Good afternoon, everyone. Welcome to the J.P. Morgan Healthcare Conference. My name is Anne Samuel, I'm the healthcare technology and distribution analyst here at J.P. Morgan. We're really excited to have Consensus Cloud Solutions with us this afternoon. We just initiated coverage on them, you know, a few months ago. We're really excited to learn more. Presenting with us today is going to be CEO Scott Turicchi, CFO James Malone, and COO John Nebergall. They'll do a 20-minute presentation. Then we'll open it up to Q&A. If you have a question, you know, please raise your hand. We'll be sure to take it. With that, let me turn it over to Scott.
Anne, thank you very much. It's a privilege for us to be here at the Healthcare Conference. First time we've done it, as we are a fairly new public company, coming public through a spin on October 7, 2021. This is a very high-level overview of who we are. Each of the three of us will present. This slide is just the risk factors, other information that you can access in our various 10-K's, Q's regulatory filings, where there's a more extensive discussion of various risk factors. As Anne mentioned, I'm Scott Turicchi. I'm the CEO of Consensus Cloud Solutions. Prior to that, I had a long tenure at the predecessor company, J2 Global Inc. For a number of years, I was the CFO of the parent company.
With me today is John Nebergall, our Chief Operating Officer. As you see, he has a background in the healthcare space, specifically with Orion Health and Allscripts. He was hired in to the predecessor company structure in the middle of 2018. He's going to talk about our interoperability solutions and how we've leveraged the core cloud fax solution into those areas. He's been the primary architect of motivating us in that direction. Obviously, when I came over, there was a vacancy in the CFO role, Jim Malone came to us about a year ago in early 2021, having both a healthcare background but also a deep background in accounting and finance. Our most recent senior executive hire is Johnny Hecker. He's not up here on the dais. He's in the audience. He's our EVP of Operations.
Actually worked with us back at J2 some number of years ago. Spent time in Europe with Google and Retarus, is now with us stateside, we're very excited about that as we unveil and we talk about our strategy on a going-forward basis. He'll be key to that. I'm gonna kick it off by just giving you some very high-level overviews of who we are, kinda where we've come from, I'll turn it over to John, who will dive a little bit deeper. This is a very broad mission statement, you can kinda take it for what it's worth, this is something we spent a lot of time on pre-spin of what this company was really all about, what is our focus, what is our goal.
For those of you that are not in the room, it's to be the trusted global source for the transformation, which is a keyword, and John's gonna touch on this in greater detail, enhancement and secure exchange of digital information. What is interesting about this, it's a very broad statement. It does not define any specific sector. Having said that, the emphasis of this company the last four years has really been in the healthcare space. It's an increasing percentage overall of our revenue, slightly under 40% of all the revenues that we generate today, but more importantly, about 70% of the incremental revenues that we generate, and most importantly, almost all of our investment dollars as it goes to new products and service development is first and foremost for the healthcare space.
We are a market leader, as we come from the cloud fax or digital fax space. We span from the individual customer, which we call our e-commerce customers, all the way up through large enterprises. You'll hear more about this from Jim in terms of how we report. We've about 700 large enterprise customers. That group of customers generates mid to high $50 million of revenue annually. That's combined with our SMB channel, which has a much larger set of customers, about 46,000, generating around $135 million of revenue. Combined, our corporate channel, which is really where our emphasis is about $200 million of revenue rounded. We are part of the healthcare ecosystem, having four of the top 10 healthcare companies in the Fortune 500 as in our portfolio.
Our revenue is very recurring in nature. It's all sold under subscription model. However, depending upon the type of customer you are, a greater or lessers percentage of your revenue will come to us in the fixed subscription fee. As a company as a whole today, we're about 70% fixed, 30% variable. However, for our larger clients, both in and out of healthcare, that will flip to 70% or 80% variable, 20%, 30% fixed. We've historically bought companies to add to our customer base and our technology stack. We have been a consolidator. We are not an aggressive consolidator, though. We've done 15 deals over about 15 years, so the pace is about 1 a year.
We did one just a little over a year ago, a company called Summit Health outside of Boston, that brought us some great expertise in the area of RPA and HL7, as well as a small professional services team. We've been in the corporate marketplace serving those larger customers for 20 years, and we've got an excess of 100% corporate revenue retention. Our offerings on the left side, as I mentioned, when we get into sort of the product roadmap, John will get into much greater detail here. The key is really to deliver in real-time, high speed, reliable, on a trusted basis your information. We started historically by doing that through the fax protocol, doing that now in the cloud, focusing, of course, on the healthcare sector. In that sector, being HIPAA compliant is important, but we've gone a step beyond that.
We're certain, but not all of our services are HITRUST certified, and we're working on getting the remainder of them HITRUST certified. We do have this kind of legacy business, which we call the e-commerce or SOHO business. It's about $175 million-$180 million of revenues. These are individuals. They do have a small portion that is healthcare-oriented, primarily individual doctors' practices, but for the most part, it's a very wide swath of almost every industry represented in the United States. To give you a sense of our economic size, we had just under $370 million of revenues on a trailing 12-month basis, ended September 30th, and EBITDA margin slightly in excess of 54%. As I noted earlier, the two revenue streams that we report have very different growth profiles.
The corporate growing about 14.5%, the SOHO basically flattish, which gives us a combined revenue growth of slightly less than 6%. I'm now gonna ask John to come up and talk in greater detail about both the core cloud fax service as well as our focus on interoperability.
All right. Thank you, Scott. Appreciate it. On slide nine, we can start to look at the key problem of interoperability. You know, healthcare has been struggling with the ability to exchange information for as long as the electronic health record or EHR systems have been in the mainstream. Part of the issue can be found in the diverse set of players that you find in the healthcare sector. You know, healthcare isn't just a single industry. It encompasses many important commercial areas, hospitals, clinics, insurers, public health, social services, pharmacies, lab, the list goes on. The number of players creating and storing information is huge. You know, further difficulty in this space arises from a wide range of technologies and data structures used by hundreds of electronic health record, ERP, and financial and research systems.
You know, the effort to establish standards for information exchange in healthcare has been limited in its effectiveness. No single standard has completely emerged as a clear choice for communication. A protocol called Health Level Seven, which I'm sure you're familiar with, defines parameters. It's more of a framework than it is a real standard. FHIR is in fact the very same thing. Fast Healthcare Interoperability Resources is another framework that needs to still be standardized, and now it's difficult to use those simply by themselves to be able to exchange information. The effort to establish those as standards has been limited in its effectiveness. Vendors attempting to solve the problem, they're nearly always aligned with a specific solution.
You know, the problem is that when you get into the field, you see the HL7 and FHIR vendors think they're competing with Direct Secure Messaging. They think they're competing with fax, when in fact, when you look at it, what you're looking for is a solution that is going to be able to combine the number of protocols that are out there in the marketplace and allow for seamless communication and secure delivery of key healthcare information.
You know, if you think about the number of different kinds of vehicles that you use for transporting healthcare from the CCD to the CCDA to CDRs, you know, health systems can spend hundreds and hundreds of hours every day just trying to communicate with the doctor across town or the insurance company to be able to send and receive claims data. The need for information, actionable information, that integrates into workflows is absolutely essential. If you look at slide 10 here, you see an illustration of the scope of healthcare's interoperability challenge. For those of you in the room who are financial professionals, you know, I compare the problem in healthcare to imagine a banking system with no SWIFT codes or routing numbers, right?
In that kind of scenario, every bank would have to directly connect to every other bank to share information. Healthcare is very much that kind of overall ecosystem. In healthcare, you multiply that not just by hospitals, but labs, insurers, pharmacies, home health agencies. You know, a single hospital shares information with hundreds of endpoints every day, sometimes thousands. A software upgrade at one of those endpoints is going to break that connection. If you add a new field to an intake document, it makes it practically unfileable. You bring a new drug to market, and it's mayhem in interoperability. The expense to maintain these hundreds of connections for a single hospital is absolutely staggering.
The travesty here is that our healthcare system creates and stores massive amounts of valuable information that can greatly improve patient care and allow providers to coordinate efforts to the benefit of each and every one of us. If you ask why healthcare uses fax, and they fax a lot, this is the reason. You know, in contrast to this spaghetti bowl of what people call interoperability, you have fax, which is reliable, proven, inexpensive, and verifies receipt. Let's move on to slide 11, and we're gonna talk a little bit to the components parts that serve as the foundation for how Consensus solves this interoperability problem. You know, we approach this challenge with an eye towards reducing the economic burden associated with growing pressure in healthcare to comply with all of these requirements for digital communication.
We wanted to design ways that information can be shared, managed efficiently within existing workflows, protected in a highly secure and reliable framework, and meet the market reality of a variety of protocols in use across multiple disciplines in the continuum of care. Starting with a solid foundation in digital cloud fax, which is, by the way, an entirely paperless and incredibly secure, proven communication technology, we created a logical set of powerful tools designed to work as an integrated platform or be deployed as point solutions to address customer needs, can go either way. From our roots in eFax, we added a blockchain-based secure digital signature solution engineered specifically to fit within clinical workflows. Then we integrated secure direct messaging, Health Level Seven, Fast Healthcare Interoperability Resources or FHIR, patient record query through Carequality and workflow management tools together in Consensus Unite.
It eliminates the need for multiple vendors to manage the spectrum of protocols that are used within healthcare. To that powerful solution set, we brought Clarity, literally, to ensure that faxed data delivered to a location was able to be received in their protocol choice. You know, from a work effort point of view, receivers of fax very often have to have staff rekey that information into their EHR to maximize their value of the data. Clarity is a sophisticated transformation tool. It employs automated intelligence and natural language processing technology to take this static, unstructured data in a fax document and deliver machine-readable, structured data that greatly simplifies and streamlines the entire intake process. This crosses a previously closed superhighway in healthcare.
If you can imagine, instead of rekeying a 10, 15 or 20-page patient record into your Epic, Cerner, NextGen system, you now have an electronic HL7 message that files into your EHR. The reduction in manual work and improvement in accuracy is game-changing, nothing short of revolutionary. For those interested, you can actually see a demonstration of this live on our website that we did at HIMSS last year on consensus.com. The bottom half of the slide, you can see how these capabilities deliver maximum utility in an integrated platform, bring the solution to healthcare that it desperately needs to meet the interoperability challenge. You know, a slide back, we talked about a solution, and the difficulty of trying to manage a network that doesn't have this idea of routing numbers or SWIFT codes.
In a, in a organized communication structure, you need to be able to have at this unwieldy environment in healthcare rationalized. Disorganized landscape is where Consensus will bring Harmony. Over the past 25 years, Scott spoke about this earlier, we've been building connections. We connect to hospitals, we connect to pharmacies, we connect to clinics, offices, insurers, nursing homes. We connect to the CDC. You know, with Consensus, you are looking at a natural hub of connections, a cloud-based, highly secure, redundant, scalable, and established digital network. For a hospital, Harmony represents a single connection that can eliminate 100 existing ones. From eFax to jSign, Unite, Clarity, and soon Harmony, we've built a toolset that is designed to solve healthcare's biggest problem. Here is a visual depiction of the full Consensus platform and its integrated capabilities. It's more than a collection of products.
Our Consensus cloud platform brings disruption to an industry that's become accepting of single-point solutions and either/or choices. Cloud fax, secure email, HL7, FHIR, send, receive, sign, query, and transform, brought together in a single HITRUST platform with essential technological capabilities like action triggers, workflow tools, EHR integration, event notification, natural language processing, and collectively, they are unique in the industry. No one's come at the interoperability challenge as comprehensively as Consensus. We believe this is the winning approach. As a result of our existing cloud fax footprint, we're already in position to capture the market. You know, one look at our sales numbers, clear evidence that our approach is resonating with a runway that offers tremendous potential. Now I'll hand it over to Jim Malone, our CFO, for a bit more detail on the business's key metrics.
Okay. Do you have it?
Yeah, right there.
Good afternoon. Good afternoon, everybody. As sophisticated investors, you know that we're in a quiet period, I'm going to provide a couple of slides to show our financial strength. We intend to be issuing a comprehensive press release that you can take a look at sometime in the 3rd week of February, filing our 10-K at the end of the month. I've lost us here.
The-
Okay. There. This slide is gonna give a little more color to what Scott talked about with the different revenue streams that we currently have. If you take a look at the first column there, SOHO. SOHO, we have approximately 1 million customers. The business has been around for about 25 years, and it was really the foundation of starting our fax business, going back to the turn of the century, maybe even a little sooner. It's an e-commerce model. We market through e-commerce. We have a set of schedules and that you sign up for. It's a very light touch to no touch type of business. High transactions with 1 million clients. We have month-to-month arrangements as well as annual plans.
We receive the money upfront through credit cards. It produces a great deal of cash for us. It's comprised of about 90% of fixed subscription fees, and then a small element, about 10%, as you can tell from that chart, which is for usage. If we move over to what Scott described as our corporate. Our corporate business has two components. Our small and medium business of about 46,000 customers. We initiate sales through an in-house sales system we have. The sales cycle is quite quick, 1-3 days, some going up to a month. We have month-to-month contracts as well as annual contracts. We have pricing very similar to the SOHO business.
In SOHO, I should say that we generally have a monthly price of an average about $18 a month. It is higher in our small business area and when we have annual contracts. Again, 80% of the cash coming into that business is through credit cards, and we have about 20% that is through cash or wire. We jump to our marquee accounts. We have about, as Scott said, 700 customers. There we have a field force, enterprise field force, sales cycle because some of these are behemoth clients could take anywhere for 12-18 months. We negotiate 3-year contracts. Generally, 3-year contracts.
We'll have some that go four, we'll have some that go two , but the average that we look for is a three-year contract with an evergreen of one year every year after that. 30% of the contracts represent subscription revenue and has a higher amount of about 70%, which is volume or usage that we charge. Fortunately, it's a diversified client base. We're not only in healthcare, and I know this is a healthcare conference, but we're into a number of industries. The finance industry, education, and we're just recently getting into the government business with a contract that we signed with the VA. I encourage you to ask questions about that contract. I go to the next slide. I lost the button. Okay.
Here, I just wanted to give you a short preview of our financial strength. Because we're still in a quiet period, I'm going to talk about the last 12 months as of 9/30/2022. You will see that our business is growing from $350 million to about $370 million in total. What's interesting with that performance to date, we have foreign exchange headwind that we're fighting against. If we look at that business on a constant dollar basis, we're probably 6% plus on a growth. We are experiencing, as we talk about on our recent press release, that the market seems to be taking a little longer to sign contracts, a little longer to ramp. But we continue to have those accounts in our pipeline.
Our corporate business, which I just talked about, is growing about 12% on an actual basis. While Soho is a important part of our business and represents about 48%, we give guidance on that in the past. We're not giving future guidance here. In the past, it's anywhere from 1%-3% reduction. If I look at the Q3 financials that we issued, because of the headwinds with FX, it was flat year-over-year. On a constant dollar basis, we're even stronger. My last slide, I just wanted to show you our leverage. Because of the spin, we were spun from J2, and we're very thankful.
Next slide.
It didn't roll. Okay, sorry. It's hard for me to do 2 things at once here, you know. We were spun from Ziff Davis in October of 2021. Part of that spin, they were very grateful to give us debt
Of $800 million. That cash, the cash related to that, stayed in various forms with Ziff Davis. We have a 5-year note at 6%, and it's callable at the end of this year if we wanted to take some of that debt down. We also have a 7-year note, 6.5%. We've also negotiated a line of credit for $50 million. We have not tapped into that credit. That just gives us some insurance. Total debt of $800, net of cash of $7, with an EBITDA of about $200 million. Our leverage is at 4, net is 3.5.
We would look in the future to take a look at that debt and hopefully get down our leverage to anywhere from 2.5%-3%. We have a fully diluted share count of approximately 20 million shares. Kate? Thank you.
Great.
Thank you.
So, um-
Thank you.
We can open it up to Q&A. If you have a question, raise your hand, or we can take it in the digital conference book. I'd like to start with interoperability. you know, this is something that is extremely important for healthcare, but still feels, you know, pretty elusive. You know, we're not even close. you know, can you talk about, you know, the $8 billion TAM there that you've identified? You know, how much of that market is truly addressable to you? and how quickly can you capture some, you know, significant share there?
interoperability is fragmented. It's fragmented almost by the construct currently in healthcare. You've got competing protocols, which we talked about. You've got a number of different kinds of rules to put into place to try and drive certain kinds of adoption. Those rules aren't widely adopted by healthcare. You've also got, when you think of a healthcare ecosystem, I almost think about it as concentric circles. Everybody tends to think about healthcare in the middle of the concentric circle, where you find hospitals and large academic medical centers and large clinics where healthcare is delivered. As you start moving out, you start moving out to pharmacies, to prior authorization clearing houses.
You move out even further to skilled nursing facilities and home health delivery and hospices. The amount of money invested in health IT gets smaller and smaller and smaller because it's much more of a difficult investment for those care delivery mechanisms to make. When you think of healthcare and you think of adoption of FHIR, you really are immediately thinking of, you know, UCLA Health or Stanford Medical System. You're not thinking of the skilled nursing facility down the hall that down the road that is essential to care, but generally is going to have a fax machine sitting there. How do you draw everybody else in?
Because UCLA Health or Stanford Health has to communicate with that SNF, they have to be able to facilitate fax, and they have to be able to facilitate whatever kind of protocol comes in. Because of that, you've got this fragmented interoperability system that really has had difficulty trying to get on the same page because it's constructed that way. I think as you start to think about the TAM, even the TAM in interoperability is sliced up. You know, some of it's HL7, some of it's FHIR, some of it's Direct Secure Messaging, some of it's fax.
We're really approaching this as a kind of building a full platform that can encompass all of those various protocols, adding into it, secure digital signature, which we view as a communication protocol for signature rather than a signature filing system, as some of the other large competitors do. In doing that, every step you take adds to the TAM, of a fragmented view of TAM, but turns it into a single interoperability view of what the TAM looks like. Scott, I know you wanna build on that.
Yeah. Well, I think the slide I brought back up is the service roadmap. You'll see that with the advent of Clarity, we're into that $8 billion+ TAM. Like all TAMs, there are limitations and constraints.
For us, the biggest, I think, challenge, particularly coming out of the spin 15 months ago and coming out relatively thin from the spin, and there's all kinds of historic reasons why that's the case, is really how we beef up our own personnel, which we did in the 15 months post-spin, but also the marketing, because our approach to this is different than a lot of, quote-unquote, "our competition." Yes, there are Direct Secure Messaging competitors, there are cloud fax competitors, but we have this vision in terms of taking the interoperability and sort of mixing all of these things together, and that word's gotta get out. We've been very judicious in our first year of spin to maintain margins, maintain cash flow. We do have debt we have to service.
These are some of the things that as we look forward, we ask ourselves the question: How can we accelerate the opportunity to grab more of this TAM over the next, say, two to three years?
There's a lot of bad actors out there, you know, that are creating barriers to interoperability. You know, the physicians point the stinky finger at the EMRs, and the EMRs blame physicians. You know, how do we resolve that? Is it the 21st Century Cures Act that's really gonna be where the rubber meets the road, and they're gonna have to, you know, get religion on interoperability, or is it gonna take more than that?
I think, you know, HHS and CMS have tried to mandate this by rule before. There is pushback from the industry when things are difficult to adopt, either economically or from a workflow point of view. We've seen time and time again, we even saw it with the Cures Act, that they pushed back kind of the starting point on a number of different parts of the rule. We think the Cures Act is beneficial for us because it encourages messaging. You know, we're essentially building a platform that is message agnostic. You send a message, that's good for us, it's good for interoperability, it's good for the patient.
What we've also layered into this, and I think that this is unique, when we start to talk about clarity, you start to take away some of the excuses that people have used over time for being able to have an interoperable environment using all kinds of protocol. Fax has generally been excluded because it's a unstructured data.
That's a good point.
Unstructured piece of data. It's a picture. Good analogy. What AI and natural language processing let you do is deconstruct that picture and actually create one of those dynamic HL7 or FHIR messages out of the fax. You're breaking down these barriers to entry. One of the worries that you have with Cures is that in its full implementation, you're putting a lot of economic burden on those outside concentric circles of the healthcare community that have difficulty trying to find the money to invest in that. A social services agency would have a lot of trouble modernizing to the point where it could speak FHIR. The same is true with many SNFs. The same is true with long-term care facilities.
What we wanna be able to do is to say, "Look, you don't need to do that. If you have to deliver a FHIR message, we have a facility that lets you keep your fax, keep your workflow, keep what you trust, but be able to, on the other end, to Stanford Health, deliver a FHIR message." I think that starts to open the path for the promise of what 21st Century Cures wants to be able to enable. It opens the promise to be able to realize that.
I think you're in a really interesting position where, you know, fax is really where healthcare is today.
Sure.
You know, you've got solutions for where healthcare is going.
Going.
eventually. You're, you know, kind of really positioned along, you know, where the timeline is gonna be. You know, can you discuss why fax is so important to hospitals right now? Do you see yourself, you know, maybe with Clarity as a key catalyst to moving healthcare away from fax over time?
Well,
Will it always be with us?
It will always be with us. I. Look, I've heard that for 25 years. I've been around this company in many iterations, going all the way back when I was not a part of the company formerly. I was its investment banker. There's always been that. I actually think the fax protocol will be around, and Consensus Clarity actually think will help extend its life because it, as John mentioned, it addresses that one challenge that people have, which is, okay, you're sending me a picture, now someone's gotta go interpret it. A human's gotta get involved and read it. I don't think this is. While this is, as everyone's mentioned, we're here for the healthcare aspect of it has broader implications.
Mm-hmm.
We do have customers that are in the finance arena, government, manufacturing. The reasons, though, why fax in healthcare, but also outside of healthcare, is a highly used mode of sending documents really goes, I think John touched on it in the presentation, it's secure. That's a big deal for a lot of these regulated industries. Is it secure? It's been recognized by various regulatory statutes. It is verifiable. You know it's been received. That's also a big issue. It's easy to use. Don't underestimate simplicity and incumbency. The fact that it's been around and everyone knows how to dial 10 digits and let something go, whether it's physical pieces of paper or digital images, that's a big advantage. You don't have to retrain people how to use some of the newer protocols. To your point, our view is have the whole cornucopia of options.
Mm-hmm.
Some will wanna move faster into other areas. Some will wanna move slower. Some will have the budget, some won't. Some will wanna train, some won't. Our view is to be really agnostic and to say, "Well, okay, we've got the core communication protocols for you to send and receive as you wish, and ultimately with Harmony to transform. You'll run at your own pace.
Mm-hmm.
I think you'll still see 15, 20 years from now, there'll still be a home for fax.
Mm-hmm.
both in healthcare and as well as some of these other traditionally regulated industries.
Okay.
Yeah. I think that's really important, Scott. I wanna build on the security piece. When you think of electronic communication, fax is very likely the most secure kind of communication that you can deliver. Imagine, if you would, that you've all been to websites before where they put a picture up and say, "Where are the stoplights?" They can verify it's you. Because reading pictures is really hard for hackers. A fax is essentially a picture. Now, not only is it's a picture, but it's a picture that's turned into a sound file. Not only that, it's encrypted. Not only that, it's in a high-trust certified environment. You're as close to an unhackable piece of electronic information as there is on the planet today.
There's a lot of good in fax even though it's regarded as an old protocol. If you can just spend the time to I'd almost say that Clarity is close to how do you decrypt the fax?
Yeah.
Clarity is actually that tool. We certainly have spent a lot of time creating an environment in technology where we encrypt things, and we decrypt them on the other side, but precious little time has been spent saying, "Well, we could just decrypt the fax, and guess what? We've got a fileable HL7 message." That's really the technology that we've been able to bring to market here.
I think that's the best explanation I've ever heard for why we should use the faxes.
Keep using it in all industries.
You're making us want to keep it forever, right? You know, we only have a couple of minutes left.
Sure.
I do want to touch on macro.
Yeah, let's do that.
This is something that's, you know, important, and everybody's been really focused on it.
Yeah.
We've heard from everyone who touches the hospital space this week about the financial pressures that they're seeing, increased scrutiny. Can you talk to us about, you know, what you're seeing from your customers.
Sure.
You know, and how you're planning for that?
Sure. We comment a little bit, in fact, I think Jim just did, in our Q3 call. Once again, we have a range of customers, and I think, you know, the size element matters here, where you are also on the sophistication curve. One of the positives to our services is they generally have a very good ROI relative to what is incumbent. Having said that, and we know this in Q3, and I'll tell you, it continued in Q4, and I think it's going to continue in 2023. There is a slowdown in decision-making. I think a lot of that in this phase is caused by an uncertainty in the economy. Are we going into recession? How bad a recession? How long a recession?
Even if there is a positive ROI, there's just this natural, I think, instinctual sense, humanly, to say, "Well, I'm just gonna slow down." We've seen some of that. The good news is the pipeline keeps building. It's very robust. When it will actually, you know, windfall to be determined. It's not as though decisions may be deferred or may be slowing down, but not eliminated. I think that's a key, a really key point. We assume, as we think of our own budgeting for 2023, there will be a recession this year. We're building our plans and our cost structure with that assumption in mind. We don't think it's 2008, 2009. We think it's a much milder recession that probably lasts two, three quarters.
It probably doesn't start imminently, middle-ish of the year. We could be wrong on that. We're not economists. We had to put a stake in the ground to say, "What do we believe?" That will influence where we put marketing dollars, how many salespeople we hire or don't hire, et cetera. That's our working assumption. You'll hear a lot more on the earnings call when we release formal guidance of revenues, EBITDA, and net income. These are some of the things that we've, you know, seen and we are extrapolating out and believe will be there in 2023.
Great. Well, in the last 30 seconds, what are you most excited for in 2023?
Well, I think it's a couple of things. This chart that's up, while we've talked about a lot of things being developed, there's still iterations going on. So from the opportunity of bringing, and in the case of particularly Clarity, productizing it, that's a big accomplishment that we can achieve in 2023. There was John alluded to the VA contract. Now, it moves kinda slowly, but we've got the authority to operate. VA is in the process with Cognizant. Coming up with a rollout plan. Unclear what that will mean in 2023 from revenues, but getting that rolling, certainly as we snowball and go into 2024 is very exciting. Getting some of the. We've actually done it, but more of the work done on Harmony.
A lot of it is developmental work within the organization against this service roadmap, then leveraged with marketing and sales to actually bring these things to market and generate revenue. That's really where our focus is in 2023. We can't control, particularly for the bigger things in the macroecon, we don't know how that will play out, but this is where we're spending our time, attention, and dollars.
Great. Thank you so much for sharing your time with us today. Really appreciate it. It was super informative.
Anne, thank you.
Thank you all for joining us.
Appreciate it.
Thank you, Anne.