Q4 2019 Earnings Call
[music].
Ladies and gentlemen, thank you for standing by welcome to had trends fourth quarter 2019 earnings release Conference call.
All lines have been placed on mute to prevent any background noise.
After the speaker's remarks, there will be a question and answer period.
Yes. Good question during this period, you'll need to press star one on your telephone.
Who require if any.
Further assistance, please press star zero.
During the course with the conference call trend Representatives expects to make forward looking statements, which reflects management's best judgment based on factors currently no.
These statements involve risks and uncertainties, including.
Successful development that market acceptance of core products the degree.
Grief competition in the market for such products.
It's been channel mix component cost manufacturing efficiencies and other risks detailed in our annual report on form 10-K for the year ended December 30, Onest 2008.
These risks and uncertainties could cause actual results to differ materially from those in the forward looking state.
Which may be made during the call.
There's no exposure to turn the call <unk> Chief Executive Officer veteran Sir. Please go ahead.
Thank you Chris Good morning, everyone. We appreciate you joining us for fourth quarter 2019 conference call.
With me today is a trend CFO Mike.
<unk>.
Following my opening remarks, Mike will review the quarterly financial performance in detail and then we'll take your question.
The fourth quarter came in largely as anticipated and slightly ahead of expectations seasonal slowness in the U.S. was offset by a pickup in Europe, and Latin America as shipments.
What's their resumed from their Q3 delay.
We finished the year with some key awards, including our first European Tier One Sdx Award and then Stx Award with a national.
National service provider in Ireland.
These along with other the other progress we made during the quarter.
Help strengthen our future.
10 gig fiber access and our open disaggregated solutions.
We believe we are at the beginning of a significant investment cycle for fiber deployment driven by technology advancements.
Regulatory influences and vendor disruption.
From a top line perspective revenue for the quarter was 100.
18.8 million up 1.5% on a quarter over quarter basis, overcoming our needs normal seasonal decline.
Network solutions accounted for 83% or the revenue at 96.2 million, a 2% increase over the prior period.
Global services revenue contributed 19.6 million a.
3% decrease quarter over quarter.
Pawn fiber and fiber CB solutions continue to be our top sales growth categories.
We continue to be actively engage in a large number of fiber broadband and fiber extension opportunities and all of the regions we serve across the globe.
Most.
Finally, with another emerging service providers such as the often that's in Europe.
The electric co ops municipalities here in the U.S.
New network builds in EMEA.
National providers in Ireland in Australia.
And some new opportunities in emerging markets.
Further our investment in innovative and.
After the industry changing opened disaggregated virtual access solutions are gaining market traction at several tier one and national operators have ongoing RFP and trials.
From an organizational perspective, we continue to implement changes to improve our operational cost basis improved gross margins and provide more.
Ability to focus on our key growth areas broadband access subscriber solutions and global services.
The following are the key updates for each of these areas for the quarter.
In broadband broadband access remains the key driver for our business.
Our success in delivering these solutions is what enables customers from Australia's national.
I bet networks.
To emerging 10 gig fiber network operators, such as zoom in the UK to deliver the services needed so that their customers can fully participate in the gigabit economy.
Our fiber solutions are helping nuts in Europe and community utility providers in the U.S. address underserved markets in which they live and this.
Supporting the rising capacity demand from the customers of tier one providers around the world.
Some of the key highlights for Q4 2019 for our broadband access business included. The addition of 15, new fiber to the home service provider customers. In addition to the previously mentioned FCX wins at a large European tier one and.
On the National carrier in Ireland, and our announcement with to a full fiber broadband provider in the UK delivering gigabit speeds to more than 100000 premises by the end of 2021.
Yeah.
Key broadband access product investments included delivering our multi tenant scale with the SM two.
Great, adding 100 gig transport excuse me multi terabit scale with the SM to had hundred adding 100 gig transport capabilities with our total access 5000 platform to support the market ramp of 10 gig services.
We will be showcasing our leadership in open network in open networking at mobile World Congress next month.
In Barcelona, with Deutsche Telekom, demonstrating our next generation open source SD access solution.
Capping off our broadband access achievements for the quarter, we added Lightwave innovation award to the industry accolades for 10 gig fiber access portfolio.
Just subscriber solutions.
The next spirit as a significant contributor to us.
And how we enable our customers to better monetize investments they are making and the access network to deliver seamless integrated business and residential services.
Our focused investments and see PE for residential and businesses support gigabit services delivery.
Improved why I experience and better subscriber insight in management capability to lower operational costs and improve the customers experience.
Some of the key highlights for Q4, 2000, Nike our subscriber solutions and experience business included the initial shipments of AD trends first integrated RG omontys.
Utilizing smart RG technology.
We expanded our devices under software subscription management services, which include mosaic subscriber inside smart home analytics and device manager and we now have over 2 million devices under management or crossed a vast array of networks, including fiber copper cable and wireless.
Airtran launched our smart or West 11, furthering Adtrans leadership and open solutions by delivering the industry's first Purple Foundation compliant operating system.
The quarter also marked initial introduction of that trends first SD when solution targeting distributed enterprise and SMB market, allowing customers to migrate.
Shifting hardware to realize the benefits of fault tolerant and secure estee wins in their solution.
Our global services business has proven to enable address to be a trusted partner with expanded services capability for our service provider customers.
As operators moved to deploy network capability.
Of delivering the capacity and customer experience they need to stay competitive AD trends unmatched domain access network experience has proven to be a critical assets.
And it's helping our customers in Europe, Latin America, and the U.S. plan provision support and build their best networks.
We're helping customers.
As better understand how to maximize opportunities find new pass through revenue reduce operational expenses and realize faster time to market with their new services.
In 2019 as a whole as most of you know we had a strong first half growing 20% over the previous here.
But we saw weakness in.
The second half due to a lower capital spending at two carriers.
Notwithstanding go spend delays, we did see double digit year over year revenue growth in the UK, let Tam, Canada and the RSP market here in the U.S.
Going forward, we expect continued growth in our broadband access pets portfolio in the years to come.
Net New awards building upon the crop progress we have already made.
We are well positioned and expecting continued sustained momentum we achieved over the last decade with Caf funding.
On Thursday January Thirtyth, the FCC adopted the real digital opportunity fund order, which will provide 20.4 billion a federal.
Well subsidies for broadband deployment for 4 million homes in Rural America over the next 10 years and it fits perfectly into our solution portfolio and services.
We are excited about the future for AD trends, our customers and the markets, we serve driven by technology evolution positive governmental influences.
And vendor disruption.
Our focus remains on delivering an outstanding level of quality and commitment our commitment to our customers is to deliver network solutions that deliver results.
And with that Mike I'll turn it over to you to go over the financial results for the quarter.
Thank you Tom and good morning call.
I will review our fourth.
Quarter results and also provide our view for the first quarter of 2020.
During my report I will be referencing both GAAP and non-GAAP results.
With respect to non-GAAP financial measures that are discussed on this call, but are not presented in our earnings release reconciliations to.
The they're comparable GAAP measures are published in a supplemental financial schedule that appears on our Investor Relations Web page at Www Dot add trend dotcom.
For non-GAAP measures discussed on this call that are presented in the earnings release reconciliations are contained.
And in the release.
The supplemental financial schedule on our web page also present certain revenue information by segment and category, which I will be covering today.
As Tom stated Adtrans fourth quarter revenue came in at 115.
$8 million compared to $114.1 million in the prior quarter and $140.1 million for the fourth quarter of 2018.
Breaking this down across our operating segments, our network solutions revenue for the fourth quarter.
It was $96.2 million versus $94 million reported for Q3 up 2019 and $116.9 million in Q4 of 2018.
Our services and support revenue in Q4.
Was.
$19.6 million compared to $20.1 million reported for the third quarter of 2019 and $23.2 million in the fourth quarter of 2018.
Across our revenue categories access and aggregation revenue.
For quarter, four of 2019 was $74.6 million compared to $65.1 million in the prior quarter.
And $100.5 million in quarter four of 2018.
Revenue for our subscriber solutions in.
Ariens category was $33.2 million for the quarter.
Versus $42.5 million for quarter, three of 2019 and $31.2 million for quarter four of 2018.
Traditional and other products revenue.
For the quarter was $8 million compared to $6.5 million for quarter, three of 2019 and $8.3 million.
For quarter four of 2018.
Looking at our revenues geographically.
Domestic revenue for Q4 2000.
The 19 was $69.9 million versus 83.1 million reported in.
Quarter, three of 2019 and $74.8 million in quarter four of 2018.
Our international revenue for quarter four.
For 2019 was $45.9 million.
Compared to $30.9 million for quarter three of 2019.
And $65.3 million in quarter four of 2018.
For the fourth quarter, we had to 10% of revenue customers.
One domestic and one international.
Our GAAP gross margin for the fourth quarter.
Was 40.6%.
Which was the same as in the prior quarter and was 39.5%.
Fourth quarter of 2018.
Non-GAAP gross margin for quarter four.
Was 41.1%.
Paired to 41.1% in the prior quarter and 40% in the fourth quarter 2018.
The year over year increase in both GAAP and non-GAAP gross margins was driven by.
Movements in product mix and supply chain efficiencies.
Actually offset by a decrease in services GAAP and non-GAAP gross margins.
Total operating expenses were $62.2 million for quarter four of 2019 compared to $62.7 million report.
In the prior quarter.
And $59.2 million per quarter for 2018.
The quarter over quarter decrease in operating expenses was driven by lower personnel related expenses in both SGN a and R&D.
Reduced legal in contract expenses.
Yes.
And partially offset by increases in our equity and variable compensation expense.
The year over year increase in operating expenses was primarily driven by market changes in our equity compensation and incremental expenses related.
To the smart RG acquisition, and restructuring expenses, partially offset by reduced personnel related expenses and contract services.
On a non-GAAP basis, our fourth quarter operating expenses were $57.6 million.
Compared to.
$59.4 million last quarter and $60.2 million in quarter four of 2018.
The non-GAAP quarter over quarter decrease in operating expense, primarily the result of decreased personnel related expenses and reductions in.
Track services costs in both SGN, a and R&D.
And reductions in legal expenses.
Partially offset by increases in our variable in equity related compensation expense.
The non-GAAP year over year expense decrease was primarily attributable to.
Ladies and personnel related expenses.
Project specific R&D spend R&D contract services and travel expenses, partially offset by increases and incremental expenses related to the smart RG acquisition and increased legal expenses.
Our operating loss on a GAAP basis for the fourth quarter was $15.1 million compared to an operating loss of 20.3 million in the prior quarter.
And an operating loss of $3.8 million reported in quarter four of 2018.
The quarter.
Over quarter improvement was attributable to higher sales volume and reduced operating expenses.
The increase in our year over year operating loss was primarily driven by lower sales volume, partially offset by improved gross margin.
Increased market dripping equity expenses in our.
Our comp plans.
Higher restructuring expenses and incremental expenses related to the smart RG acquisition.
Non-GAAP operating loss for quarter, 420, 19 was $10.1 million compared to a loss of $12.6 million in Q.
Three of 2019, and a loss of $4.2 million in quarter four of 2018.
The quarter over quarter improvement in our non-GAAP operating loss was mainly driven by higher revenues and decreases in our operating expenses.
The increase this quarter.
In our non-GAAP operating loss as compared to quarter. Four of 2018 was attributable to lower sales volume, partially offset by improved gross margin and operating expense reductions.
Other income for the fourth quarter of 2019 was 3.2.
$2 million compared to $1.9 million in the prior quarter and a loss of $6.8 million in quarter four of 2018.
Our non-GAAP other income for the quarter, which just ended was $2.9 million compared to.
$2.7 million in Q3, and a loss of $3 million for quarter four of 2018.
The favorable increases this quarter in both GAAP and non-GAAP. Other income were primarily driven by gains and our investment portfolio.
The company's tax provision for quarter four.
Our 2019 was $768000 as compared to 27.7 million last quarter and a benefit of $2.1 million in the fourth quarter of 2018.
The Q4 tax expense was primarily a result of our international operations.
Has the deferred tax benefits generated in the current quarter by our domestic operations were offset by additional changes in the valuation allowance that was previously established during the third quarter of 2019.
GAAP earnings for quarter four of 2019 was a loss of 12 point.
$7 million compared to a loss of 46.1 million in the prior quarter and a loss of $8.4 million in the fourth quarter of 2018.
Non-GAAP earnings for the fourth quarter of 2019 was a loss of $3.2 million as compared to a loss of two.
Point $8 million in the prior quarter and a loss of 5.8 million.
In quarter four of 2018.
Earnings per share on a GAAP basis was a loss of 26 cents per share compared to a loss of 96 cents per share last quarter and a loss of 18 cents per.
Our share in the fourth quarter of 2018.
Non-GAAP loss per share for the fourth quarter of 2019 was seven cents as compared to a loss of six cents per share in the prior quarter and the loss of 12 cents per share and quarter for 2018.
Turning to the.
Lets sheet.
Unrestricted cash and marketable securities net of debt totaled $153.6 million at quarter end.
After paying $4.3 million in dividends.
For the quarter, we use 10.1 million in cash for operations.
Net trade accounts receivable was $90.5 million at quarter end.
Resulting in the DSL of 72 days compared to 73 days in the prior quarter and 65 days at the end of the fourth quarter of 2018.
The variability in Dsos.
After over quarter and year over year is mainly attributable to the timing of shipments during the quarter and customer mix.
Net inventories were $98 million at the end of the fourth quarter compared to 104.9 million in Q3 of 2019 and 99 point.
8 million at the end of Q4 2018.
Looking ahead to the next quarter.
Book and ship nature of our business the timing of revenue associated with large projects the variability of order patterns and the customer base into which we sell as.
Well as the fluctuation in currency exchange rates in our international markets may cause material differences between our expectations and the actual results.
We expect that our first quarter 2020 revenue will be in the range of $112 million to 100.
$18 million.
After considering the projected sales mix, we expect that our first quarter gross margin on a non-GAAP basis will be consistent with the fourth quarter.
We also expect.
Non-GAAP operating expenses for the first quarter.
I have 2020 will be approximately $55 million.
And finally, we anticipate a consolidated tax rate for the first quarter of 2020 on a non-GAAP basis will be in the mid twentys percentage rate.
We believe the significant factors.
Impacting revenue and earnings realized in 2020 will be the following.
The macro spending environment for carriers and enterprises currency exchange rate movements, the variability of mix and revenue associated with project Rollouts that proportion of international.
Tim revenue relative to our total revenue.
Professional services activity levels, both domestic and international the timing of revenue related to connect America fund projects the adoption rate of our broadband access platforms and inventory.
Once and our distribution channels.
Again additional financial information is available at AD trends Investor Relations Web page at Www Dot add trend dot com.
With that now I'll turn the call back over to Tom.
Thanks, very much Mike Chris at this point were.
Great and open up for any questions people may have.
Thank you at this time I would like to remind everyone in order to ask a question Press Star then the number one on your telephone keypad.
The first question comes from Rich Valera with Needham and company. Your line is open.
Thank you good morning, gentlemen.
Just.
Wanted to follow up on your comments about your two large international customers appearing to have come back to some degree in the fourth quarter.
Can you just characterize what went on there and where you think that run rate of those customers is relative to where it could get.
The balance of this year and beyond it.
What are you expecting in the first quarter from those two large customers.
And so we do expect.
Europe to be stronger in Q1 than Q4.
The customer in Latin America tends to be.
As you're aware very bumpy. So we tried to de leverage that is.
Is that as much as we can so we try to be as conservative as possible. There. So we have shipments to them as well in the quarter, but I think the shipments that we have in there for curve relatively safe so.
But you never know they tend to.
Place orders and then drive you for quick delivery. So typically will know that until the orders happen.
So pickup in Europe and then.
We actually have less in Latin America that we did in the Q4.
Got it would you characterize but yes, I think so just.
Try to understand who did the state of play for your European customer.
I think it was well documented that they would I think sort of a capex pause after spending quite a bit for spectrum.
Is it.
Sure business as usual as we head into 2020 from what you can tell or do you have any any sense of how it compares relative.
The Threeq you last year.
Definitely stronger than Threeq last year, so, yes, which was so.
It's an easy one as far as for the total year there, though the only thing that adds ambiguity to the numbers. There's there are several projects that.
Our.
Yeah.
That arent nailed down I mean, they have target dates form.
But.
I don't know when they'll fall in that could that could change the number materially. This year right now were fairly conservative I would say is probably flat to slightly down with the core business.
Hopefully right around.
Flat there are three projects that I'm aware of right now that could drive that higher than than that.
[music].
So I would consider a flat, but the three projects are.
Fiber penetration I mentioned, the and I don't want to get into specific carrier names, but.
That we have.
An award with a large European.
Tier one for Sdx system, which will be integrated into their network. We also have.
The strong G fast potential there that we're trying to move forward into earlier in the year.
And then we also have CP business, which has really ramped up.
So I think all of those are kind of in play.
Got it and then just wanted to focus on the U.S. a bit.
So quarter over quarter. It clearly it looks like the U.S. softened a bit threeq to Fourq you do you guys, probably provide a little bit of color on what that was and then just your thoughts on sort of the.
Wes outlook for this year.
Clearly you talked about the Caf, which seems like should be a tailwind at some point and just how you think about caf and when that that could begin potentially contributing to your business.
Yeah sure so.
Cash has been strong we still.
We expect to have good caf year, So let me talk little bit about the environment today.
RSP is our strong so we're we're picking up customers you municipalities and in tier threes and those are growing at double digit rates, we expect that to continue on this year.
In the tier two space.
We did actually see a pickup.
Really in the second half of this year, starting to pick up where you're starting to see PON deployments in one of the tier twos and we expect that to continue on this year, so far it looks pretty.
Pretty good.
The rest of the tier two spaces. So some are going through their transition right now and maybe not.
That is focused on capital spend but in general we expect to tier two space to be up.
Tier ones and both in the Msos space and in the carrier space have just been.
Tepid.
With a lot of.
Just a lot of different things going on that seemed.
We continue to delay things so I would expect the tier one space as of right now to be flattish to what we saw last year.
Got it Thats very helpful. In just one yeah that was perfect one more if I could just on the.
I know you don't give guidance beyond one quarter, but sometimes you'll give a little color in terms of seasonality.
Let me how you think it might shakeout.
Typically you have pretty strong Q1, Q2 seasonality and just wondering if we should look should've towards historical trends for that if there's any other factors, we should consider when thinking about the contra year beyond Q1.
Sure so the.
I would say the only thing that would be.
Different is the volatility around Latin America.
Because that kind of goes up and goes down and big spikes. If you take that out and as I mentioned before we don't have a whole lot in Q1, but if you take that out I would expect typical seasonality.
That's perfect Okay.
Thank you gentlemen.
Okay.
Your next question comes from Rod Hall of Goldman Sachs. Your line is it.
Hey, Thank you for taking my question does is ashwin on behalf of fraud.
Tom I wanted to ask about does vendor.
Men opportunity that you're talking about thinking the Pos you talked about carrier attention related to certain vendor.
This quarter you appear to be a bit more explicit about that as you put that in your prepared remarks. So just wondering what has changed and can you give us more color on what's going on that.
Yes.
Maybe two big things that have changed one is we actually started receiving orders.
From one carrier for actually replacing gear, so thats kind of new in the quarter.
And started shipping that.
In Q4, and we expect that to kind of pickup for next year. The other is the generation of additional RFP.
Does that have come out over the last six months.
Probably the biggest ones.
There is a very large winning and going on in Europe, right now and there are other ones, where I wouldn't call unnecessarily vendor replacement, but I think people are just making sure that their supply chains are lined up so it's just that general push that we're seeing in.
In certain parts of the word world, where it's continuing to heat up and that's continuing to.
Give us opportunities that probably would not have been open to us two years ago.
And could you give us sense of.
How big does.
Opportunity can be.
At least in Twentytwenty you said you started receiving orders from one carrier can you just so.
So and that will be I'll be very frankly that is not a what we considered to be a large tier one carrier.
So the 2020 impact.
I would say, it's probably not a lot in 2020 because.
Although we do have a couple that have accelerated plans I think still getting.
Things integrated and deployed I think we'll be tough I mentioned.
One carrier that.
Is looking at trying to pull things into this year, but I think that will be very difficult. So.
I think really its 2021 is when you start seeing the impact of the larger carriers.
Really diversifying their supply chains.
Got it okay. Thank you it's.
Okay.
Your next question comes from George Notter of Jefferies. Your line is.
Hi, guys. Thanks, very much I guess I wanted to.
Expanded some of the things that you said earlier in the call and then I think in addressing one. The other question did is really around the customers and you asked and I guess large medium.
Paul can you talk about the mixture of your U.S. revenue by those different tiers of customers tier ones tier two tier threes.
You know it seems like the picture is quite different depending on whether you're talking about smaller or larger carriers. One of your competitors, obviously broke some of the data out recently, but.
Yeah I just.
Curious with the mixture of that business looks like.
It's really quarter dependent George because sometimes as you know tier twos can come in really strong the way, we typically think about it and Mike I'm going to look at you tell me if I'm wrong as a third a third.
Yes, generally that generally thats kind of where that mix is probably a little.
A bit more smaller carrier weighted right now because of some of the issues with the territories, but one of those tier twos headed.
Pretty good quarter with us this quarter.
And then.
Yes that when I say, a third a third third that would include.
The MSO business, which sometimes which is kind of just been.
Flattish.
Over the last year.
Got it is that it does that help your margin structure then is the business.
I guess first is that business continued to shift.
Toward smaller carriers sounds like that's what you're suggesting going forward and then also would that help your margins.
So for this year.
I would think tier twos and tier threes are going to be are going to see more growth than tier ones without a doubt.
We like to treat all customers the same so I, probably won't get into a margin discussion.
[music].
Let me just leave it there.
Alright, thank you.
Okay.
Your next question comes from Paul Silverstein of Cowen Your line is.
Tom I appreciate the disclosure to students sponsored Georges question, but I want to pickup on that if we hold the clock back to wind down.
Do you see in film mix in other words carriers had been healthier in the.
Revenue flow and I know, there wax and wane when they when they aren't peak levels. What did the concentration look look back then.
Oh, yes, now by the way I was only talking about the less revenue.
So if you will get so I appreciate that.
Yes. Good yeah can you talk about can we talk about.
All in right now I mean, historically you always have these projects sort of offer great opportunity on the challenge has been deal is your customer spending still yes, it's still materially weighted towards tier ones on a global basis.
And I apologize reserves were fifth Gen I want you to 50%.
Well over 50.
<unk> percent.
If you look out on a global banks is right because our international but there were no I know it's over 50% I was hoping to get you to go to one that will further but [laughter].
Well I think it's if you take the third a third of therapy, which is a rule of thumb over let's kind of an average of then you figure that and Mike I'll look at you again I'm thinking.
And at this point in time 80, Percentish of our international revenue is tier one base. If you include people like ours trillion customer our Latin American customer.
European it's heavily tier one base.
Hi, I appreciate it does this will all insight.
All right.
Given that exposure, Tom I know other moving pieces, but correct me if I'm wrong.
I think the Nbn project in Australia is now at least in the current fees. They are getting through the very late innings and that they had a mid 20 target I think the completion no doubt there'll be additional integration.
Patients in terms of improving the foods and speeds as you go forward and Tom but it also sounds like with the financial situation Australia.
Probably not imminent in terms of them cranking that back up.
If we take that into let me ask Brian Posner stepped back and after the broader question when you will get over this year putting.
You saw it any individual quarter when you look at the to tell you the year.
What are the biggest opportunities for upside what are the biggest risk for downside.
So let me say the biggest variable on we're trying to mitigate downside. So let me say the biggest variable and.
So I'll talk more about upside and downside, but the biggest variable is Latin America.
And that's just the nature of.
Customer there.
Australia, where.
They have finished a major rollout, we're still getting orders effect will be shipping quarter, where they're going back.
Either fixing issues or in some cases, where they have fiber to the node they may be looking at putting fiber to the herb.
And that will continue on and there are couple of waves of deployment, where they're trying to.
Perfect.
Reduce some of the.
Areas, where they have problems that will continue on and then they as you know they are talking about refract material refreshes and some of their network going forward. The other thing that we have going on there as we did win some new business. There we were have not been.
If you think about the DP you business or the though.
G fast.
Fiber extension is that we have there.
They put in a lot of the infrastructure now they have to turn on those customers.
And we recently less within the last two quarters one.
A large portion of that CPG business, which has not started shipping yet and we'll shift this year.
So there are incremental pieces that were.
Adding on on the CP side that will augment the additional gpus shipments that we have.
And so it's probably the picture that you have is probably a little off.
In Europe for this year of course, we have a large European carrier, that's going to be driving the majority of that revenue this year I.
I'd say the ultimate there are really coming online and.
We feel good about them contributing it'll be more second half than first half, but then contributing in a material way towards the end of this year.
And our other large large European carrier that drives the majority of the revenue typically out of there it's all about.
Getting these new projects Onboarded running.
[music].
I appreciate some give recalling circuit Australia.
Yes, I know that was great on the Nbn can named given the new wins in the other the refresh as such we can that can nbn be up this year for your own since last year.
I think Australia, maybe but I don't know about in the ash I hate to come talk about specific customers, but.
I don't know if they will be I think Australia, we just recently won.
The National service provider there for their fiber rolla, which is off to calm.
We have a couple of we have a few more than a couple of customers there.
Okay and.
That one for instance, a brand new that will be contributing this year. So I don't know about.
Australia, Nbn I would probably agree I think it would be tough to actually duplicate, but it's probably not as far off this year is you're contemplating right now.
All right and one last question for me I'm going back to Latin America.
Revenue from wrong, but I think earlier last year, you pointed out the futures religion bid change for the better and that is that you had expanded.
Number projects that you're being deployed in that should translate relative to historical incredible volatility where you'd have a huge quarter. It would go.
We're also we saw for four or five quarters huge quarter, and rinse and repeat it sounded like there was more predictability visibility that it would just be better for you in general has that has that changed again or is that still weakness.
We're not talking about the only podium Latin America.
Thank.
Q3 kind of was.
You know kind of a point to where I would say that we started.
Really.
Having to second guess ourselves on what the revenue would be there and any particular quarter. They are moving forward with us.
With.
So so this does.
The nature of this project was different than the nature of the previous projects. So I would agree with that I think we we've seen that the volatility we've learned that the volatility associated with this project can be.
I'm still very.
Detrimental.
We are.
Getting approved for other things for instance, they're looking for.
And our trial or excuse me lab testing right now.
Good fast for fiber extension as well as looking at additional.
On providers within their network.
Which would help.
I should say it'll help because I.
That that customer tends to be light switch and you would think.
Thank you would help because its three technology into the one.
But I will tell you I will always have trepidation there.
All right I appreciate that additional color I'll pass along thank you.
Okay.
Your final question comes from for Hudson job with Cowen Your line is open.
Thank you for taking my question.
Wasnt expecting.
We call, but I wanted to.
A few but you'll let Adam opportunity if Wally is being pushed out of European markets, one would assume that they will become very.
Active in the Lat am market and in terms of margin NTSB trends are you cognizant of this list. Good news is something that you're worried about as well.
So we haven't seen that yet.
I agree with your premise that they could.
But we have not seen that yet but in the areas where we're competing.
Literally as of right now.
They're not really competitive so.
Majority of the business that we've had to date has been vectoring.
We are kind of unique in that we have kind of we'd just have a much much better.
So I don't really view us as having a strong competitor regardless of who the company is there.
And.
The other piece, which is.
The fast we also have a very good lead in the technology space. So.
They just don't have something to compete with.
If thought if and when we get into if and when we get into the loyalty business. That's when we'll see.
Got it.
One last question.
In terms of this corona wireless outbreak disruptive or having the potential to disrupt the supply chain.
Are you are you planning any.
Disruptions in it so is that accounted into your outlook.
It is something that we've been tracking now for.
Over a month and have been having weekly meetings on just to make sure that we don't have disruptions and trying to find supply Mike you want to.
Sure. So it doesn't impact us really at the top level.
Production, because we don't have any factories in that region.
As you start to get down into some of our sub components, especially in the optical space. I think you guys know that a lot of fat actually comes out of that area specifically in the in the two bay promise and move on.
We have been spend a lot of time working with our our suppliers and the folks that build some of the sub assemblies for us trying to make sure that they can turn up in and move material as soon as they are cleared to go back I think you may now that the.
The extension of the Chinese new year Holiday Inn and move on goes all the way through the 17th of February at this point, we don't believe if that ends up being the date that they'd turn those factories back on that it's kind of have any disruption to our supply chain. We're working with secondary sources that we've had on our.
Our bill of material as well to be able to pull in some of those suppliers that are outside of that region, but if it does get worse and it does extend farther beyond that point there is the possibility that it could impact some of our optical products.
Would it have if you're going to switch suppliers out of China would it impact your margin.
Look in any way shape or form.
Most of the suppliers, we've already had on our bomb and we have.
Agreements with them potentially could have some minor impact on that but I wouldn't think.
Thank you would have any type of they have a large swing there yeah. I think it's all if everybody runs to the same door and that's what it's going to its going to be more of a of but availability that on a cost problem, where we just saw the same thing we were in Vietnam early in some of our manufacturing and everybody ran to Vietnam.
What are your and a half ago and.
We really didn't see big swings there. So hopefully this will turn off the same way.
Excellent. Thank you very much okay, alright, thank you everybody for joining us on our call today, and we look forward to talk into next quarter.
This concludes todays conference call you may now.
Disconnect.
[music].
And.
[music].