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Boxlight Corp. (BOXL) Q4 2021 Earnings Call Transcript

Boxlight Corp. (NASDAQ: BOXL) Q4 2021 Earnings Conference Call dated Mar. 17, 2022

Corporate Participants:

Michael Pope — Chairman and Chief Executive Officer

Mark Starkey — President

Patrick Foley — Chief Financial Officer

Analysts:

Scott Buck — H.C. Wainwright & Co. — Analyst

Byron Meo — 1031 Private Exchange Group, Inc. — Analyst

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

Presentation:

Operator

Thank you and welcome to the Boxlight Fourth Quarter and Full Year 2021 Earnings Conference Call. By now, everyone should have access to the press release issued this afternoon. This call is being webcast and is available for replay. The remarks today will include statements that are considered forward-looking within the meaning of the securities laws, including forward-looking statements about future results of operations, business strategies and plans, customer relationships, market trends, and potential growth opportunities. In addition, management may make additional forward-looking statements in response to your questions. Forward-looking statements are based on management’s current knowledge and expectations as of today and are subject to certain risks and uncertainties that may cause actual results to differ materially from the forward-looking statements. A detailed discussion of such risks and uncertainties are contained in the company’s most recent Form 10-K, Form 10-Q, and other reports filed with the SEC. The company undertakes no obligation to update any forward-looking statements.

On this call, management will refer to non-GAAP measures that when used in combination with GAAP results provide additional analytic tools to understand the company’s operations. The company has provided reconciliations to the most directly comparable GAAP financial measures in the earnings press release, which will be posted on the Investor Relations section of the company’s website at investors.boxlight.com.

With that, I’ll hand the call over to Boxlight’s Chairman and Chief Executive Officer, Michael Pope.

Michael Pope — Chairman and Chief Executive Officer

Hello, everyone, and thank you for joining the call. Despite significant uncertainty in the world today, including growing concerns with the war in Ukraine, an ongoing battle with COVID-19, rising energy costs, rapid inflation, continued supply chain and logistic challenges, and overall volatility in global equity markets, we continue to see growing demand for our interactive solutions and our outlook is overwhelmingly positive.

We have reported double-digit or greater revenue growth for five consecutive quarters, a positive profitability trend, and significantly improved working capital. Just two years prior we reported the full-year 2019 results with USD31 million in orders, USD33 million in revenue, and an adjusted EBITDA loss of USD6 million. We are a dramatically larger company today, benefiting from both market expansion and strategic acquisitions. For the full year 2021, on a pro forma combined basis with FrontRow, we generated USD250 million in orders, USD215 million in revenue, and USD21 million in adjusted EBITDA. We are gaining on our key competitors with an aim to achieve the top industry position in each of our product categories.

For the fourth quarter, excluding FrontRow, we reported USD44 million in revenue, exceeding our guidance of USD40 million, and delivered organic growth of 38% over the fourth quarter of 2020. The financial results of FrontRow were not included in our Q4 financial statements because we completed the acquisition on December 31st. However, due to significant one-time costs incurred to complete the acquisition and related financing, we experienced inflated operating expenses. Additionally, supply chain and logistics costs remained high during the quarter, impacting our gross profit margin. As a result of these additional expenses, we reported a fourth quarter adjusted EBITDA loss of USD2 million.

We concluded the fourth quarter with an improved balance sheet including USD18 million in cash, USD53 million in working capital, and USD52 million in net assets. For the current year, we are experiencing stronger-than-expected customer order intake as well as growth in our sales pipeline, and have lifted our guidance for the full year to USD250 million in revenue and to USD26 million in adjusted EBITDA. For Q1, we expect USD44 million in revenue and USD2 million in adjusted EBITDA.

On December 31st, we formally closed the acquisition of FrontRow, a leading provider of classroom audio and campus communication solutions for the education market. The purchase price was USD23 million, net of USD12 million in acquired working capital. Given the company generated greater than USD7 million in EBITDA for 2021, prior to transaction adjustments, the resulting valuation was very attractive at less than 4 times EBITDA. We had identified classroom and campus audio solutions as our top growth opportunity and FrontRow was a clear strategic fit. We are now integrating the company into our Boxlight ecosystem and benefiting from a broader solution suite along with our combined sales resources and global reseller channel. We are also in a position to expand our communication systems with fully-integrated audio and video throughout an entire campus, a significant competitive advantage.

For the full-year 2022, we expect FrontRow to contribute greater than USD32 million in revenue and USD8 million in EBITDA. Also, on December 31st, we secured a USD58.5 million loan from WhiteHawk Capital Partners, providing funding to complete the FrontRow acquisition, refinance existing debt with Sallyport Commercial Finance and Lind Global Asset Management, and allow for general working capital. The facility provides an additional USD10 million in borrowing.

During Q4, we published seven case studies that detail the successful implementation of Boxlight solutions in a broad range of education and enterprise environments. They included Quarrydale Academy and Cardiff Metropolitan University in the U.K., Ord Public Schools, and Phoenix Unified High School District in the U.S. and Starcar Rental in Germany. One of our case studies featured our strong relationship with Clayton County Public Schools, the fifth largest school district in Georgia. We are working closely with Clayton County to provide teachers and staff with customized training and support and have renewed our professional development contract with the district for a third year. Another success story showcasing our utility in higher education featured Joseph Chamberlain College in the U.K. which upgraded from underperforming competitor screens to our IMPACT interactive panels, and CM Series digital signage displays, along with Clevertouch Live our flexible and customizable content management platform. Our case studies and success stories reaffirm our dedication to be a trusted ally for our customers by providing turnkey solutions that are cutting edge, comprehensive, and can be fully integrated into the diverse communication environments.

Adding to the many accolades we have received from industry leaders, our Clevertouch brand won two awards during InfoComm 2021 Best in Show for the IMPACT Plus interactive touchscreen and Best in Show digital signage for Clevertouch Live. We continue to innovate and released several product updates and feature additions that differentiate us from the competition, including a new generation of interactive and non-interactive flat panels, enhancements to our MimioConnect blended learning platform, improved tools to our LYNX Whiteboard annotation and lesson-planning software, the ability to access our Cleverstore 3 education app via a web browser, additional screen-sharing tools using Clevershare 5, and the addition of sensor technologies to monitor air quality in meeting spaces, among others. Of course, our success to this point, along with our ability to continue to deliver growth and profitability is a direct result of our talented and dedicated employees and our supportive channel partners.

With that, I will now turn the call over to our President, Mark Starkey, to provide additional insights.

Mark Starkey — President

Thank you, Michael. And I’d like to say a Happy Saint Patrick’s Day to everyone on the call. Q4 was another record quarter for Boxlight, and I’d like to take this opportunity to thank all our staff and our customers who have helped contribute to our success during the quarter. During Q4, we booked USD42 million of orders from our partners, up from USD33 million for the same period last year. That represents organic growth of 25% year-on-year. For the full year, our order intake was USD216 million compared with USD57 million in 2020, representing 283% year-on-year growth. Some of our key orders received during the quarter included USD3.1 million from Unit DK in Denmark where we retained our number one market share position and 23% share of interactive displays.

In the U.S. we had significant orders from Bluum, previously Trox, USD2.6 million dollars; Central Technologies based in Tennessee of USD2.5 million; D&H Distributing of USD2.2 million; USD1.9 million from ACT, Advanced Classroom Technologies; and USD0.9 million from data protection [Phonetic] in Texas to name but a few. Overall, our market share of interactive displays in the U.S. has more than doubled over the past two years to greater than 7% according to Futuresource. In Australia, we continue to hold the largest market share with 26% of total IFPD sold and received a further USD2.2 million of orders from our partner ASI. In France, we received USD1.3 million of orders from our partner Speechi, and in the U.K. where we have 16% of the IFPD market share, we received orders from over 100 partners, including USD1.1 million from Roche AV and USD0.9 million from IDMS [Phonetic]. This highlights the quality and diversity of our customer base, especially across the U.S. and EMEA.

We are also developing very successful partnerships in Australia, South Africa, and South America. During Q4, we also had our first major win in Japan where our Clevertouch solution was selected for ease of use with the students’ Apple devices. In Russia, we have temporarily suspended our business relationship with our partner in St. Petersburg, although we do not expect any significant impact in our revenues and growth as a result of the war in Ukraine.

As previously mentioned, in September 2021, we signed the exclusive contract with Trox, now Bluum, which was a merger between our two largest partners, Tierney and Trox. The contract gives Bluum exclusive rights to sell Clevertouch in 49 of the 50 states in the U.S. and Canada. Q4 was our first quarter of trading with the new contract with a number of sales people who are actively selling Clevertouch in the U.S. increasing substantially from 40 heads to over 200 heads. I can now report that our sales pipeline has expanded significantly with Bluum and currently stands over USD20 million of qualified opportunities. Clevertouch is now being actively sold in all 50 states, including Canada, whereas just a few months ago Clevertouch was only present in 20 states. This means that both of our IFPD brands, Mimio and Clevertouch, are being proactively sold across all states in the U.S. by our channel partners.

The acquisition of FrontRow fits very well into our portfolio and gives us a fantastic audio solution for the K-12 marketplace. We expect that the acquisition will be more — will be accretive to our collective revenue and more importantly to our gross profit which we anticipate will continue to improve throughout 2022. As a result of the increase in gross profit margins along with top line sales growth, we expect USD26 million in adjusted EBITDA this year. That equates to more than 29% organic growth in adjusted EBITDA for 2022.

In terms of end users, we had another quarter of fantastic wins. One notable win was with Midland ISD in Texas where we continue to roll out Clevertouch panels across the whole school district. In total, we expect Midland ISD to take over 4,000 screens. Midland continued to buy our solution predominantly because our clever message — because of our clever message solution enabling the schools to push alerts across the district. In Switzerland, we received an order by our local partner for 150 86-inch IMPACT Plus screens from the city of Gossau. They noted that the Clevertouch MDM solution was the main reason for selecting our screens.

Our STEM business is also starting to gain traction as COVID restrictions begin to ease. In Poland, we received an order for 370 3D printers, including MyStemKits platform activity and curriculum content to be supplied to schools across the country. There are 13,000 schools in Poland and each school is required to have at least two 3D printers. Our solution was recommended to the Polish education authorities, and we expect further significant orders in the coming quarters. Our software revenues continued to rise as we pursue a dual strategy of selling our Mimio and Oktopus software under SaaS and OEM agreements to customers such as Samsung, Uline, and school districts as well as embedding our Mimio and Clevertouch software solutions into our own products. Our Oktopus OEM software revenues increased from USD0.7 million in 2020 to USD1.3 million in 2021, an increase of 90% year-on-year. And sales of Mimio software increased from USD96,000 in 2020 to USD1 million in 2021, following our first order of MimioConnect in March ’21. Combined, our software revenues grew by over 200% from USD0.8 million in 2020 to USD2.4 million in 2021.

We also launched a new cloud-based version of LYNX Whiteboard in September ’21 and have had an unprecedented response. Using Google Analytics, we know that in the past five months since launch, we have had 523,000 live sessions on LYNX, with an average duration of 54 minutes each. That equates to more than 53 years of lessons being delivered on our platform in the first five months since LYNX Whiteboard was launched. We are therefore confident of delivering more than 1 million lessons over the LYNX platform in its first year, and we will look at the best ways to monetize the solution moving forwards. Ultimately, the fact that we own a growing suite of software IP enables us to differentiate our products from the competition.

In summary, Q4 was a very strong quarter in terms of order intake and revenue, and our solutions are getting a lot of traction in the market. We continue to develop our key partnerships and alliances across the globe. And I look forward to another record quarter in Q1.

With that, I will now turn the call over to our CFO, Patrick Foley.

Patrick Foley — Chief Financial Officer

Thanks, Mark, and good afternoon, everyone. To further expand on what you’ve already heard from Michael and Mark, I’d like to add a few figures to provide context to Boxlight’s international operations. So revenue by country and region, our total revenue in Q4 was USD44 million. EMEA was 55%, USD24.3 million, of which the U.K. represented 34%; the Americas 38% or USD16.5 million; and the rest of the world 7%, USD3.2 million, which was mainly Australia.

The top 10 customers represent, approximately, 44% of total sales in Q4, with the single largest customer at, approximately, 9% and these are based across a number of markets, namely the U.S., Denmark, Australia, Finland, France, and Spain. The top 20 customers represent, approximately, 57% where the mix is slightly different to previous quarters where this was running around 66%.

For our sales product mix and margins, in Q4 hardware remained the largest proportion of total revenues at 91%. These were largely sales of interactive flat panel displays and represented 90% of this total, with the related accessories being the balance of 10%. The balance of all our total revenues coming from software, services, and STEM solutions. Gross margin for the quarter was 21.2%. The IFPD margin was about 20%, which have been slightly higher. However, as previously reported, with increased global shipping costs where we’re still seeing 4 times normal rate, have reduced margins by up to 4 percentage points, we anticipate the higher costs will remain.

As noted in previous quarters, we have experienced some supply chain challenges, including interruptions to inventory production schedules as suppliers [Phonetic] continued delays in shipping and receiving goods. We’ve seen manufacturing costs increase due to these issues, which have impacted gross margins. In Q4, the education sector represented 91.5% of all interactive display sales with about 73% of these with 75-inch and 86-inch panels, which follows the consistent trends we have seen throughout 2021.

I will now review our first fourth quarter results — the financial results for the three months ended December 31, 2021. Revenues for the three months ended December 31, 2021, were USD44 million as compared to USD31.9 million for the three months ended December 31, 2020, resulting in 38% organic growth. Gross profit for the three months ended December 31, 2021, was USD9.3 million as compared to USD3.6 million for the three months ended December 31, 2020. The gross profit margin for the three months ended December 31, 2021, was 21.2%, which is an improvement of a 100 basis points compared to the three months ended December 31, 2020. Gross profit margin adjusted for the net effect of acquisition-related purchase accounting was 28.1% as compared to the 26.4% as adjusted reported for the three months ended December 31, 2020.

As reported in previous quarters this year, gross margins have been adversely impacted by, approximately, 4 percentage points due to increased freight and customs costs caused by supply chain challenges associated with the effects still of COVID-19. Additional pressure on margin has been seen on the cost of manufacturing, which has led to an adverse impact of, approximately, 4% in the quarter.

Total operating expenses for the three months ended December 31, 2021, were USD14.9 million as compared to USD11.1 million for the three months ended December 31, 2020. The increase primarily arose from headcount and other related overhead expenses and significant one-time costs related to the FrontRow transaction and WhiteHawk financing. Other income/expense for the three months ended December 31, 2021, was net expense of USD2.2 million as compared to net expense of USD1.9 million for the three months ended December 31, 2020. Other expense increased primarily due to USD1.6 million losses recognized upon the settlement of debt obligations.

The company reported net loss of USD7.1 million for the three months ended December 31, 2021, as compared to a net loss of USD8.6 million for the three months ended December 31, 2020. The USD7.1 million loss includes more than USD1.5 million of costs associated with WhiteHawk financing and FrontRow transaction as well as the retirement of the Lind and Sallyport debt. The net loss attributable to common shareholders was USD7.5 million and USD8.9 million for the three months into December 31, 2021, and 2020, respectively. After deducting the fixed dividends to Series B preferred shareholders of USD317,000 in 2021 and USD338,000 in 2020.

Total comprehensive loss was USD6.9 million and USD3.2 million for the three months ended December 31, 2021 and 2020, reflecting the effect of cumulative foreign currency translation adjustments on consolidation. With the net effect in the quarter of USD275,000 gain and USD5.3 million gain for the three months ended December 31, 2021 and 2020, respectively. The EPS for the three months ended December 31, 2021, was USD0.11 loss per basic and diluted share compared to USD0.17 loss per basic and diluted share for the three months ended December 31, 2020. EBITDA for the three months ended December 31, 2021, was USD5.1 million loss as compared to USD6.4 million EBITDA loss for the three months ended December 31, 2020. Adjusted EBITDA for the three months ended December 31, 2021 was a USD2 million loss as compared to a USD356,000 loss for the three months ended December 31, 2020. Adjustments to EBITDA include stock-based compensation expense, gains/losses recognized upon the settlement of certain debt instruments, gains/losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with acquisitions.

At December 31, 2021, Boxlight had USD17.9 million in cash and cash equivalents, USD53.4 million in working capital, USD51.6 million inventory, USD201.4 million in total assets, USD52.5 million in debt resulting from our new WhiteHawk debt facility net of debt issuance cost of a circa USD7.1 million, USD53.3 million in stockholders’ equity, 63.8 million common shares issued and outstanding, and 3.1 million preferred shares issued and outstanding.

The financial results for the 12 months ended December 31, 2021. Revenues for the 12 months ended December 31, 2021, were USD185.2 million as compared to USD54.9 million for the 12 months ended December 31, 2020, resulting in a 237% increase due primarily to the acquisition of Sahara in September 2020 and increased demand of our solutions. Gross profit for the 12 months ended December 31, 2021, was USD46.5 million as compared to USD9.9 million for the 12 months ended December 31, 2020. The gross profit margin for the 12 months ended December 31, 2021, was 25.1% compared to 18% for the 12 months ended December 31, 2020. Gross profit margins adjusted for the net effect of acquisition-related purchase accounting was 26.8% as compared to 27.1%, as adjusted, reported for the 12 months ended December 31, 2020. And as reported in previous quarters this year, gross margins have been adversely impacted by, approximately, 4 percentage points due to increased freight and customs costs caused by supply chain challenges associated with the effects of COVID-19, and this is anticipated to continue into 2022.

Additional pressure on margin has been seen on the cost of manufacturing as a result of component shortages, which have had an adverse impact of, approximately, 3.9% in the 12 months to December 31, 2021. Total operating expenses for the 12 months ended December 31, 2021, were USD49.1 million as compared to USD22.6 million for the 12 months ended December 31, 2020. The increase primarily resulted from additional overhead costs associated with the full-year cost of the acquired Sahara operations in September 2020.

Other income and expense for the 12 months ended December 31, 2021, was net expense of USD7.9 million as compared to net expense of USD4.3 million for the 12 months ended December 31, 2020. The increase in other expense was primarily due to USD4.9 million of increased expense due to losses recognized upon the settlement of certain debt instruments. The company reported a net loss of USD13.8 million for the 12 months ended December 31, 2021, as compared to a net loss of USD16.2 million for the 12 months ended December 31, 2020. The net loss attributable to common shareholders was USD14.7 million and USD16.5 million for the 12 months ended December 31, 2021 and 2020, respectively. After deducting fixed dividends to Series B preferred shareholders of USD1.3 million in 2021 and the fair value revaluation deemed contribution of USD367,000 following the redemption amendments with the Series B shareholders which was signed June 14, 2021.

Total comprehensive loss was USD15.3 million and USD10.9 million for the 12 months ended December 31, 2021 and 2020, reflecting the effect of cumulative foreign currency translation adjustments on consolidation, with the net effect year-to-date of USD1.5 million loss and USD5.2 million gain for the 12 months ended December 31, 2021 and 2020, respectively. The EPS loss for the 12 months ended December 31, 2021, was USD0.23 loss per share compared to USD0.39 loss per share for the 12 months ended December 31, 2020. EBITDA for the 12 months ended December 31, 2021, was a gain of USD66,000 as compared to an USD11.6 million loss for the 12 months ended December 31, 2020. Adjusted EBITDA for the 12 months ended December 31, 2021, was USD12.1 million as compared to a loss of USD1 million for the 12 months ended December 31, 2020. Adjustments to EBITDA include stock-based compensation, expense gains/losses recognized upon the settlement of certain debt instruments, gains/losses from the remeasurement of derivative liabilities, and the effects of purchase accounting adjustments in connection with acquisitions.

And with that we’ll open up the call to questions.

Questions and Answers:

Operator

[Operator Instructions] [Operator Instructions] Your first question is coming from Slatt Beck [Phonetic] with H.C. Wainwright. Your line is live.

Scott Buck — H.C. Wainwright & Co. — Analyst

Hey, guys. It’s Scott Buck. How are you doing?

Michael Pope — Chairman and Chief Executive Officer

Hello, Scott.

Patrick Foley — Chief Financial Officer

Very good.

Scott Buck — H.C. Wainwright & Co. — Analyst

Appreciate the time. My first question, I’m just curious if you could talk a little bit about the levers you might have to pull to combat not just the supply chain headwinds, but now we’re dealing with inflation as well.

Michael Pope — Chairman and Chief Executive Officer

Yeah. So both, of course, challenges — so we’ve been dealing with supply chain challenges, of course, for a couple years now. So that’s something that we feel like we have a relatively good handle on what the expectations are. The hope is that’ll start to improve, but we’re not planning on that in the near term, but we’re managing that with better planning and in addition to that with the new credit facility we brought on, so you remember we brought on WhiteHawk as our new lender, USD68.5 million that was closing, but we have access to another USD10 million facility to help with growth, and that’s going to help us start to bridge that gap.

But then also we’re turning the corner. To this point in time we’ve gotten to where we are even with dramatic growth but needing to spend cash to get where we are. And this is the year where we start to turn the other way, and we’re going to start to bring in positive cash flow and the cash from the business will start to fund the business going forward.

Scott Buck — H.C. Wainwright & Co. — Analyst

Yeah. That’s helpful, Michael. And on the competitive environment, very nice looking guide for 2022. Do you guys have a sense of what is the pie getting larger versus you guys taking a larger piece of the pie?

Michael Pope — Chairman and Chief Executive Officer

Yes, we’re seeing both of that. So the pie absolutely is getting larger. This last year there was dramatic growth, specifically in interactive flat panels which is the majority of our business, as you heard, but also growth in other categories as well. And that’s going to continue in this year. We look at research that comes in from Futuresource consulting, and they show that their expectation is growth of nearly 20% in the U.S. and in EMEA it’s closer to around 10 points. But globally, we’re looking at, based on our growth, we’re going to be in the teens for industry growth.

So if we can grow like the market, we ought to grow in the teens. If we can take some market share from competitors, we can grow quite a bit faster, and we have been doing that to this point. If you look at the research that comes out of Futuresource, they show the percentage of the market that we have. If you go back to couple years, we were low-single digits. We’ve over and doubled that in the last couple years, and now we’re north of 7 points of the total interactive flat panel display market, excluding China. Now we hope within a short number of years we’re going to be up definitely well north of 10 points, as high as the teens or as high as 20, which would be about where our largest competitor is. They’re about — around 20 points of the total market.

Scott Buck — H.C. Wainwright & Co. — Analyst

Good. That’s really helpful color. And then last one for me, just on the operating cost going forward, what should we think of as run rate opex here maybe 4Q, pulling out those one-timers?

Patrick Foley — Chief Financial Officer

Yeah. So there’ll be a number of different things in terms of — when you see, obviously, the financials as we are publishing, the run rates going forward will have, obviously, a greater amortization piece now included in our opex as we move forward close to completion of the FrontRow transaction. So we will have an increased opex but it will actually from an adjusted EBITDA perspective obviously we’ll be backing out. So it’ll be pretty consistent quarter on quarter going forward now. So, obviously, in Q4 we had a slight anomaly and slight up. So it will normalize slightly — our normal range going forward will be slightly below that on a quarter basis on a normal opex, but there will be increased amortization as a result of the recent purchase.

Scott Buck — H.C. Wainwright & Co. — Analyst

Got it. That’s very helpful. I appreciate the additional color, guys. Congrats on the quarter.

Patrick Foley — Chief Financial Officer

Thank you.

Michael Pope — Chairman and Chief Executive Officer

Thank you, Scott.

Operator

[Operator Instructions] Your next question is coming from Byron Meo with 1031 Private Exchange Group. Your line is live.

Byron Meo — 1031 Private Exchange Group, Inc. — Analyst

Hi. Congratulations on your increase in sales over projections. That’s very nice. I know you expected the gross margins to improve as your sales volume and economies of scale progress. I’m wondering looking over the next year or two, where do you see gross margins once supply is mediated, remedied.

Michael Pope — Chairman and Chief Executive Officer

Yeah. Well, appreciate the question, Byron. So a couple thoughts on that. One is as a business we’re focusing more and more on our solutions outside of interactive flat panels today ISPDs are around 80% of our business as you heard, and we’re looking at selling a lot more of accessories, including the audio solution we brought on with FrontRow that’s selling other classroom solutions. Beyond that, we have our software solutions. We focus on STEM, of course, science, technology, engineering, and math. We have several solutions there. We have our professional services team. But all of these other solutions are high margin. Most of those are 40-plus points of margin and in some cases 50-plus points of margin. So as our product mix improves and we’re less concentrated in interactive flat panel displays, our margins will absolutely improve. So that’s one focus.

A second one is growing our enterprise vertical. Today, we’re 90% as you heard education. We’re focusing on enterprise. That’s a growing opportunity. We’ve won some really great opportunities actually over the last few months, and we’ve built out our team, which is larger now, focusing on enterprise. And enterprise margins are typically substantially higher. In many cases 50 points a margin even on hardware in enterprise. So as we start to be more successful there, you’ll see the margins improve. But then also with scale, we’re going to be better at buying. That’s going to help as we build out our broader solutions as we’ve been doing. We’re able to charge higher prices and so we’re looking wherever we can to increase prices. That’s going to improve margins.

And then hopefully, as the economy improves, as the cost to manufacture comes down some, as logistics costs come down some, then that will affect those margins as well. But if you’re looking at a couple years, so we really ought to be north of 30 points, and I think optimize with a total solution like we’re selling today. And several years forward, we ought to be probably close to around 40 points of margin, and that’s where we’d like to be eventually. But in the short term, maybe expect some small upticks over the next few quarters as we start to realize these different opportunities.

Byron Meo — 1031 Private Exchange Group, Inc. — Analyst

That’s a great answer. Thank you so much. One last question.

Patrick Foley — Chief Financial Officer

Michael, can I just add a couple of points to that as well actually?

Michael Pope — Chairman and Chief Executive Officer

Yeah, please do.

Patrick Foley — Chief Financial Officer

So just quickly, so we just filed our super 8-K from the completion of FrontRow, so when you look at the financials on that, that’s in the attachment. You’ll see also in the margin mix as we change going forward. It’s a very profitable business. So the margin mix will lift naturally as a result of that inclusion as well as we move forward. And then secondly would be the points we previously made in other quarters about increasing prices, which we we’ve done and passed on and that’s now improving margins as we go, and also our purchasing power, obviously, the volume of our interactive flat panels that we’re now selling throughout the world has increased enormously. So it’s giving us good leverage for discussions and continued discussions with our manufacturers.

Byron Meo — 1031 Private Exchange Group, Inc. — Analyst

Thank you. One last question, too, and that is in growth through acquisitions, are you guys eyeing any potential acquisitions? Like FrontRow, anything on the table possibly going forward to expand your horizontal or vertical?

Michael Pope — Chairman and Chief Executive Officer

Yeah. So we’re at a scale [Phonetic] now. We’ve come a long way in the last couple years from a little USD30 million company to now we’re talking about being a USD250 million company, and with that scale, we’re a lot more noticed in industry. So we had — we see a lot more opportunities now than we did in the past, and I would say on a weekly or every couple weeks we see a potential new opportunity, not necessarily because we’re pursuing it, it’s because a lot of these companies come to us. They see what we’re doing, they’re seeing our growth, and they want to be part of it.

Now we’re not actively looking. Right now the focus is largely on taking advantage of the companies we brought together, focusing on the strong revenue growth, focusing on improved profitability. However, if the right opportunity came along, of course, we would look at that. And, of course, the economics would have to be right as well. And like they were with FrontRow, the economics were amazing with FrontRow. We bought FrontRow for less than 4 times EBITDA. It’s going to pay for itself very, very quickly. So if the right opportunity again came along, we would look at it. But we’re not actively pursuing many opportunities and feel like we have the right suite of products and the solutions in-house today, and we’re going to take advantage of that.

Byron Meo — 1031 Private Exchange Group, Inc. — Analyst

Thank you.

Mark Starkey — President

The other thing I’d highlight there, Michael, was actually the synergies between FrontRow and the rest of our business. So what we actually see is we can integrate the solutions from FrontRow into the rest of our solutions and actually we get one plus one equals more than two, right. So our customers can see better, more integrated solutions, and we think that will give us a big differentiation in the marketplace as well. So the FrontRow acquisition has only just been completed, but we’re very positive on what’s going to happen over the next 12 months now.

Byron Meo — 1031 Private Exchange Group, Inc. — Analyst

Yeah, great points.

Operator

Your next question is coming from Brian Kinstlinger with Alliance Global Partners. Your line is live.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

Thank you. Since you did file your super 8-K, can you remind us what the gross margins are for FrontRow and then what is the combined gross margin implied in your USD26 million EBITDA guidance?

Patrick Foley — Chief Financial Officer

Yeah. So if you look at the — it’s, approximately, 50% gross margin on our FrontRow acquisition, and you’ll see that on the historical financials and that will continue going forward. So on a mix basis, you’ll see that that would on average lift the margins to — as reported to about 27%. So as we increase and improve the margins on the interactive flat panels and the mix of other products coming in that will increase as well.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

Great. That’s helpful. And then you mentioned your new exclusive agreement with Trox that started at the beginning of October. It’s been now probably almost six months. So I’m curious how that’s working. First of all, are you gaining market share of Trox sales? And then second part of that, how do you see Trox selling your solution versus others? Are they selling yours a lot more? Are they even selling competitors’ solutions now that they’re differentiated? Just take us through how you’re seeing that market play out.

Mark Starkey — President

Yeah. Michael, do you want to lead with this one or do you want me to take this one?

Michael Pope — Chairman and Chief Executive Officer

Yeah. Go ahead, Mark, and I’ll jump in as needed.

Mark Starkey — President

Yeah. So, look, it’s been five months since we signed that exclusive contract with Bluum as they are now called. And we have to go through a process of actually working out exactly how this is going to work because previously we had about 40 sales guys from Tierney that were selling Clevertouch and now we’re interacting with about 200 sales guys from Bluum. And they’re selling not just Clevertouch, they’re selling other competitor screens as well. But we are getting a lot of buy-in from their sales guys, a significant amount of buy-in. I mentioned on the call that we have over USD20 million of qualified leads in the pipeline. I think we’re going to have an exceptional year with Bluum. The relationship’s very good, very strong, and we see huge opportunities there. And they’re not — we’re also doing Mimio deals with them as well, right? So it’s not just Clevertouch. We’re still selling a lot of Mimio, and we’ll take — whatever is the right solution to each customer, we will take. But they’re our number one customer, right? They’re very important to us.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

Can you remind us what your or quantify actually the revenue from your Trox and Tierney relationships in 2021? You just did USD20 million of qualified leads. How does that compare to actual revenue generated in 2021 from that?

Mark Starkey — President

Pat, do you have that number, the full year?

Patrick Foley — Chief Financial Officer

Sorry, say again for me. Sorry, excuse me.

Mark Starkey — President

No, it’s all right. [Speech Overlap]

Michael Pope — Chairman and Chief Executive Officer

We did USD3.9 million.

Mark Starkey — President

Sorry.

Michael Pope — Chairman and Chief Executive Officer

That’s right.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

I’m interested in the revenue from Tierney and Trox relationships in 2021.

Mark Starkey — President

Full year.

Patrick Foley — Chief Financial Officer

Yeah, I’ve clearly got it. I’d have to pull in. It would probably take time to actually get back along. I can take that offline separately with you.

Michael Pope — Chairman and Chief Executive Officer

Yeah. So Brian, to give you an idea. So Bluum, as they’re called now, was approximately 9% of all of our sales in Q4. They were single digit but they were our largest customer in Q4. For the full year, they’re going to be — it’s going to be single digit, right? They’re not going to account for more than 10 points, but it’s significant. It’s going to be probably high-single digits in the percentage.

Mark Starkey — President

Which I assume was much lower if we look at all year 2021. Is that accurate?

Michael Pope — Chairman and Chief Executive Officer

It would have been significant for the full year as well, but it is growing. We set growth targets with Bluum. They’re hitting those targets, so we are seeing good growth, but it would have still been significant for full year ’21 as well as full year ’20.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

Okay. Lastly…

Mark Starkey — President

Sorry, just on that point, the USD20 million of outlook is obviously what we see in the next three to four months in terms of order intake, right? So it’s not the full year — it’s not like a year’s outlook.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

All right, thank you for clarification. Lastly, since COVID we’ve talked about the federal stimulus money. There’s been so much money that’s sent to K-12. Where are we with that? Are we still another year or two’s worth of this being a catalyst in United States? Just take us through where we are in that timeline.

Michael Pope — Chairman and Chief Executive Officer

Yeah. That’s right. So the stimulus money that was applied to education or ESSER funds — there was ESSER 1, 2 and 3, so three tranches. The bulk of that came in ESSER 3, and that money is being spent now. We’re getting orders where we know in fact they are spending that money and they have been accelerating technology implementations because they have or getting the money but that money is going to last through 2024. That’s the expectation. It could potentially go beyond that. A lot of times the deadlines get extended. They did on the previous tranches. But right now the expectation is that money would be spent through 2024, and that’s why if you look at most industry projections, they’re going to see high growth in the U.S. in sales of education technology and then come 2025 it’s going to flatline for a little bit before it starts to go up again.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

Is that — is there a number such as there’s X billion dollars of money — in stimulus money over that time period? Or is that unclear necessarily how much money is available?

Michael Pope — Chairman and Chief Executive Officer

No, it is clear. Yeah, so it was, approximately, it was just shy of USD200 billion. It was about USD190 billion was the total. Of that USD190 billion, I believe — and I’ll have to pull the amount. I want to say it was USD120 billion [Indecipherable] of the USD190 billion was the last tranche. But I can get that to you, Brian, because that’s all public. Probably a quick Google search of ESSER funds education will have it pop up. But again, about USD190 billion total. The largest tranche of that, the majority of that USD190 billion again is going to last through 2024.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

And when was that — sorry, did you say that, when was USD120 billion released?

Michael Pope — Chairman and Chief Executive Officer

Well, so let me look real quick. Let’s see if I can pull it up because I want to make sure I give you the right number here.

Mark Starkey — President

The other key thing, Brian, is — and I know Michael mentioned this before, is what you’re really going to see the biggest growth — obviously the next couple of years we’re going to have significant growth in the education sector. But what we’re starting — and we’re really seeing this. Corporate is going to really start to take off. And in most meeting rooms in any corporate environment, it could be public sector or finance, banking or whatever. In those meeting rooms they generally have non-interactive screens. And what we’re going to see, especially with the likes of Teams, Zoom. the way people are interacting these days, we are seeing those meeting rooms being moved over to an interactive technology. So we’re going to see the growth rate in what we call corporate or enterprise really significantly ramp up and within three to five years we expect the market there to be as big as the market of education.

Michael Pope — Chairman and Chief Executive Officer

Yeah. So back to your question, I was digging the K-12 number, which we track the majority of [Technical Issues] it was much higher. So the total education number was USD13 billion — no it was USD31 billion in March of 2020, another USD82 billion was approved in December 2020, and then USD168 billion which was approved in March of 2021. So that’s — do this in my head here.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

No, I got it. That’s okay.

Michael Pope — Chairman and Chief Executive Officer

That would be USD280 billion is the number. So you got USD280 billion for education. Now, of that, education for those tranches, again, March 2020, December 2020, March 2021, the K-12 education portions were USD13 billion, USD54 billion, and USD122 billion. So that’s that roughly USD120 billion. Now of the first which was the CARES Act was the USD13 billion. You remember when the CARES Act came out, that had the USD13 billion and then you had the December COVID relief package that’s USD54 billion. A lot of that’s been spent. The CARES Act money has been essentially spent. I believe that the bulk of the ESSER funds too have been spent. But a lot of again this USD122 billion for K-12 education is still out there. There’s an application process, and it’s a little bit of paperwork for the school districts to access the funds. And funds, by the way, they’re allocated from federal government to states and then the states allocate to the schools. But that is all happening as we speak, and even just last week I know that we brought an order in that we were told they were using ESSER 3 funds.

Brian Kinstlinger — Alliance Global Partners Corp. — Analyst

Great, okay. Thanks so much.

Michael Pope — Chairman and Chief Executive Officer

Yeah, absolutely. Thanks, Brian.

Operator

We have no further questions from the lines at this time. I would now like to turn the floor back to Michael Pope for closing remarks.

Michael Pope — Chairman and Chief Executive Officer

Great. Thank you, everyone, for joining the call and for your support [Technical Issues] 2021 earnings call. We look forward to speaking to you again in May when we report our Q1 2022 results.

Operator

[Operator Closing Remarks]

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