to build on. And the customers don't -- I don't believe, fully understand what they have to build, how to build it, and what skills they need to do it, how long it's going to take, and so on and so forth. So we set out to do a number of things. First of all is to create a language model that was sophisticated in sales. And we had to deal with some challenges there because product catalogs have got a greater propensity to what's known as hallucinate or drift. And so, we wanted to solve that problem. And an example of that would be that if AI is not very intelligent when it comes to words, it's all using algorithms and mathematics and guesswork. So if you ingest a product catalog of cosmetics and fragrances and the fragrances are called beast or savage and the descriptions are sandalwood and blackberries and barbecue notes, we understand that we're talking about an aftershave there, but AI doesn't. AI think it's a beast in the wood eating blackberries, right? So we had to solve that problem of structuring product catalogs in a way that AI could understand and we have patented that process. That's one of the reasons why AI by Google and Microsoft have partnered with us because they have not done that and they recognize that what we've done is pretty smart. Then when a customer asks a question we want the AI to be empathetic. I'll give you an example of that. If I ask the question, I need two AA batteries, the answer must be, here is your two AA batteries, click here. It isn't, thank you for coming to our store, we've got lots of batteries, we've been in batteries a long time, blah, blah, blah. Nobody wants to hear that answer from an individual or from an AI-generated answer. So understanding the prompt, which was, in that case, an urgent, I need two AA batteries, to another question that might be, I've got an electric toothbrush, and I'm not sure whether to get a disposable batteries or rechargeable batteries. That question requires a bit more of a sensitive answer than the first one. So those kind of empathetic understanding of prompts is another element of our large language model. And then the third is, we have trained our language model on sales techniques. ABC, always be closing, and all the other sales techniques associated with sales psychographics. Now as a result of those three things, empathy, sales techniques and deep product and domain expertise and the ability not to hallucinate sets our BRAiNPOWA LLM apart. There's nothing like it on the market in our view, or certainly something that we have come across is on the market. And as a result, we have then built on top of that, these three products, Brain Checkout, Brain Commerce, and Brain Assistant, that take the customers of our customers through the digital journey in an elegant and effective way. You have to always remember that our solutions are designed to replace the in-store experience online, because in store seven out of 10 people end up buying and online seven out of 10 people don't tend to up buying. And if we can build the relationship that you have and the experience that you have in store into a digital environment, then we have the ability to have a massive improvement in our customers revenues online.
Michael Guido: Excellent, Dan. Thanks for that color. I want to move to the financial model and outlook. And we've received a number of questions for our CFO, Rich, which are, I would say, almost universal amongst analysts, with the first regarding expense growth. And Rich, I know you've touched on some of these, but maybe you could dive a bit more. The question is, as you scale the organization and ramp revenue throughout the year, can you discuss the areas of investment and levels of increased expense needed to support this growth?
Richard Burchill: Yes, sure. So just -- I mean, just to reiterate, we are highly elastic. We've spent several years flexing our cost base, and I would say we're pretty good at it. So as the underlying business continues to gain traction and grow, we will see some costs of sales increases along with sales and marketing expense as we grow those teams to generate sales. But it is important to reiterate that we do not see any meaningful step change in any of our cost buckets. So we will grow costs, but we'll grow costs in line with revenue. And we expect to scale relatively quickly, given the operational leverage inherent in the business model, and thus believe we are both well positioned from a liquidity standpoint to get through this initial startup period that we're in and that we feel relatively -- we feel will be relatively brief prior to achieving breakeven which we expect to do at the -- at or around the $80 million to $90 million ARR level.
Michael Guido: Perfect Rich. And that sort of our last question here that dovetails into our last topic, which is, again, something that was highly requested, which is related to the profitability outlook. You've touched on this a little bit, Rich, but just to put a finer point on it. Question is, Rich, given that your SaaS business model should have a significant amount of operating leverage, how are you thinking about the level of annual recurring revenue at which the company is able to achieve operating profitability? Now, I know you've mentioned this, Rich, but maybe if you could put a finer point on this as well.
Richard Burchill: Sure. So the SaaS model certainly puts Rezolve in a good position to achieve break-even profitability with -- from relatively modest growth or modest revenue should I say. Achieving profitability which we view as a measure of adjusted EBITDA, is what we think is the first of multiple milestones, which we'll accomplish over the 12 to 24 month period. As I've mentioned, we expect to reach just an EBITDA break even at the $90 million level. We have initially targeted $100 million, but given the flexibility we have in our cost base we are confident that we will do it at $90 million. Now just to caveat that that breakeven will depend on sales mix, direct versus channel partners, etc and also will be contract specific. But at this juncture, we believe that $90 million ARR is a sensible number to pin breakeven on.
Michael Guido: Excellent, Thanks for those comments, Dan and Rich. And thanks for the answers to your questions. I also want to thank everyone for joining this call. We really appreciate you taking the time to being with us today. Please feel free to reach out, contact us with any questions. We look forward to speaking with you all again in the near future. Thank you.