Q2 2020 Earnings Call
Please standby.
Good day, ladies and gentlemen, welcome to expose second quarter conference call for fiscal year 2020.
This conference is being recorded at this time I would like to hand things over to advance Oliver director of Investor Relations. Please go ahead Sir.
Good afternoon, and welcome to expose second quarter conference calls for fiscal 2020.
With me on the life to date or flip molding fixed source Chief Executive Officer.
Flamanville CFO and Vice President Finance.
I don't know excuse founder and executive Chairman will also be available to answer questions. During the Q when a period.
A reminder, that this conference call include certain forward looking statements under estimates concerning or intents beliefs or expectations regarding future events that may affect EXFO.
Please note that such comments will be a fix it to say risks and uncertainties.
Certainly impacts of the core of minus endemic on our employees customers and global operations.
This may cause actual results of the coffee materially different from those expressed or implied today.
For more information about EXFO I encourage you to review our form 20-F as filed with the Securities and Exchange Commission.
Our annual information form is available Canadian securities commissions as well.
Please note that not only the forest numbers, maybe used during this conference call.
Reconciliation at least not only the forest results with forest numbers, it's available in the Q2 2020 news release on our website.
All dollar amounts in this conference call are expressing U.S. hours, unless otherwise indicated so without further delay I will turn the call over to fill it.
Thank you Vince and good afternoon, everyone.
First started during this difficult period I hope that you sound. These are all safe and sound.
[noise] I would also like to extend my deepest gratitude to our first responders doctors nurses and medical stop loss, putting their life that rich Daly to come back this quarter on my lives and then.
It is RMR thanks enterprise.
Now turning our attention to X fault.
Despite the temporary shutdown of our manufacturing operations in China due to their corn the virus outbreak.
Let me solid bookings at 72 Dot 9 million in the second quarter of 2020, including a double digit increase in test and measurement orders.
We also reported sales of 55 down 3 million in the second quarter, well I as far as net loss amounted to nine young balls.
We consider these quarterly results I will then Terry said back to our long term profitable growth strategy.
The good news is that we have returned to full manufacturing capacity in China.
Oh Exelis site, our operational and our staff is committed to helping global network operators and <unk> web scale companies. That's five during this challenging period.
It's Robin global pandemic safety of our employees communities and customers their names and well continue to remain at the center of all interaction.
Following up on the Nike issue that we initially reported in February.
Advice was detected and quickly contain that EXL.
I T specialists were brought in to help the resolved the situation.
And I can safely say this matters behind us.
We turned this incident into an opportunity to all so far about our IP security systems.
Lets manufacturing and high teens, she was firmly under control X always open for business.
There are very busy with customer meetings to virtual demos Webinars and conference calls.
We're finding creative ways to meet customer needs and we're continuing to book orders, albeit at a slower pace than last year at the same period.
We also believe that Expos test and measurement solutions, along with our SaaS solutions are essential during these unprecedented times.
Since our customers are being challenged by searching bandwidth demand.
Coping with reduced staff.
The telecom industry is mission critical more than ever with network capacity liability and scalability, playing an increase role in creating opportunities for Expos innovative solutions.
Several network operators and what scales companies for example.
Increased capital spending to meet the global trend that's telecommuting from home.
Next fall with its well stuff test and service assurance solution enables the deployment of such bandwidth intensive application.
You know Virtualized cloud based networks.
Our solution to help customers maintain peak performance and we also help them with faster troubleshooting and then these disruptions conditions.
I, providing geolocation analytics.
Virtual VPN remote monitoring.
And active monitoring of network and subscriber anomalies just to name a few of our solutions.
Although we're open for business government imposed locked down in many countries.
Within the Americas, Europe and Asia.
Affected our visibility of future business.
Therefore, EXL has decided to suspend quarterly and annual guidance.
He will do our best to provide investment community banks qualitative commentary about the companys upcoming prospects.
He will not be possible to offer revenue and earnings guidance for the foreseeable future.
In addition, we're continuing to engagements with our customers and our partners to assess the medium to longer term business impact of this coroner virus epidemic.
At present time, we've decided not to have taken cost cost control measures, including a whole on all our future hires.
Well a little bit lost in the shuffle. The spend then it was our launch of Nova adaptive service assurance in mid February.
It's the first intelligent automation platform, enabling mobile operators to deliver ultra reliable and high quality service experience and Fourg and Fiveg environment.
At the heart of this small, though and I say is real time automated Assurant solutions mobile sensor yacht acting as a central nervous system for our platform.
The combined often leverages machine learning to provide mobile operators with heightened visibility into subscriber experience and performance.
Good news is way already child with this highly differentiated service assurance loosen looks really good customers and the feedback has been extremely positive.
Well in clothing I'd like to express my heartfelt thanks to the entire excellent team for delivering underlying conditions not only in the second quarter. There's I know as they will in the weeks ahead.
What makes me most probably that we've kept our global customer base appraise throughout the two out and maintain a high level of customer support.
So at this point I'll turn the call over to appeal to cover our financials.
Thank you fill it.
The new everybody.
Same degree what do you find ways to present to 55.3 million mean into signal when it doesn't 2020.
From 73.9 million in December one if it doesn't mean.
As previously mentioned see dropped year over year, mainly due to the negative impact of that could be 19, oh, great or mistakes or operation in China and supply chain.
HM we didn't do anything from the same I live in end of calendar years in spending received in Q1, the scene and ship it used to 19.
And also we didn't want to 90 to review of 4.9 million older funds.
Well, the putting yourself software as a budget in the same field Nike.
Bookings I mean, the wine <unk>, 4.2% year over year to 72.9 billion in just six months one of this doesn't 20 independence, but they're up to 2020 at 14.7% heat treat intensive ism and booking Onesubsea city, 2.2% decrease in booking.
We all know sat product line.
And just mentioned, we booked and we see millions on our contract well in this wants to publicly software into second place doesn't make the equalising solution in Boston and San Francisco, but we didn't benefit from such large older into second quarter 2020.
Gross margin before depreciation and amortization amounted to 57% of saying, it's going quarter to them 20 gold base to 60.7% into second quarter two dozen Nike.
He just forgot what it's done them 20, the current the virus outbreak managed to a temporary shutdown.
<unk> since then China Division he gets to be thanks to our seen in gross margin that's important markets of C C into short.
Your next Gen <unk>.
We secure so whereas contracts related to on its wants to put as you mentioned before insisting on Walter Nike, which carry margin above corporate average.
He said Oh operating expenses city, and I'm interested expenses totaled 24.3 million, 44% of seed industry knows what is the 20 compared to 25.5 million Oh, 34.1%, let's say in the same feel that Keith.
The 1.2 million decrease in India. The expenses, mainly reflects lower commissions paid out.
Let's say level into San Francisco twenties, when he also the other Oh I'm sorry, you laid in reducing all in June expenses year over year.
Net R&D expenses reached 12.6 million or 22.7% of safe in discount onewest when its wendy compared to 12.2 million all 16, my Cypress and let's say in the sort of 90.
The 0.4 Muni three units R&D expenses.
Mainly b b to B system lesion and spending increases as we have that Roger me you every year.
I'm sorry, that's not in the second one is less than 20 totaled 9 million Oh man just 16 censorship.
Got Fraser I personally have turning reached 5.2, many young or nine cents per share is just forgot what it sounds a 19.
Hi, France NIM slot.
This 2020 included 1.5 million in after thanks summer they some of that you're going to sit.
My phone median stock based compensation.
At this point change last so why small and medium.
Geographically the Americas accounted for 48% of social seating you do 20.
I mean did he said if we got represented 31% of C.
Yes. Thanks.
21 cents, we'll see.
Operator, let's say split was 50%.
34% and 16% of known to treat you'll get fixed region, it's important to something like <unk>.
And then plus customer me well some customer accounted for 8.2% of still don't see you do 20, why or sub three represented 19.5%.
Turning to a few key points independently cast was really shouldn't increased to 20.9 young at the end up you do 20 from 17.6 million in the previous quarter.
These 3.3 million increase in me. He may lead you to 7.1 million <unk> cash from operation.
These cash flow from inflation, especially the upset by 2.1 million for their shapes up kept an eye sit and one time in young refund the repayment or at least the litigation in Los Angeles.
At the end of Q2, 20, EXL and a net cash will be turned up 2.8 media and I believe the revolving credit facility fees up to 46.8 million.
No I just want that we turned to cut over to the theater well just felt subject you Andy Thank you.
And ladies and gentlemen, if you were asking a question.
On your telephone keypad.
If you're using any speakerphone.
You bet.
Your signals.
Again, that's star one.
Do you have a question first.
Hopefully.
Your line is open please check your mute button.
And you hear me Okay now.
Yeah, I apologies for that.
[noise] [noise] I was I I had a few questions and I'll just a walk through them here, if I could [noise].
First on the income statement. The Opex that you had in order is that about the right level of Opex to think about prior to seeing some turn up in sales wants to get through Cove. It.
Yeah, but the level Oh, I'll make a high level coming I'm sure capital well that will add to that so well level of opex that we have right now is pretty much I would say at the level that right now we're operating Wes as I mentioned, we've decided to put a a hiring freeze.
Ladies and obviously, although the other discretionary spend will be a every dollar will be like that's all the opex will probably not from a from my standpoint, as you will probably go down from what you've seen here, but at this point I would say a with the hiring freeze that they have in place focus we're putting.
On the any other kind of spend.
You know I would expect RPX to slightly go down, but being that kinda range <unk>.
Yeah, we don't know so that the there can didn't really see when the was down the since the end of February and that's what amount of it because it is banco opex in the U.S. as well so so on the with different C., we should have some.
Some some some CV assuming that the currency gains and understand the limit the pieces right now okay and also when it closes the we need to assume that trend need would be deeply reduce and then we should see some CV on discounting you mentioned that I read freezes too.
We.
We are doing.
Great. Thanks.
And then I just noticed on free cash flow.
Like you just lost a few million dollars before a noncash working like them she had a big.
Cash means from a accounts receivable, so I I'm, assuming that you're not going to see that every quarter. So the way to think about burn at this point is $50 million about noncash working capital is that you tell me if I'm thinking about that correctly. Thanks.
Yeah, you're right. So as we have been factored in the last month for the assays will do that companies who visit when gritty down as the ended the quarter, which is just for the cash and we do it stayed that as a kid do I consider that we'd be back in line.
We we have seen the defense seen in the 50 million roughly in sailing in the recent adult therefore, we will lead the cats to fat finance the cash flow. So we should this thing.
The excellence is good we go up and then it will request some cash and space that we should be it goes to June to fund the operation.
Without any problem.
And just to complement to your first the first question Tom Sorry, and then you know we also are putting measure that I should've mentioned, but on that on the spend as well a topic should also good doesn't go down slightly because of some of the decision we made on contractors and discretionary spending like that as well that we should that.
We should Ah that will decrease as we get into our second huh.
Okay.
And then my last question is just maybe just on what the U.S. carriers are doing with respect to Fiveg deployment is that come due a complete halt in cold it needs to get out of the way before network deployment start again I'm just just.
Update us on what you're hearing from a your carrier customers regarding their fiveg deployment plans. Thanks a lot.
Yes, so Todd I mean, how we engage customers obviously it varies by customers I never by operators and you've made specifically on America, but we are that's part of our constant engagement and dialogue, we're adding Archie I understand better what what will happen as we exit they called it a pandemic in terms of investment.
It is clear that their needs now it's for bandwidth growth. That's all they are looking at investment there on the Fiveg side, I think that's still a bit or too early to say, if they're going to increase toward delaying and certain other countries in Europe, we've seen actually some of the spectrum auction to do the late.
You know as they as the though the countries have to deal with the virus. So we're gonna. This is part of that the discussions we're adding in dollars grabbing what our customers to better understand.
How when once we emerge out of the crisis, how these investments and where that prices are going to be.
Okay. Appreciate the color good luck everywhere.
Thank you.
Our next question comes down as Michelle.
Hi, good afternoon with respect to the supply chain, you mentioned, China is up and running but any other issues that could prove to be risks as far as would be compelling shortages or other jurisdictions for manufacturing or for the time being.
Doesn't seem expansion should be fine.
So two points on the Allentown was number one as you mentioned told so our facilities and send them up and running we have other facets facilities is your bulk convexity Danielle.
And manufacturing facilities are open now what we have to deal with is our supply chain of component being mainly out of China is while we're able to really maintain our capability there where we have now what I would call more shorter term challenges is on freight logistics sometime.
Country that locked down so and that's giving us sometimes a bit more logistic challenge, but but overall I do view that position with our supply chain our facilities across our multiple sites across our obviously, China being are being up and running now.
Giving us an opportunity to respond faster with our customers and I'd, maybe say a competitive advantage.
Some of our competitors that I know have.
Phil even factories and countries are still locked them.
And so how is it that you're a factory that kind of trying or operational isn't that different jurisdictions aren't box Alan or do you follow the bucking the central services and some jurisdictions.
Yeah, that's it that's exactly that and we're far into essential services side because of the telecommunications market and so that's why all our factories are and and manufacturing facilities are open.
Okay, Great and then separately as you think the customers. Obviously, you know part of uncertainty out there but.
In terms of you know their day to day operations because they are central services are they still considering that technicians to execute on previously planned.
Deployments or what are you seeing in the field from that perspective.
Yeah, it's a good questions on it. So so first of all I would say, they're not of meetings were having is as.
We're very active very very busy so that's that's kind of the good news.
A lot of our customers meetings I've done although video conferencing insulin.
But very very creative ways to do demos and stuff. There is a is what we're going through in terms of projects and activities. What I would say is it falls into two kind of category.
Have you see the ones that that require construction is like fiber construction fiber, but being big big underground and so on both kinda projects in most of the country's there's lot down are kind of are being delayed.
But all of the other activities you know with with regards to bandwidth growth vpns activities and monitoring the network.
What we're saying that there's still a lot activity there there's still a lot of field technician going to how those and apartments to make sure that beat their connectivity and the bandwidth or secure and this is where our products and solutions are are really.
Coming across as differentiating we spend a lot of R&D and efforts and automation and bringing more intelligent found that when a technician goes it in a in a house the or you can troubleshoot much faster or we have a centralized fiber monitoring system. So that from the Central office, you can monitor where the fiber issues.
Right and we've got capability to monitor where do you have congestions with our service assurance platform. So I.
I would actually tell you that we are more activity. Our funnel is actually increased on a soft side.
It's a the cold the crisis I compared to the PNM side.
Okay, and then and then finally in terms of the bookings number in the quarter remind US is this the quarter, where you have a seasonal higher level love maintenance and support and it was coming through.
The amazing contract tends to happen at the end of calendar year right. So they tend to be more of our.
The quarter hitting our.
Q1, Q2, sometimes a bit in Q2 for the delayed the delayed the contract, but it tends to be a bit more on Q1 in Q2.
Okay. Yeah. So I guess, what was going with this is whether that contribute disproportionately to the bookings number but as you said against smoking Q when it I think you're doing back.
Yeah, Okay, great credit there thanks.
Thank you Donna.
Once again, everyone. It is star one if you have a question, we'll now go to Tim Savageaux.
Yeah.
Hi, good afternoon.
A couple of.
Questions here Hey.
I Wonder if you could talk about or gets about a 15% year over year increase and test and measurement booking.
[noise] and give us some color on kind of what the drivers were.
On that increase on her 20 year on year basis.
[noise] 10, so two or two main drivers coming in one is again on the or what we call our transport and Datacom portfolio.
400 gig 100 gig solution.
Optical RF [noise].
This was a again I did a good performance of our a of our portfolio. So we're continue and we tell us they tend to sell this to the web scale guys, we tend to sell that.
And then I, but even some of the operators in their lives. So that continues to be very strong performance. The other one that nice growth was on on the manufacturing our manufacturing customers or our I wouldn't call NBR and they're they're very strong quarter manufacturing capacity. If you recall you know we.
Reinvested and our and by two an acquisition a year missteps and Weve continue to really see some nice growth of our particular business there with manufacturer.
I'll give you an apple and Oh transceiver, but also a main factors of optical components.
And that continues to be she also nice growth for US now again, our physical interface physical products sold to the Iranians, So and that continues to do really well that there's more fiber deployment and fiber to the intended but in terms of growth percentage thing I would say, it's a you know about 100 that 400 and our manufacturing.
And the artist or product line.
Well, that's great color, Thanks, and you know clearly build some.
Backlog here in the quarter.
And with would presumably be really tailwind heading into Q3.
So you've obviously got headwinds as well as Lynn.
You're continuing to book or put it or do great I wonder.
In lieu of any garden City group, maybe talk to us about the month of Mark just sort of.
What's the sort of magnitude or.
The kind of run rate order decline.
And would you expect that Kirk more than offset what should be something on the order of a $10 million tailwind in terms of.
Building backlog heading into Q3.
Yeah, I mean, it and that's the I, obviously, the though the big question in terms of a visibility of what we're saying I would say the good news. There's two good news for US one is that there is a backlog we have good good backlog in our PNM. There's a good backlog on our SaaS business that we're actually going to leverage in the in the next quarter.
And next quarter's you know in the South side, we still have over $60 million of a backlog that we want to continue.
And then obviously if you just a quick math between what we had done in terms of revenue and are you tend to have the book to Bill ratio of one you can see the type of backlog, we have other PNM side.
As well so that's that's the first point and so that the backlog is giving us a good good base to work to works out.
The second item is I do believe the fact that we all of our.
Facilities are sites and our functions, whether because our employees are working from home.
Or all of our facilities and that our central our operating allows us to Cook quick quickly respond.
With customers that they may have an urgent need and we're seeing that you know out of certain countries in Asia I mean in China that things are picking up really well and we can respond.
The third is the lack of visibility because of the Cohen of ours, you know, it's very difficult and to ER to kinda predict.
How how our customers are going to not in terms of or ordering equipment, arguing solutions.
Well most of our customers have people on site. They can receive the equipment that they lack warehouses, but it's clearly as I mentioned in my opening statement.
It's more and and plus sleep, we still don't know how quickly.
We're going to re emerge out of this crisis, and that's what's preventing us from giving more detail guidance.
No I understand about the guidance versus.
Kind of near to the extent the you've got some.
On a real time data [noise].
That's what I was asking about although I understand that's that's probably not.
Enough to form a trend either.
On the flip side you mentioned.
Got it and we've seen this pretty extensively.
You know cable telecom, you're obviously significant increases.
Network traffic.
Leading in many cases too.
Expedited capacity are you made reference to that better where if you could talk a little bit more specifically about how that manifests itself.
I've been exposed business.
Whether you'd see it more.
Kind of in access that work Arlington Augmentations and.
Fuel tech roles to address those or more and kind of.
You know high speed metro core capacity or near to the extent that you've you've seen.
Customer behavior change in these last few weeks to deal with increased traffic anymore color on kind of how that's developed would be.
Okay great.
Yeah. So the that trend that we're seeing is on on that they're still I need to make sure that that the fuel techs are fully equipped with a innovative solutions and automated solution. So we're we're seeing a we have launched a protocol optical explorer a few months back that it is getting a lot of 10.
And because it does help the field technicians to troubleshoot much much faster than than the previous solutions based on on the our power meters and so on and we're seeing a need for feel tax to be better equipped so that as they goal.
There into a house in their partner and they can do their troubleshooting faster.
The second thing is and is around our centralized kind of more solutions, which are service assurance.
We're providing you know geo location analytics and that allows people to our operators to figure out if they're having particular concessions.
And there are lot work same thing on VPN. There's you know a tremendous amount of VP ends I require now I know you've gotta monitor all the VPN and we're providing solutions that meet our software solutions. So that's why I was mentioning the funnel for those particular application as as increase correct.
And so and then and then I would say workforce, we're really I'm seeing opportunities where on fiber monitoring in particular vis vis.
This particular activities were seeing where people need again as you know the than the knock centers I've fewer people. They they don't they're not fully staffed.
And to be able to provide them with solutions that.
Our pretty automated and easy to install essentially and manage is also giving us an actual.
Well the place we're seeing a decrease in a slowdown as I mentioned is on construction build out and that's that's a that's kinda understandable, but I think the places we're seeing now more growth is on on field technicians, and then on our centralized size SaaS offering.
Got it.
<unk> last question for me.
Yeah, what area and you kinda talk to the bid, but I'd like to get you to be a little more specific or you guys do have controller is obviously, you're you're spending.
From an Opex perspective, and you heard anecdotally.
A couple of items that should be providing.
We're crusher you know any chance of quantifying that a bit more should we be expecting something like at least a 10% sequential decline in opex in Q3 or.
As you look at all do you kind of anecdotal things how does that.
Kind of add up.
Yeah.
Yeah, not seen what I would say that again I think you've seen in the past a we've we've always been very road diligent with our cost in our spend when we're going to continue to do that and whether it's on hiring freeze or or or no replacement or contractor spends on.
To me that's kind of on the main focus as we are doing our business assessment talking to our customers around the medium term longer term.
Well I will watch to see what other options. If we need to go there I do feel like maybe I'm optimistic like nature, but I do feel that based on our position based on our solution based on the fact that the telecom industry is sold mission critical.
And the backlog that we've got that I think we can we're in good position to navigate the storm, but again there is some and uncertainty that will need to assess in the next few weeks based on the and what we're saying in the market.
Okay. Thanks.
Okay.
Our next question is Robert Young your line is open.
I'm good evening scare me okay.
Yes, he the line of questioning that Tim was on around the.
Backlog, if I can dig into that a little more I understand you're not giving guidance, but perhaps I think you said $60 million backlog that's on the SaaS side.
Would you be books, a share any backlog built up on the T. nm side. The reason I'm asking about that I'm, assuming that the shine that shutdown I understand that's mostly T.N. handheld.
Production would that have built up a backlog.
Yeah.
Yeah.
Yeah. So so again I guess when you when you look at what happened. Our Q2, you know, though we effectively lost almost a month of supply from our shouldn't that factory, which tends to be our higher volume kind of product and therefore I'm quite quickly quicker turnaround and then fell cycle.
So what I mentioned, though to the backlog a question. We have you know we've mentioned before that we have about over 16 million things are all of backlog and fast and that's still still the case. So that's a really good backlog.
And I saw that PNM, although we never provide a backlog you can kind of figured out that you know I I book to Bill They show it tends to be.
Close to one then we tend to be able to.
Respond pretty fast are pretty fast to with the PNM. So kind of gives you that kind of the backlog that were.
Where I'm coming into our Iraq third quarter.
Okay, so that sounds like something $10 million to $15 million backlog there probably.
Does that convert he said book to bills. One so that's a pretty quick version I would assume you'd expect that to linked quarter.
Yeah, obviously, it's again would be a they've been locked down thats on the edge and normal turns out let's say yeah. It would cover.
Pretty quickly, but we obviously need to make sure that you know, we can deliver and and I'm pretty sure pretty confidently Walt I was just we've got to work through a some of the challenges. We have you have with lyft freight and logistics and talk.
In countries like that.
Yeah.
The I'm trying to shutdown name if I look at the actual operations, you said everything's up and running now I'm. The only place you've been impacted is the shut ins and manufacturing as I understand all of your other manufacturing has been on Yep uninterrupted is that correct.
That's correct I mean, all all our factory, obviously, we had to make sure we provide all the rights security.
And in Cleveland S and the associated with all the right measures that are that we need to do on our other facilities.
But you know other than the cold and cough cold the 19 security aspect, none of our other facilities or weren't impacted so that's I couldn't as all alvi late it's good news throughout all this.
Is that we're very you know we're open for for business and and I do think that based on some of the bookings where we're seeing is I do think that is giving us a short term competitive advantage because I know something about competitors are.
I have facilities in a in countries that are still locked out.
Okay, and then maybe it was there any information you can give us on the timing of China production coming back and you said, it's that you know working at Stifel.
Capacity now when would that have a hit full capacity would have been sometime in March or would you have been.
Been back to normal by the end of February.
No no no. They will go back to at the beginning or really late February but very first week of off of March sometime in March.
Okay. It took a that when as you know rod right. There's a lot I think you're trying to get all the employees back and get the whole supply chain.
It took us pretty much all the month effect where to here to get back on track. So big beginning of March is one media we were back at four.
Okay.
And then maybe like different minor question just around the balance sheet in your access to capital light cashed went up like a previous question.
When you look at the balance sheet, maybe a little less cash.
Balance sheet past years, I'm happy with where it is now.
Much cash do you generally think you need.
The balance sheet, one you know to fund your operations now and then how much do you need to keep your customers happy we're probably looking at your balance sheet.
That's all I'll answer first and then job what will comment I'm sure, we'll provide more color and again.
Yes on where we are now based on on again, what we would the fact that all our sites are opened in the fact that that you know that there's bandwidth growth and an aspect I, we were feeling okay with where we stand on the balance sheet I mean, they're not you know I think we've got some <unk>.
Nice backlog to play with and and I I went just make sure you know from the point is out of business the or.
We're in a in a good position, but I like Jack on and I'm sure well, yeah, it's more color.
Yeah, so as to see if all we want them as much as far as much cash that's impossible for sure.
But.
We did have an ending 50 to 70 million to kids and others. So so.
We were in good shape due in June two just for the next waters and I think that if anything that's maybe from a if it from a customer so I don't think though some it would be afraid.
With the which we yeah and bank to whose divvied bid.
That's the goal that we have.
So the.
<unk>.
Okay, and maybe just one last clarification for I like the line go.
When I said.
$15 million backlog in TNF, <unk>, where I got to that was just looking at a 55 million report and the 16 half at the midpoint of the guidance for all of this happen I've just it am I wrong in that math or is there something else there from the I T.
Systems outage I should be thinking about.
Yeah, Rob hearing a lot about them.
Okay. Thanks, I'll pass one.
Thank you.
Your next question comes from Richard.
Yes. Thank you just talked about the fund all of us outside and this kind of curious I wasn't clear in terms of you guys have the capacity now that's sort of fulfill all that demand.
Yeah on the fast side that Richard it's it's predominantly software solutions right and then we have sometimes professional services to to do a you know what to do the integration and customization total so on both cases, I mean again shipping software that's not a an issue and then on the.
Capability to do this off our integration customization, we have absolutely capacity to do that and no no challenges their normal issue there.
Okay. So you don't have to be onsite actually deploy that okay.
Hello.
But even in some cases, which is even in some cases, where you have to be on site that again, most most of my customers have people on site. So you know obviously you need to be careful it'll take a bit more time, but most of the time, we don't need to be on problem. If they do we do have that could those be donald's walk.
Okay. Thanks, and then are you know, there's a lot of questions on sort of the cost structure.
As a threat come about different way you kind of look of the op ex cost structure.
What proportion of the your total Opex is considered a fixed costs.
I I mean Tsum tsum.
During the month No Summer Olympics, Scott I think the Devaliya business wouldn't be mostly the commission for same traveling.
Its trade shows or some marketing, okay, but most of defense Oh. So so once we discussed we need to reduce the framework us its was there used to me.
You can do we have some programs and that has been the.
No, but today than ever gum, and mint, we have to looking from kind of thing on that.
No.
And so so I have seen that this is me mostly fixed cost one deal faces.
So busy.
Okay, Yeah, I, just sort of you know, obviously, oh all companies rightly so want to keep the headcount in place I would call I consider that.
Currently variable to some extent oh, yeah tough decisions obviously.
Hmm here with respect to like the receivables, obviously, a seems like things are going pretty well so far but at the bank had discussions with your current base in terms of I'm thinking about maybe deferring pain medicine, and how you're thinking about the receivables here going forward.
With with our customers.
Yes.
Yeah, Yeah. So it's not so good that because it becomes due to be within the within their fans.
It was you going forward with the state to the business each country is that.
We may have some some issue for predicting onto sign but the most one customer on last company with.
Usually some good times band so so I don't expect to have a huge hi.
Dsos increased the you treat you for and then maybe we would have some some enthusiasm some customers seeking and it'll be more things to be announcement.
I think is too much trouble so far.
Okay, great. Okay. Thank you.
Is there a show.
Okay.
Your next question is from Daniel Chan.
Hi, Good afternoon, guys I, just wanted to make sure I understand the market dynamics here.
So is it safe to say that you'll see every quarter or revenue was light because you had supply constraints in the China shutdown, but demand was still strong and that's why you had a good book to Bill, but come March, especially at mid March you saw a demand kind of take a stall out a little bit that's why you're saying that the bookings have slowed a little bit that is that fair summary of what's going on.
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No what what else and then maybe I'll say in a different place study for Q2, the bookings where Where's my strong solid immediately I showed by 15% growth on our T.N. side, which was driven by what I mentioned earlier 100 gig 400 gig insulin.
And then the stronger don't book to Bill ratio looks better because of the gas supply challenges, we had in China, which which has allowed us to effectively only said 55 million.
Since the a cold and virus impacting now other reason than China.
I mean, it's out other countries in Europe, and the U.S., we have seen the but Ah are booking rate is not as fast as if you compare last year for this year and it's mainly due to their coal that crisis that obviously, our customers are trying to navigate through working from home.
Navigate through the situation than the locked down there and that.
And that's caused the Oh, I guess, what I will call the bookings rate to not be I was has a strong as it was for the same period last year, which I don't think anybody surprised by that.
Okay. That's helpful. Thanks for that.
You made some commentary around uncertainty around fiveg deployments I'm, just wondering whether you having the same kind of discussions around virtualized position of networks.
I think diversifies the network. So it's continuing Daniel I don't think there's any change there because there because the our customers are I started that trend they're going to continue the right. It provides them with capex and Opex reduction and that to me is a is continuing and we're seeing that with our SaaS portfolio. We mainly fell now are.
Solutions with our pros are all virtualized all in containers and so that that trend is going to continue I don't think it's actually going to slight slowdown.
Okay, great. Thank you.
At this time there no further questions I'll hand things back.
For any additional for closing remarks.
So thank you again, so just a few key takeaways before we conclude this call today. So again first EXL reported solid bookings $73 million in our second quarter and as we just mentioned almost 15% a year on year, increasing orders for our team in business.
Second all artful sites are fully operational in our staff is committed to help global network operators and Webscale companies to succeed during this challenging time.
And third we launched a highly differentiated solution, although adaptive faster sharis berries loved leverage machine learning to provide more about burgers with better visibility.
We believe that aren't solves a solution both on PNM and our Hsas will be essential in the upcoming months as our customers are challenged that this increased demand and then as well with coping with square do stuff.
And then finally, we do have us have to suspend our quarterly and annual guidance due to uncertainty surrounding the breast and duration of the calling of ours pedantic.
At this point this conclude our 22nd quarter 2020 conference call on behalf of the entire EXL team I. Thank you for joining today and then please stay safe.
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Ladies and gentlemen that does conclude today's conference they would like to thank you all for your participation today you may now disconnect.
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