Sphere 3D Corp (ANY)

[falon]

SPHERE 3D when is the cash going to start flowing?

Soon Come quarter after quarter after quarter


The bottom line is Sphere 3D has done a lot of ground work to get their technology on the street. Some of it will work without little or no assistance from Sphere 3D while other tech will require much tech support depending on the requirements of the client.

How fast will this ramp up to considerable revenue is a wait and see situation.



http://seekingalpha.com/article/3689416-title-sphere-3d-corp-any-ceo-eric-kelly-discusses-q3-2015-results-earnings-call-transcript?all=true&find=Sphere%2B3D






Question-and-Answer Session


Krishna Shankar - Roth Capital
Yes, can you give us some sense for how these design wins are going to transmit to revenues over the next few quarters, especially they could mean both your healthcare and the Texas education design win and some of the other wins that you have at Microsoft Azure, can you give us some sense for the cadence of all revenues are going ramp for the next few quarters.

Eric Kelly - Chairman and Chief Executive Officer
Hey, Krishna. This is Eric, good morning.

Krishna Shankar - Roth Capital
Hi Eric, how are you.

Eric Kelly - Chairman and Chief Executive Officer
Great, thanks for getting up so earlier this morning. Yes, so if you looked kind of the and Peter said kind of briefly, if you look at the wins that we have got with let's say ESC6 or iPro, iPro, is a three-year deal where they have over 300 healthcare facilities. They have decided to put that our product, our virtualization product in 200 of their facilities to start and that represents a little over $13 million win for us over three years. One of the things that we are looking at is how do we accelerate that just by adjusting them by going from location to location.

The other one which we are excited about Krishna, is that ESC6, one with the school region in Texas where they have about 1.1 million students and we signed an agreement with them, not only are they are deploying it within their region, but they are now we have a partnership with them where they are actually developing at throughout Texas where they have a little over 5 million students. Again, just a 20% adoption rate with that one Krishna, represents over $20 million over the next three years.

So, again, as you look at where we are deploying our resources really making sure we support them and try to accelerate that from three years to less than three-year implementation. So, when I look at it over, kind of product a timeframe it is easy for me to pencil in quarter-by-quarter. Depends on how quickly we can move through the installation. So, the great news is we already have the contracts, now the execution and implementation by our services and support team. I don’t know if that…

Hubert Mak - Cormark Securities
Okay. And I guess on the sales pipeline, I think Peter I’m not sure we are going to talk about that.

Eric Kelly - Chairman and Chief Executive Officer
Hi this is Eric, hi Hubert how are you doing?

Hubert Mak - Cormark Securities
Okay good.

Eric Kelly - Chairman and Chief Executive Officer
So we don’t really forecast our sales pipeline, but I can’t kind of give you put some context to the pipeline. I mean what we’re seeing now is much larger deals because we’re selling solution versus disk [ph] products. We’re seeing with the partners over at Microsoft clearly build that we probably wouldn’t foresee ourselves, the partnership is working extremely well. So it’s growing and the key areas that we’re focused on are virtualization products, our storage products and you kind of see in that reflected in the numbers but we don’t really give guidance on pipelines, but hopefully that answers your question Hubert.

Hubert Mak - Cormark Securities
Yes and maybe just – maybe another way of asking, you announced two deals in that $13 million to $20 million range or couple of years, are those types of deals, are these larger deals or these are be in size, I'm just trying to get what type of deals are they.

Peter Tassiopoulos - Vice Chairman and President
Hubert it is Peter. I mean it’s all over the map. We’ve seen everything from deals that have been locations to companies who spent 1 or 200 locations to companies who spent $300 million on just building their app that are looking for a way to get to the cloud or we see everything in between. So it’s pretty hard to quantify the key is though we didn’t see these six months or eight months ago.

We didn’t see this range that’s sort of new to us because these deals are big and quite frankly we’ve added some new skill over the last quarter to manage that kind of business. So we’re pretty excited to answer your question directly, the one way of seeing that we’ve announced those are now turning into the midrange, whereas originally we are looking at those, that the large ones that are actually now in the middle of the path.

Hubert Mak - Cormark Securities
And based on these deals are growing in size and sounds like you've got more solutions from a technology standpoint I know either there always comes in improvements in R&D, but always you guys have companies combined together a resort of close like pretty much complete in terms of the technology stock or you it’s kind of go and sell one solutions with all different products?

Eric Kelly - Chairman and Chief Executive Officer
Yes, so I think a follow up from Kurt from last quarter you have mentioned that R&D we see some reduction from the synergies between the two companies, so which we did from last quarter and this quarter. So, from an R&D perspective it’s not as exploratory as it was. The lot of the R&D is actually specific to customer requests now. And so the product is pretty backed as we have mentioned Glassware in market place is staged, certified and so it’s ready to go.

Exosphere is already up and so, it’s fully baked. The appliances are up Hubert, I don’t know if know, but we did an install where we actually taped that wire so short simple it is. So, it’s there – it’s backed, of course we're - is always going to be improving it. As SnapCLOUD and also our SnapScale products we are always going to be improving, but for the most part I mean we have got some solid products there already to be in the field which took a little longer than they would like, but they are gone.

Hubert Mak - Cormark Securities
Okay, just two more questions just on the Microsoft, are you looking with an idea how much resources they are putting behind your partnership, just so that we can get feel of how aggressive they are?

Eric Kelly - Chairman and Chief Executive Officer
Well thank you, I mean trials yes the Microsoft executive team all the way through their sales and marketing teams, they have put in a tremendous amount of resources behind what we are doing basically as a strategic move for them in terms of enable their customers to migrate from on premise to the cloud. But a good example of that Hubert is just what we did 30 days ago.

When we did the October 15th announcement that has their worldwide sales team and their key partners being introduced to the products, being trained other products we are follow on these after that, we are - our sales teams, their marketing teams, their executive team are working hand-in-hand to just drive the business. So, their – I couldn't add pretty more resources that they are providing us. So, I am extremely pleased with that kind of partnership that we have.

Operator

Your next question comes from the line of Scott Shafer [ph] Private Investor. Your line is open.

Unidentified Analyst

Hey, guys can you elaborate a bit on the different between Exosphere and Glassware in market place like who, what each product is for, who each we marketed too and by whom.

Peter Tassiopoulos - Vice Chairman and President
Yeah, sure Scott it’s Peter. Thank you, great questions. So, let me start off by just what Exosphere is. Exosphere is actually how we started. We sort of code named it internally as routing [ph], but Exosphere is how we started. It is a highly distributed solution where there is a number of components to it. So you have different size virtual machines inside of Azure running different parts of the overall workflow within your solution. And you can even have connections to others like Rackspace or Amazon.

So you can actually fire up other data centers to work along with your core data center. And it is really designed for large deployments. Right? We were able to stand up an infrastructure for 10,000 users in two weeks and which is not heard of, but it does require certain technical sophistication to do it. It is not something - it is not pushing a button.

Glassware coming in at the marketplace, that's pushing a button. All those little micro small virtual servers that are located and spread out in Exosphere, they are shrunk down into one package so that you can go online, go into their store, pull the image, go download your client from one of the app stores whoever it is, put in the address for your virtual machine and connect to that virtual machine in Azure.

So it is more geared towards, and I wouldn’t say necessarily it is small medium businesses because that is not the only target, because it can't do thousands of users, it is actually geared towards a more simple approach, less distributed, but can also cater for somebody who just needs access. I mean if you needed access to Microsoft Office for the weekend, you could literally turnaround and fire up for a weekend.

And in terms of Glassware remove everything and in about half an hour into the cloud and then come back and turn it off on Monday. Right? So it is two different sort of market use cases and the bigger difference between the two is really scale and flexibility as well as the amount of specification you need to actually run.

Unidentified Analyst

Okay, who or how it will be marketed and by whom? How the product will be marketed and by whom?

Peter Tassiopoulos - Vice Chairman and President
Well absolutely, so both products are done jointly between us and Microsoft. And so this is again to be very, very clear and I've heard these questions from a couple of other shareholders, I'll be as clear as I can, they are out marketing this think in many cases without us and they are patrolling leads over the fence saying, hey guys here is what I have come across, can you help, et cetera, et cetera, et cetera. So their sales force is working this.

Understand this is an Azure and I cannot speak to this, but from outside looking in if you look at all the push they've put on Azure, this is a major initiative for them, their cloud and that's why they grew I think 130% quarter-over-quarter last quarter. So they are definitely incentivized to go out there and this gives them a huge advantage over whomever else is out there right now when it comes to applications. I mean where we can deliver stuff no one else can and their sales folks know it, so they are in the front line.