Q2 2020 Earnings Call
The only mode. After the speaker presentation, there will be a question answer session to ask a question. During this I shouldn't do you want me to press Star one on your telephone if you require any further assistance. Please press star Zero I would now like to hand, the conference over to your speaker today, Jamie Bernard, but Sharon Merrill Merrell and associate.
Please go ahead ma'am.
Good morning, everyone and thank you for joining Tesscos Q Q2 020 conference call. Joining me today, our Sandeep Muthangi, Tesscos, President and Chief Executive Officer, and Eric's the tone that the company's CFO .
Please note that management's discussions today will contain forward looking statements about anticipated results and future prospects.
Looking statements involve a number of risks and uncertainties and Cescas results may differ materially from those discuss today information concerning factors that may cause such a difference can be found in test gets public disclosures, including the company's most recent Form 10-K and other periodic reports filed with the Securities and Exchange Commission.
That introduction I'd like to turn the call over to Sandeep Mukherjee, Tesscos, President and CEO Sandy.
Thank you, Jamie and Hello, everyone.
It's my pleasure to be here today is does cause president and CEO .
Like to take the opportunity to greatly introduce myself discuss why I'm excited to be part of that NESCOE team.
Review some of my early observations very specifically highlighting the exciting opportunities that lie ahead for Tesco.
Let me begin by introducing myself.
He spent over two decades in wireless telecom and the software industries with 18 people labs loosened Alcatel Lucent and most recently with Nokia.
During that time I have experience first time, what technology Refreshes me in the wireless industry, specifically hobbies.
Neighbor growth an opportunity for the broader ecosystem and more importantly, how they impact the way people live and conduct business.
The current transition, we're going through which some have label before industrial Revolution will bring about unprecedented changes and opportunities.
When I accepted the CEO role.
That does go had a well established heritage and I'm pretty impressive reputation in the industry.
I also news that much work was needed to reverse the company's current trends.
Since joining Costco in late August I've been here for about 70 days now I've spent a lot of time getting to know our people our customers our operations our processes, our financials and our supplier partners.
What I have discovered reinforces and accentuates the positives impressions I first time, when I joined that's cool.
Ray specifically number one.
We have a very talented team of individuals who come to work every day with passion and partly.
We have excellent longstanding relationships with our customers and our supplier boxes.
We have a strong core solutions competency that come about as a result of our teams in understanding of works technology and the market.
And then finally, we sit in a position in the overall industries taxonomy.
Anticipates, the ramp of new technologies, and very candidly makes it happen.
These factors align very well with my own brand because then I bring to the table my brand around customer intimacy innovation and a fashion to be very easy to do business with.
No one of these factors provide a solid foundation for our company as I mentioned earlier, we have a great deal of work to do to realize our full potential.
In order to improve performance, we have already taken immediate actions to make some very important changes in our structure and we are undergoing a very thorough review every aspect of how we operate and innovate.
As an example, we have split our product and sales functions into separate organizations in order for each organization to focus on their expertise and to work management attention.
In the same breadth, we have combined our product management and supply chain organization into one seamless organization to facilitate the better understanding of our inventory needs and drive efficiencies.
Let me spend a few moments inventus our own innovation in manufacturing engine Ventas ability to design unique products example, custom enclosures has enabled us to win business with some large stadiums and fortune 100 Enterprises. One example of this is the recent win with a large baseball stadium in.
Texas, which will begin shipping later this quarter.
Another area, we focused on improving is our whole overall solutions proficiency, which is a crude differentiator for Tesco. This is when we anticipate our customers future needs and develop integrated solutions involving one or more suppliers, our own ventas capabilities, along with our other technical and logistics.
Capabilities to come up with the flow what we call an end to end solution.
Let me give you. An example of this we recently partnered with Commscopes to bring to market a bi directional amplifier that saw its critical coverage means for reliable cost effective public safety wireless systems.
That's cool has had a long commitment engagement with the public safety industry and this product will ensure that emergency responders have reliable and continuous communications. It was because of this customer intimacy and our ability to work across the value chain, but that school has secured the entire first your production capacity for this very unit.
Native product.
Well, our ability to prop solution to the crew competitive advantage, we need to become much easier to do business with.
To that end, we have already begun to make important changes, including improvements in our order processing supply chain management and inventory optimization. We have also implemented a strong discipline around building and managing our sales pipeline.
As a result of these actions, we expect to better position that so to capitalize on the technology growth trends that I mentioned earlier.
And because the upcoming market opportunities are so significant and aligned so well with our core competencies. Our core strength, we are accelerating our technology and process improvement investments to enhance.
Our competitive advantage.
Be drive sustainable profitable growth and see create shareholder value for the long term.
Thank you share in much more on these points with you over the coming months in quarters.
Now, let's turn to an overview of our second quarter performance.
Our overall second quarter results improved sequentially from the first quarter, although they were weaker than expected on both the top and bottom lines revenue was down from 10.6% year over year, primarily as a result of our retail business, which was down 24% year over year.
This was due to our previously disclosed retail customer transition.
That occurred in the fourth quarter of our fiscal 2019.
Our carrier business was essentially flat year over year, but did improve sequentially as we captured new wins in the carrier ecosystem with both tier one carriers and stuff contractors.
The bar business was down 6% year over year.
Let's discuss the drivers behind the performance of each one of our businesses starting with our retail business.
The same confluence of factors that negatively impacted our first quarter continued to impact us into second quarter for this business.
But the retail segment is experiencing significant consolidation that multiple levels throughout the supply chain.
Second our retail business is adapting to changing dynamics, such as the slowdown or device refreshes, which has driven the market for the last several years.
These dynamics are expected to continue until a broader set of accessories. It's the mass market. We expect this to change with the availability of Fiveg devices and it. This is expected sometime later in calendar 2020 .
I really have also had a negative effect on this business during the last several quarters. This was a contributing factor in our results this quarter as well however, with the supply change actions. We have started earlier, we expect Arabs to have a minimal in effect on our business going forward.
Beyond this we are aggressively addressing some critical areas that will improve our performance.
Examples.
Focusing on a better customer experience.
Implementing strong fields disciplines that drive building and managing our pipeline.
Forecasting an improving inventory management.
Also devoting resources and investing in our ecommerce website.
Performance. So far website has index saved not only for our retail channel, but also for our Wagner and integrator segment. We now have a team dedicated to fixing issues and implementing enhancements.
You're already seeing some positive results of these efforts and it is critical that we improve the aspects of this part of our business, which has been holding us back for sometime now.
In addition to these structural changes, we're focusing on developing business in new retail channels, including mass consumer electronics wholesale airport enterprise insurance and repair we are actively supplying product to customers in the UK through two newly established distribution partners in your.
And as we mentioned last quarter, we signed a contract with one of the largest carriers in the UK. The supply event the mobility products and have also signed contracts with another large carrier as well as a mass retailer.
Additionally, we are dedicated to providing a best in class accessory line card to that end, we recently announced a new partnership with JBL a premier audio products brand. This partnership outs. That's continued building a robust and can competitive or do you offerings, while providing customers with a single source for all.
They're audio and mobile device accessory needs.
And finally, our retail business historically has been able to snap back from dynamics like the ones. We're now seeing which have happened before when you expect the seem to be the case going forward.
Turning to the Wagner an integrator business.
We had previously discussed the realignment of our sales and go to market strategies in prior quarters.
We have not yet seen the results of these changes in our sales momentum.
I guess, who has a strong brand recognition and presence that position us very well the gained meaningful market share in the segment.
I've got a chance to review and understand the go to market strategy being implemented I believe our implementation of this strategy needs some refinements to gain better traction and to drive growth.
These include many of the things, which I mentioned earlier, including stronger sales disciplines improvements on our E Commerce website, and a lean forward approach to understanding our customers changing needs and associated solutioning to solve those needs.
We are implementing these refinements and I firmly believe that these will collectively have a positive effect on our sales we will pay particular attention to growing our market share in this segment.
Regarding our public carrier ecosystem business, while revenue was essentially flat year over year.
Sales were up significantly sequentially quarter over quarter, and we expect continued sequential growth. Let me tell you why.
Rick capturing new wins with tier one carriers and with our tough contractors.
In Q1, we mentioned that we had signed a master franchise agreement with a tier one carrier and had been awarded components of a major distributed antenna system project for a government agency installation.
A carrier has slowed down some of these goes this quarter what has been overall very pleased with our performance.
Additionally, several of our tough contractors have one new markets and we have been selected either as their primary supplier or exclusive provider for the sites that they have one.
We're also winning business with Verizon contractors and during this quarter. We were informed that we won important aspect.
Tower business with one of the largest dollar operators in the United States I am very proud of what our team has achieved and believe these wins, we have a dramatic effect on this part of our business going forward.
[noise] overall, we are encouraged by the outlook of the carrier segment as the build delays we had seen over the last few quarters they seem to be easing.
We expect like the rest of the industry. That's the velocity of Fiveg deployments will increase in the second half of calendar 2020 .
Given the competitive environment among the U.S. carriers, we expect increasing demand and broad recognition of pepsico's industry expertise together with our program management suite. Our execution. This will drive increased demand for our products and solutions.
Our rental infrastructure business, which supports what the carrier in foreign markets is expecting sales improvements going forward. This is driven by customers waiting for like five refreshes. However, choosing to wait for the next generation technology, namely wildfire six Oems are just now the leasing radios for life Isix deployments.
So we expect to see a lift booked this quarter and throughout Q4 from this group of products.
Finally, as we mentioned in our press release I have kicked off a strategic study are far business. Now. This is expected to be completed by the end of our fiscal year and the goal is to ensure that all of our company assets and resources are being best utilized to enhance long term shareholder value I am.
Back to share the results of this work with you over the coming quarters.
Let me know handover the call to Eric for a more detailed discussion of the financial results.
I'll be back to provide some final thoughts Eric.
Thank you Sandy and good morning, everyone.
Thank you know, while we did show significant improvement in revenue and earnings over Q1.
Another difficult quarter force.
Ever we forget about the fundamentals of our business. We're now focused on the exciting opportunities before us.
Now, let me give you a financial overview of the second quarter.
Revenues totaled 142 million.
10% from the prior year.
Sequentially total revenues were up 8%.
Gross profit from the quarter was 26.3 million down 16% from the prior year quarter due to lower sales volumes and higher tariffs have increased freight and costs.
As a result gross margins declined to 18.6% from 19.8%.
Second quarter fiscal 2019.
Our incremental tariff costs too late this year.
But clearly all related to vented mobile accessory products have been approximately 1.4 million.
We have several here that we expected tariff issue to be largely mitigated by Q3 should we have been successful in that effort.
We believe that over 80% of all bets are power products, we manufacture this quarter will come from non Arab countries.
So are we will continue to have some tariff costs going forward.
I should be you've actually lower than in the first half of the fiscal year.
And she and her expenses were down 13% from the prior year quarter.
In part due to lower variable expenses fell so as a result of our cost reduction efforts.
As a percentage of total revenue as she may expenses decreased 40 basis points.
Team 0.2%.
Operating income was point 6 million for the quarter compared with operating income of 1.9 million for the same period last year due to the lower sales volume.
Net income for the second quarter was essentially breakeven compared with net income of one and 2 million a year ago.
Second quarter diluted earnings per share also breakeven compared with diluted earnings per share 14 cents here.
In light of second quarter results and the difficulty in forecasting results for the fourth quarter, which has historically are most difficult prefer to forecast.
Reversing it all previously given financial guidance, we do however expect positive earnings to third quarter.
Turning to the balance sheet.
Inventory balance decreased by approximately 17 million from the end of Q1 as expected.
We've had equipped to what initiatives to reduce inventory lock in packing our availability to customers.
Most of the inventory reduction was related to current projects that had been differ.
Well, we are focused on opportunities to further lower inventory, we're on a much better position now than we were 90 days.
Birth, an additional $15 million against her 75 million dollar line of credit now for the balance of 35 million.
On a project business will naturally lead to fluctuations on the balance sheet.
We remain focused on improvements in working capital cash flow.
You said or dividend of 20 cents per share with record date of November 13th and the payment date of November 27.
Well results this fiscal year have been below our expectations. Our team is engaged and we are focused understand each leadership to get back to driving profitable growth.
With that let me turn it back to Sandy.
Thank you very much Eric.
Before we go to the Q and any section let me reiterate a few of my beliefs number one I believe the Tesco team has the talent in the back end to end.
Number two the changes Weve recently made to our organizational structure, our sales discipline and our web strategy are the first steps along the road to making Tesco best in class.
Number three our market is expanding.
Driven by new technologies, such as Fiveg like five six and Pbrs.
Now this together with the reality of edge computing and cloud based applications will usher in new applications, such as Aiotv augmented and virtual reality smart cities smart metering et cetera.
Number four in order to succeed our customers will need complete and complex end to end solutions from Tesco and that this need will increase overtime.
We are going to be very focused on anticipating these needs and aligning our investments appropriately.
I wanted to take this opportunity to thanks, the Tesco team, our customers suppliers and shareholders for the warm welcome to have extended to me I'm very optimistic about that goes future even more so now than when I first took the seed two months ago.
With that Eric and I will be very happy to take your questions.
As reminder to ask a question you any depressed star one on your telephone to withdraw your question press the pound or hash key please standby, while we capacity Q and a roster.
And your first question comes from Mackie Nolan with William Blair.
Hi, guys. This is Ted on for Maggie So wanted to dig in on the var, an integrator business and Sandeep I think you mentioned.
Kind of a refinement of go to market strategy. There might help you guys game for traction so could you add a little bit more color in terms of how you plan to refine that go to market strategy. Thanks.
Hey, good morning, guys. Thanks for thanks for the question.
A couple of things too.
You know points to stable right as as I answer your question first.
In this particular segment the vars the end users I mean this has been historically strength that Tesco has built on this 0.1, so we have to.
I appreciate that second our brand is pretty well known right now what has happened over time is two things that we need to.
Need to refine one is our understanding of the end users I recall at the bar and end user market you know for a reason because both.
Either Tesco directly or through Vars, we anticipate needs of the end users and be selling to them right. So our continued understanding of the pain points right to improve our solutioning capability, that's something we need to not lose we need to get back to and we need to embrace completely right. So that.
I'm much more relevant and continue to be relevant in the market.
At his 0.1, why do the buying behavior right off the end users into vars actually our multichannel I'd say come they procure through our website.
They procure by calling us directly and we also lean forward incentive to them. So I'd say almost an omni channel experience and over time, one of the things we've kind of let happen is weve had weaknesses in a in various parts of this channel. If you will things like what you're doing on.
Website that we need to aggressively fix we need to provide the same experience that we provide when a sales person calls when when a customer calls in or when a customer comes through our website and we are aggressively doing that and then finally right in terms of how we follow up you know I mean desk.
Got a science and devote management attention to ensure that it happens.
Did I answer your question.
Yeah that was really helpful.
So I also wanted to dig in a little bit on the project delays at <unk> carriers, I guess, how much visibility do you have into the duration of that I know you mentioned that you're seeing some easing of delays do is that can be more back half loaded as we think about.
2021 or is that something that we can think about here in fiscal 2000 as well.
Okay, so I'm going to basis on.
Two things right feedback that we're getting from our own channels right plus you know things that.
Salable in the public domain that you know you and others on this call all have access to.
So let's look at what has been driving some of these delays. So first as they were you know people have talked about being points on radio availability. I mean this companies you know any introduction of new technologies right Fiveg radios other radios cost structure shipping.
I used to be part of my prior life, but I think this audience I understand so that's been a contributing factor.
When you get done with the macro network right. I mean, if you think of some of the frequencies that are being used the millimeter wave technologies the smaller cells.
The the more advanced electronics antennas going forward, it's a little more complex than historically what.
These macro network deployments have been so my my belief right is that I'm using historical analogs here, but these things shake out over time and pick up momentum.
Her dad, the momentum to pick up again.
That's very helpful.
So as we as we think about kind of the fiber GE and the level of adoption currently is starting to see some headlines.
About kind of implementation of the Fiveg network on a smaller scale just wanted to see what your guys view is in terms of the current level adoption of Fiveg I kind of how how you think that will ramp up over time.
Well I mean to be very candid, we don't see you know and impact or a lift to our business yet I mean from Fiveg alone right. We are winning business. You know, we're winning as I mentioned earlier right, where we are winning contracts getting ourselves positioned in the value chain.
But in terms of the broader mass market you know how many fiveg devices are already out there I mean, that's low compared.
Did that covers multiple aspects of our business right I mean does.
You will see things like Firstnet right I mean, that's one aspect of our business, where fiveg will have an impact there's the traditional carrier buildouts right. That's another.
Some of the new device accessories, if you will right when I would be comes to play or when augmented reality virtual reality, when we see a live from me RV our.
Devices. So there are multiple aspects of our business you know that kind of leverage availability of these fiveg networks. So from that broad spectrum. We don't see you know I lift yet right from discrete parts of our business like how we help the dollar business Yeah, we are seeing.
Vector here that we hope to ride.
Yeah, certainly certainly and and then some deep coming from outside of Tesco you bring it certainly different perspective business. So I guess, how do you plan to leverage that perspective are there relationships that you expect to be able to carry over from your prior stops you think we'll be able to benefit Tesco long term.
Oh that's.
Pretty broad question right, what kind of better times co badge on the textbook.
Yes. Good question now I. So that's that's 0.1 0.2, I mean, I don't want to underestimate or anybody to underestimate the power in fashion, we haven't Tesco you know too.
We have to leverage that and paradigm in each one of five springs.
Irrelevant from the broader industry and I absolutely I.
I wanted to bring back to the table and and utilize.
The biggest challenge of challenges for us I mean, I outlined on the call and in some of those are easy some of those will require focus.
And time.
A lot or the analogs that drive our topline right next set of things, which I you know I've Commission and I mentioned this in our or their comments in terms of our overall.
And then it's a August building pipeline and you know the signs of sales. If you will right that we need to embrace and adopt.
Thanks, So yes.
Can bring to the company what I've experienced I mean, it's more than just contacts it's an approach to the business you know Anna belief system that.
It is very close to what the company already has.
Certainly that's the that makes a lot of sense and last question for me what was the share count this quarter. Thanks.
Yeah tenants 8.650 million.
Thank you.
Thanks, Ted good question.
And again for any questions. Please press Star then number one I know telephone keypad and do our next question comes from Bill Dezellem with Titan capital.
Thank you I have a group of questions first of all I want to pick up on the question about Fiveg EBIT was asked earlier what are you hearing from the carriers about their fiveg Buildout plans.
And and what is your sense about whether those are being pulled in pushed out.
And how steep of a ramp when they do begin are you anticipating.
Hey, good morning, Bill Yeah. Thanks for the question I mean, just like the.
Avenues of input we get right one is what.
Our customize the carriers.
The second is from our own channel right and from our own channel you know this information flow and as you know transaction flow right orders.
Tetra from so with that lens.
In mind.
I think our customized and some of our partners and other pleasantly ecosystem I've already talked about that.
So thats 0.1 point do you know you're asking for specific timeframe right. Our belief is that as you know second half of calendar 2020 you know when we will see mass adoption and by mass adoption you know I've.
The premise behind behind a fiveg.
And we hope you know through.
Other strategies, we are developing bill to participate more broadly in this ecosystem than we do today.
Okay. Let me, let me take that a step further because I may not have been super.
Super Fair with your question.
Yes.
Second half of 20 is when you're thinking that there will be mass adoption as.
Fiveg, having doesn't that imply that activity level at the carrier infrastructure.
Level.
Should pick up much sooner than that and and be quite yeah, quite a steep ramp or am I misinterpreting your comments.
No. Yes, I think you got to tightly right I mean look I mean, how a lot of.
No fiveg is not.
A greenfield deployment, if you will it's a new technology, right and the way and I've.
Leveraging bypass right when Threeg came along or Fourg came along it has to be backwards compatible. So as people room, you know you could handle on and off and Fiveg will be no different right. So it will initially started out as an overlay.
And then.
As handsets and other devices you know flip over from you know being doing technology to single technology I mean, you've seen this you've seen this movie before right it will not be any different.
Oh.
I cannot I should not get into you know proprietary discussions that we have with some of our customers intensive exactly where they are starting to build out and what their strategy is what in terms of our own business. You look I mean, we we participate in what I consider three phases.
If this off Fiveg deployment, so part of the build strategy right as people.
Put radios on towers, how they actually build out that technology. So we participate in the build that typically comes three mass adoption phase right. The second part we get into as you know when you get into in building distribution when you get into distributed antenna systems, and we expect to participate.
If fiveg is just going to be another way to do voice I mean, that'd be a big disappointment for the overall industry I.
I mean, its people are very excited I I'm, particularly excited about the possibilities of.
Fiveg.
How that together with.
Things that'll happen in the adjacent market right I mentioned edge computing I mentioned cloud applications all of that have to come together to drive things like Aiotv right to drive things like a AR VR that'll have an impact on devices and device accessories. So that's a third phase of what we see.
And this is you know if you look back on how threeg evolved or how fourg evolved I mean this is a decade long.
Cycle.
And Fiveg will be no different.
Thank you let me switch slightly you mentioned several.
Several Kerry and turf.
Sure contractor wins in your opening remarks would you please loss to the timing and magnitude of those wins. Please.
I think I can go into.
Specifics and violate something you know that's my friend, Eric said earlier, so bill we are not giving guidance you know on specific guidance on third and fourth quarter. So I need to stay within those confines. Hopefully you know you understand why I need to be.
Why I need to follow Eric's throughs, if you will so that with that in mind.
Look I mean, when we mentioned some of these things on a call like this and it is usually a lot of the things I mentioned, our fast and so we have one contract you know some of them our share in the overall value chain. If you will and we are excited about even expanding from there into.
Exclusive arrangements right that we have you know we have recently won.
I'm.
Confident of using you know statements like it will.
That's right in some categories, some segments, but I need to stay within.
The framework what of what Eric described.
Two.
They're not be able to give you at this time overall impact to our business areas would you like to find out a little bit to that.
[laughter] this quarter.
I had a handful of terse that weve, historically done either little or no business with.
The increase dramatically their market share with us so when we made those comments about some of the key wins there are about a.
Three to five.
The mid size kind of term vendors.
Contractors that historically, we've done a little bit of business with but are now, giving Tesco a bigger piece.
Other share.
They're not.
$10 million customers.
At this point today did you grow significantly from year ago, too and we are today.
I hope that helps bill.
That does thank you.
Next question if I may please.
The first strategy and the refinements that yeah, it's you're looking for there.
To open up a bit about that process.
More of what needs to be done.
And and how you're going to go about doing that and anything you can mention on timing keeping in mind Eric's request.
Of course.
Look here you know the strategy is.
Pretty simple right its reclaiming.
Our trajectory on momentum right, that's how I think about it.
Three elements.
Making the experience easy and things like shopping cart catalog.
Let me just ease of use and then you know monetizing that experience right I mean, what I'm studying it was fairly straightforward.
Any e-commerce or web strategy, but we have gone back to basics. We have devoted resources. We have made it a priority and we are seeing how do you measure success right. The men measure success in a couple of ways. One is how many impressions you're getting right results of organic search.
We're seeing an uptick in that already.
The ease of experience will take some time, but we have people devoted you know we are working directly with some of our customers engaging them in feedback.
Engaging their expense experience learning from that and helping us improve so that is work in progress present dense I expect that to you know contribute this quarter right and then in terms of being able to monetize.
Yeah, we will see that in our results I mean, we don't break out Tesco Dot com.
In our results, but it's a big contributor to our overall Avago and end user business. So that's one platform right. If you will.
Our ability to lean forward I devoting resources to the end user customers themselves right together with the strategies around regionalization, you know that was put in place brought in prior quarters. I mean that is still the right strategy right, but we still need to lean forward.
In terms of what we brought to the table you know with where we are today in terms of how people by him and it's our program management capabilities.
No. It's our design capabilities you know, it's it's our the others rest of our solutions the credit facilities logistics facilities I mean, the taxes that together you know to a solution. The target. Some other dynamics you were talking about earlier right radio shortage is you know the fiveg build out.
It's other relevant technologies that.
We can be much better and much more closer to at the end user needs are so we've made we're making specific changes to reclaim that if you will and then finally it feels discipline.
Right, it's sales discipline in a very classic sense.
Focusing on building pipeline focusing on people, where we might have seen revenue drop offs.
Bringing the personal touch from a sales perspective, and then frankly managing the pipeline the way you know modern sales organizations do.
That is helpful. I have two additional questions and then I'll step off number one Eric that would you. Please.
Up to the tax rate and it's what it was 90 90 plus percent this quarter.
[noise], Yeah, I'll start with attacks question, certainly looks a little all this quarter.
The combination of.
It's really the ratio permanent items in our tax rates.
And those ratios were a little out of whack disk this quarter.
After the big loss in Q1 and coming back with.
Probably the rest of the year, if you're trying to model.
[laughter] sticking to attach rate to truly.
Around 20, Percentish range for the rest of the here.
If that answers. Your question you know I will tackle the second part answer your question looking at this point [noise].
Oh I think about this I mean, let's look at studios back and then two years ahead.
And gives you a better.
Time horizon and generally the.
You know, what I'm going to say passive components.
To the industry right cables antennas.
Jump as.
And assortment of.
Off line items, if you will that we bring to the that we supplied to our customers at that point of need.
In time for what they need to do with the like logistics with the right credit facilities.
Look do not so if you will right and we do that very well and we're sort of unique as we this is something we started in the past you know this is a snapshot of two years ago desktop right. If you fast forward two years from now.
<unk>.
The advent of technologies, such as my mall.
An active antennas and how these antennas get connected do you know through the Fronthaul back to base stations, I mean that topology basically changes right. So two years down the road I mean, we see a lot more software content right in the components. We we will distribute we see a lot more active.
Next in the components.
You will you know is going to look very different.
And our customers will need to worry about things like software licenses.
Upgrades of skids, it'll be a different mix.
That we that we will end on driving so the opportunity for Tesco you know is to once again provide soup to nuts right. A total solution the mix of that solution will look very different.
I expect the mix so far revenue.
To follow suit and in terms of how we think of quarter over quarter of growth and you know the types of revenue the quality of revenue. If you will that that mix to change now I need to come back to you know not giving.
Forward guidance, which is what they're going through the we've had a chance to look at you know the our overall investment strategy and what we're after here is building long term value for our shareholders.
Okay, but hopefully I was able to give you another some color into our thinking going forward.
Thank you both.
Hey, thanks.
Thank you.
Actually think thank you, Jamie and Eric for.
You know your participation on this call I want to.
You know just repeat something I said earlier.
But it's important.
Our business model around technology taxonomy that can add value to both ends.
I mean set of things I bring to the table here you know that you will hear me talk about much more on and customer intimacy.
Vacation and how we become much much much more easier to do business with.
I want to close by thanking you know a lot of few were on this call, but most importantly, the Tesco team for all the work that they have been putting in for the warm welcome to have extended to me and for the good questions right that African I heard on this call. So thank you everyone. Good day.
Ladies and gentlemen, this concludes today's conference call. Thank you for participating you may now disconnect.
With us.