Q1 2020 Earnings Call

Ladies and gentlemen, thank you for standing by and welcome to the echostar earnings conference call for first quarter 2020 at this time. All participants are in a listen-only mode after the speaker presentation, that will be a question-and-answer session to ask a question during the session. You would need to press star one on your telephone. If you require any further assistance, please press * 0. I will talk to him the conference over to your speaker for today. Mr. Terry Brown sir. You may begin good morning everybody and welcome to our earnings call for the first quarter of 2020 on June by Mike Dugan our CEO Dave Rayner CEO and CFO private call president of Hughes under Johnson Chief strategy officer and president of echostar satellite, sir.

Services in demons and general counsel as usual we invite media to participate in a listen-only mode on the call and ask that you not identify participants or their firms in your report. We also do not allow audio recording which we ask that you respect. Let me now turn this over to be for the Safe Harbor disclosure. Thank you. Terry all statements. We make sure this call other than statements of historical fact constitute forward-looking statements.

That involve known and unknown risks uncertainties and other factors that could cause our actual results to be materially different from historical results and from any future results expressed or implied by the forward-looking statements off for a list of those factors and risks, please refer to our annual report on form 10-K and quarterly report on form 10-q filed with the SEC all cautionary statements. We make during the call should be understood as a applicable to any forward-looking statements we make wherever they appear you should carefully consider the risks described in our reports and should not place any undue Reliance on any forward-looking statements. We assume no responsibility for update any forward-looking statements. I'll now turn the call over to Mike Dugan.

thanks a lot the good day and

Thank you for joining our q1 2020 earnings call the covid-19 pandemic has had a significant impact on National economies financial markets and business and consumer activity that all of us had a co-star hope that you and your families are safe and healthy. Our operations are considered essential services and have continued uninterrupted. We had undertaken measures to protect the safety and health of our employees including remote working for many of our employees and limiting access to an enhancing safety protocols off at our physical facilities. We recognize the importance of our service and supporting the unprecedented volume of remote working arrangements and enabling personal productivity while supporting social distance.

I am extremely proud of the way. Our team is stay focused on connecting our customers around the world doing this extraordinary during this extraordinary time. Let me now turn it over to Prime we will talk about use then honors will follow to discuss echostar Global progress. And finally Dave will provide an overview of our financials pregnant.

Thank you, Mike. I'm pleased with our financial performance during this unprecedented time and Echo Mike's pride in the entire team for continuing to deliver the connectivity issue a customers depend on during the Spanish.

Hughes q1 Revenue increased 3% year-over-year, excuse me, despite limited capacity in North America as well. As foreign exchange had twins that impacted our International operations in the consumer internet business. We ended q1 of twenty-twenty with approximately one 1/2 million HughesNet subscribers, which includes that of approximately 39,000 this quarter. Let me note that to help support us stay-at-home guidelines during the pandemic we signed onto the dock fees keeping America connected plate and subscriber numbers exclude subscribers for service would have ordinarily been terminated in the absence of them are consumer subscriber base in Latin. America is now approximately 267000.

Since the start of the pandemic traffic on our network has increased dramatically and much of the network is operating at full capacity. We're diligently working to optimize drug traffic and manage performance to accommodate this increase in network use and to prioritize remote learning in telecommuting for our subscribers. We continue to stay focused on managing children and providing an outstanding customer experience due to our North American capacity constraints. We expect consumer growth primarily driven from a national Market where we have available capacity.

at this time we have the

30 to sell and service all of our domestic and international consumer markets as an essential service except in Peru, but local regulations prevent sales. For working due to the pandemic.

We continue to make progress on a Jupiter three satellite program in the first quarter of 2020 Space Systems loral the manufacturer of a satellite notified us the due to regular basis in Santa Clara County ordering residents to stay home to slow the spread of the virus space system has the ability to timely manufacture and deliver the Satellite Dish today due to the occurrence of a force majeure event based on this information provided by SSL. We expect the satellite will be launched. No earlier than the second half of 2021.

The integration of the huge Brazil and yassa operations is progressing. Well the activation of a new Jupiter Gateway system and Associated choices BSS connections to the Alia satellite is almost complete and beams are now operational the new distribution Channel brought by yourself is bigger than a new organization as planned. Finally. The migration of the existing gas had subscribers to the huge net platform is expected to be completed soon.

We could do you do work on closing I joint venture with bharti Airtel in India. This is still subject to regulatory approvals, which are not expected before late this year Thursday. We are continuing our expansion of the views expressed Wi-Fi service, which we offer through a partnership with Facebook connectivity. We now serve more than 1,000 Express Wi-Fi hotspots in Brazil, Colombia Mexico and Peru through the rest of the year. We intend to continue the growth of the service and to expand the club include Ecuador and Chile.

I'm not American Enterprise business got off to a strong start in q1, which included a significant extension with a long time customer One Main Financial and a large order from the Social Security Administration our franchise business, which primarily addresses the gas station and quick-service casual dining market. So contribute of things in the first quarter from operators BP Phillips 66 and Chevron. We have been seeing a lot of activity in that market as retail petroleum customers prepared to accept credit cards with chip technology at the pump by October.

Starting in March a few active retail projects with paused due to covid-19 and customer Personnel preparing their companies infrastructure for work from home and changes in retail operation. We're starting to see some customers re-engage on these projects for completion in the second quarter. We've also seen a reduction in activities may be sector due to the dramatic drop in all prices that we expect expect our exploration customers to review equipment and networking requirements.

Due to the significant reduction in air travel driven by covid-19 pandemic that have been a corresponding pause in the deployment of Ife systems in airplanes that is connected to linger until flights resumed a fuller schedule. However, we are continuing our engineering activity associated with the Next Generation system in support of and 60s 17 platform that we announced in the fourth quarter.

One immediate impact of the deception from the virus has been an increase in Internet and digital media products for employee and customer engagement.

S our customers is just the business practices. They're seeking more efficient ways to stay connected to their employees through Communications and training. We've also seen an increase in the divorce even for ensuring reliability of networks and supporting the increase user Reliance on wipe and video conferencing.

Is the international Enterprise business major operators around the world continue to expand the the use of the Jupiter system for their own Broadband services. This includes your own home screen as well as a new operator in Russia. Both of them are using the Jupiter system to provide Maritime Mobility Services use India, which was the first in the country. She received licenses for offering Maritime and Broadband Services added two additional matter of time customers during this quarter like the domestic Market door, which seen and expect to see some customers pause activity in light of the virus.

Our government in defense business built on the success in 2019 and had a very strong quarter with new orders from General atomics and the US Coast Guard for satellite system. Additionally. We have begun implementing new services to expand our long-tenured relationship with the National Weather Service through our contract with Iraq providing satellite through Wireless services.

We continue to address several opportunities under the GSA Enterprise Information Solutions contract with our managers broadband and has the capability.

But also extremely proud to be providing satellite internet access to US troops returning from overseas deployments and facing 14-day current time.

Despite the bankruptcy filed by one web and the financial challenges. They face. We still believe that Leo constellation will be an important part of the overall satellite ecosystem. Leo's will bring Global coverage and lower latency Services while Geo satellite will bring density to support a growing demand for data package know while we wait to see what happens with one web. We have paused work on the gateways and reassigned our engineering staff to other ongoing projects are consumer business continues to be very strong and I'm extremely proud of how we responded to this critical time.

Let me now hand it over to a hundred.

Thanks Rodman. Good morning, in q1 of twenty-twenty ESS continuing operations. Revenue was five million five million dollars up slightly from the first quarter of last year in the first quarter the covid-19 pandemic had minimal impact on our commercial FSS business. However, we could see some negative impact on existing or future business due to changing economic conditions and latent or delayed sailed Cycles.

On the global a spend front we've completed construction of our first pair of new satellites for our Echo Global subsidiary, which obtained Global mgso Spectrum rights off. The launch of the satellites have been delayed due to the pandemic and at this point in time. They've not been rescheduled. Although we expect the launches to occur this year.

We also continue to make progress in our various development initiatives supporting the echostar global Mission. We are working with several strategic Partners to develop a future system Architecture Firm support high-quality service offerings expected to reduce the cost of satellite delivered iot Services. We foresee emerging opportunities in global mobile apps like vertical markets including energy utility UAV Automotive Green machine-to-machine Communications public protection and disaster relief health monitoring and other end end services.

Regarding our European operation echostar mobile continues to see strong interest in the Hughes 4500 omnidirectional terminal and its variants including 5510 terminal a hybrid MSS terrestrial version of the 4500 terminal.

Well, the pandemic has temporarily slowed our rollout of these products through a distribution Partners. We expect to be back on track within a few months. In the meantime. We are pushing forward with development of our state-of-the-art service platform as well as plans to run proof of concept technologies that will help validate both the echostar global Mission as well as in enable echostar am able to offer devices that will greatly increase the potential addressable market for its European Focus satellite M2M and iot services.

Full integration of the S Band Satellite Services into 5G networks remains our longer-term strategic goal and we continue to explore ways to integrate our complimentary ground combat authorizations into these and other developments. I'll now turn it over to Dave.

Thank you wanders. Good morning everybody.

During my comments will be referencing or adjusted ebit a measurement this measurement excludes from either a certain non-recurring items as well as gains and losses on our investments and unrealized gains and losses on Foreign Exchange. More details are in the gaap to non-gaap reconciliation in our earnings release. We believe that adjusted even a more closely represents our operating efficiency in financial performance out of the financial results Consolidated Revenue in the first quarter was $466 the growth of 2% over the same period last year driven primarily by growth in our huge segment Consolidated ebitda. Sorry Consolidated adjusted ebitda in the first quarter was $149 compared to $150 last year.

our net loss from

Continuing operations was $58 million dollars in q1 the loss increasing by $54 million dollars from last year. This change was primarily due to higher net losses on investments of $50,000 which included the right off of a Strategic investment higher depreciation and amortization of $13.

In higher unrealized loss of them foreign currency of ten million. This was partially offset by lower. Net income tax expenses of ten million higher equity and earn 9 million and lower net interest expense of eight million Capital expenditures in the quarter $105 million compared to a hundred twelve million dollars last year.

The decrease was primarily due to lower spend on construction associated with satellites partially offset by higher spending consumer equipment.

Free cash flow defined as adjusted ebitda minus capex was $44 million dollars during the quarter.

Turning to the segments huge Revenue was $458 million dollars a 3% increase year-over-year despite negative Foreign Exchange impact of approximately six million dollars.

The growth was driven primarily by huge consumer service and Enterprise Hardware Sales partially offset by lower Enterprise service. He's adjusted even in q1 was $162 million dollars up slightly to Q one last year the margin associated with the higher Revenue was offset by higher sales marketing and G&A expenses primarily associate with our thoughts on consumer business and Latin America.

ESS Revenue in q1 was $5000000 up slightly compared to last year adjusted ebit. It was two million dollars in q1 also up slightly.

Adjusted ebitda in the corporate other segments in q1 was a loss of $16 compared to a loss of $24 million dollars in q1 last year. The segment had an equity of Affiliates of four million compared to losses of five million last year.

As mentioned last quarter, we made a change to our accounting process on how we report our Equity method Investments by shifting reporting to a three-month lab. He's faithful impacts or partially offset primarily by the impact of certain real estate that was transferred to Dish in September of 2019 as part of the BSS transaction, which was not treated as dead in you'd operations.

We ended the quarter of a 2.4 billion dollars of cash and marketable securities while we did buy back a small amount of our stock given the extreme uncertainty of current economic conditions. We felt it was prudent to maximize our liquidity. It affords us the flexibility to explore investment opportunities that could Foster growth for organic and inorganic.

Finally, I would note that Moody's recently performed a review of HS SCS credit and made no change the ratings on our files with that. I'll turn it back over to Mike wage as mentioned in my other comment. So I'm extremely proud of our organization in terms of how quickly we were able to adapt to the challenges of the pandemic the teamwork that's been displayed and the excellent service we continue to provide to both new and existing customers while the ultimate impact of covid-19 on our business will depend on future developments that are uncertain life cannot be predicted. The pandemic has made even more evident the worldwide need for connectivity and Communications to facilitate the increasing vital Global community and workplace.

as the global leader

Sound like Broadband networks and services. We continue to be very well positioned for the challenges from the pandemic as well as new opportunities for future growth. Let me down now turn it over the operator to start the Q&A session as a reminder that the question you would need to press star one on your telephone, press the pound or hatho Ki please stand by what we can follow up with you and a roster.

Your first question comes from the line of a Greek princess with Raymond James.

It's good morning. I hope you and your families and employees continue to stay well and go through these crazy times a couple of questions. I appreciate the break out of consumer versus Enterprise being about 66% consumer 34% Enterprise as we think about Enterprise sidewalk. Can you kind of list off with your top segments are I know you've got some in the retail gas side, but just trying to think through what your exposure as a different Industries on the Enterprise wage fraud when you want to take that.

Yeah, when we look at Enterprise business with you guys look at both North America, and so if you look at if you can suck.

We've got an echo coming back.

Okay, can you can you guys hear me or?

Yeah, we're here in okay here. I'm getting a if it's okay with you guys are discontinued home in North America are our business has taken its primary and you you have both Technologies with the recent technology being used and also the what we call the SD brand Technologies for improved reliability and availability. The retail is clearly the dominant factor in in in the United States when you go outside the US like let's say yeah, we we address a lot of the banking opportunities Finance is birthday and also the gas stations for those kinds of traditional reset opportunities are still dominant in in countries, like India and Brazil Europe follows closely the Dead

Model is more focused in the retail area. So it's a mixture of the two depending on which part of the world you are in. Okay, and when you say retail

Apple customers. Would that be?

Well, it's it's like, you know, traditional retailer includes the the energy sector the gas stations the companies like life, you know big not TJ Maxx. So you have the the the department stores Etc and then the energy sector as I mentioned earlier and as we think of the impact of covid-19, are you noticing any issues with bad debt or collections? May I assume the Auditors this time around were being very diligent and looking at what kind of reserves you guys have and everybody?

Yeah, obviously, that's something we look at every quarter and we did pay more attention to it this quarter, you know, the quarter ended in obviously, March 31st, Thursday, the only customer that I'm specifically aware of that. He declared bankruptcy was one web in the first quarter. I think we'll see a Fallout going forward is a greater economic impact, but for the most part, you know, we didn't have a big Reserve impact across the broader customer base and it's something we certainly paid attention to on the consumer side is private and mentioned his comments. We excluded from a reported subscribers those customers that we would have otherwise disconnected for non-payment. We also excluded obviously from the revenue charges that we we continue to make money.

customers that we don't expect to collect

Okay, I think the uncertainty on the economic environment and the impact to the retail Community broadly. As I said, we haven't seen yet and you know, it's tough to predict will look like on phone.

No, you guys don't provide guidance as we think about that you're now into.

How is business changed to mid-may?

I'll start with that and then Pride my maybe you can add some comments on top of it. I mean, obviously we saw some good growth in the first quarter on the consumer business in North America, certainly more growth and what we've seen in the last couple of quarters, we would expect that to slow down just because we simply don't have the capacity available in South America, you know, we expect continued strong growth and the consumer business on the Enterprise. I think as I've been mentioned we're going to see slow down from some customers from up there re-evaluating things. He mentioned specifically customers in the IFC space as you know, we don't provide direct IFC but we support some of those wage customers and obviously those guys some of those guys are going to struggle a little bit without any planes flying. So we're going to see slow down there, but we're in terms of of deployment of new equipment and services.

Service, but I think in private you can probably add more to this. We're starting to see customers looking to accelerate installation new services and they step up as they evaluate their needs going forward in in this new environment.

I I think Dave you, you know gave address the major points the computer business in the first quarter was very strong both domestically and internationally going off the second quarter and third quarter depending on what happens with the pandemic. We'll see what happens but it was a strong month. So I I I think we continue in the consumer business office to look good. The only limitation there of course is the lack of new capacity in the United States. So we are constantly working there to try to improve efficiencies in through ports by technology improvements and we'll try to see what happens if the year progresses in the Enterprise business, we're seeing the little we saw a little slow down in the beginning of the second quarter, but as we speak many of these customers that were looking for delays are beginning to re-engage and I think we're op Club.

Speak hopefully that many of these will convert to contracts on the schedule that.

They had originally projected.

It's good to see those changes. I guess the last question for me would be on that capacity point you mentioned the force majeure Clause from the manufacturer of the Jupiter three rocket no launch no life. No really ER than 20 second half 21. How should we monitor that? What do you think as far as the state that might affect you? I think that's going to be dependent on Thursday see when the launch date is and and the completion of the satellite. We're still being somewhat cautious in terms of predicting things, you know, there's still uncertainty on delivery of subsystems from other vendors outside of of Macs are so you know, just given the overall uncertainty of the environment. We're still being relatively cautious month.

Okay. Thanks. Hope you guys continue to be well.

Your next question comes from the line of Chris with loyalty Analytics.

Hi, I just to follow up on bricks earlier question regarding the timing of the Jupiter launch. If you're looking at the second half of next year presumably you need to put in a long tour sometime soon. And are you in fact moving towards that decision and any impact from the recent Insurance increases home and along with that they can you give us an update on your thought on the 2020 capex Outlook.

Let me address the capex and then last Condors to address your other questions capex, we're monitoring very closely and and part of that is that's where we going to be on the schedule for both Jupiter three and the rocket in terms of the capex. I do expect some delays in spending from this year to be pushed from 2020 to 2021. We're evaluating all the projects and and planning for contingencies, um, while you know bulb and I said that things, you know cautiously optimistic in terms of the condition of our customer base, but at the same time we're being prudent making sure that we're looking at at all to need to further our own costs. Should we see our customers slowing down things more than we expect with that. Let me ask others to address the the rocket issue.

Yeah. Hi Chris. We've obviously been in discussions with all of the launch providers that are capable of launching a satellite like J-3 and am aware and um adds the j3 mission potentially incurs from schedule slippage. It puts us in a interesting place from a launch vehicle standpoint because as you know, the launch vehicle providers, some of them are evolving their product lines and by virtue of that they'll be sun setting off existing launch vehicles and rolling out new and improved launch vehicles and all of those evolutionary changes are subject to delays now themselves some of it as a consequence of the pandemic but some of it just these are complex evolutions and there's a natural tension on the schedule. So we we have dead

current discussions with

The launch vehicle providers that would be capable of launching this in the time frames in which we would most likely need them. But we have deferred that decision off partially out of prudence because obviously as soon as we order a launch vehicle, we're going to have to start making payments on it. So we've we've deferred that decision until we get some great publicity is when the satellite will be completed as your question relating to the insurance Market. Yes, we've been monitoring that very carefully as well. We we previously socialized J-3 mission to the insurance community and have been keeping a lot of large Market surprised as to our timing and our needs but as you know, all the financial markets have incurred some instability and when we actually go out into the insurance markets will also be a function of dead.

The stabilization of some of that but we won't have insurance needs until the latter part of next year at the earliest. So those decisions and commitments as well. We're going to offer as long as possible.

Fair enough. Thank you all so just a question on the Enterprise business. I think it was down in the current quarter about thirteen million dollars and was also down in Q4 what part of the business the Enterprise business specifically is down is that International or North America and instead of particular segment or are there different factors that impacted Q4 from q1?

Pregnant yeah sure. Yeah, generally historically we always find to four weeks and then q1 is usually a lower than future for because I need all the shipments at the end of the year before so I don't think there's any dominant piece of our business that changed dramatically there were slightly off lower performance in almost across the board, but but nothing dramatic

Okay and specific to one web. I I didn't see any disclosures in the 10-q relating to potential write-downs. There are a couple of public companies that have taken off. Can you give us an update of where you stand in terms of Gateway deliveries on that program and and maybe size your exposure from where you sit with whip or finished products it off the floor.

Yeah, Chris, I mean in terms of our investment our investment is now fully impaired from the Strategic investment standpoint effective with the bankruptcy. We ceased all work on one web. Although we subsequent to the quarter did sign a small deal or a small dog with one with the face that allows us to wrap up some of the development documentation associated with that and that was approved by by the court, but that's a long one time and not certainly ongoing in terms of the Gateway delivery. You know, we've got gateways, you know sitting in in the same house that we're ready to ship. Those have been primarily paid for in advance. Our overall exposure to one web is relatively minimal certainly compared to some dead.

others that we've seen through the bankruptcy

Filing um, and we do have some exposure to our vendors, um for cancellation of certain future orders that were in the pipeline a um, but we don't expect that to be particularly material other than those potential liabilities to the vendors. We think we recorded everything effectively in the house you want related for one weapon got you in was there any impact on your backlog or is there potential potential impact depending on how things go and just more broadly I mean equipment sales were up in q1. Is it reasonable to assume that both the slow down and consumer and difficulties with deploying to Enterprise customers that were likely to see negative numbers for at least the next quarter and perhaps more

So well, first of all in terms of the backlog certainly then the q1 we did take out all backlog associated with with one web. So we've got nothing in the backlog more for one. Whatever. I'm not sure. I understood the second part of your question in terms of the future in terms of delivery. We we didn't other than as problem and said, you know, we we we're still restricted on how much work we can do for consumers in Peru. We did have some temporary limitations in some other South American countries, but we don't expect that situation to get worse going forward, you know, unless the overall pandemic obviously becomes a a worse situation overall on a global basis. So we wouldn't expect from a consumer standpoint if that was your question a Slowdown in activity going forward birth.

We think we return to normalize levels, whatever the hell that means anymore. But you know, we saw the search in in North America. We certainly saw a little bit of a month and South America, but that you know is to a great extent was was pretty much in line with our plans in North America, you know as private mentioned. We're we're pretty much maximum capacity. I would not expect growth in North America and Subs. Certainly, I wouldn't want you using q1 North America consumer as the bench month going forward.

Understand and final question on the the Broadband Protection Program. I forget the name. I mean Kudos on that I I would be in a terrible situation. If I lost my my Broadband connectivity in the current environment and clearly it's a bit unprecedented so difficult to think about how you're going to migrate be going forward. Once the I think June Thirty extension happens, but are you seeing a a sizeable number of folks that you know could become a future churn and you know, what are your expectations in terms of how you might migrate those customers or extend them on the back end?

Prime and you want to try and address? Yeah, I I would I would say sort of for a numerical standpoint Chris in q1. Obviously just give them the timing of the end of the quarter round and everything happening. You know, the number of Subs that we're in that delinquent mode as of March Thirty One, we're not overly significant. We do expect that naturally to them grow going forward. But in terms of you know get saving those customers in avoiding the churn as of June 30th all that problem and trying to dress them. Yeah, we have provided for in our estimates that they've mentioned that down the bill we have not counted them in our numbers. So when we said we had a you know, 39,000 methods in q1 it took into account. Yep.

Subscribers that we thought would would have normally turned out so the the stuff that's left is we don't expect it to be very large and in the scheme of the wash half million Subs that we have on in service. So I don't expect that number to be very large. The number that we estimate is the built into us into our forecasts.

It's not significant. This is this is Mike Dugan. I'd like to interject here. First of all, you're asking questions that require a crystal ball and and ours is broken because a couple of the month and we've tried to predict, you know for the pledge. We tried to prepare ourselves and say we're going to have you know, potentially higher numbers of Subs in the back nine pick configuration. And you know, the truth is it's it's been less than what we predicted. I think we weren't too good at the wage predicting the the huge demand. We saw as a pandemic to place because a lot of people needed to get a connection for work from home or school from home.

And then finally, you know, we set a couple of times we're out of capacity in the US. That's not true. Okay, there are areas of the country that are highly urbanized where we've got extremely tight capacity capability to expand there are large areas of Jupiter tues coverage that's still a significant capacity and that's where we're focused from a US standpoint to add customers. So just to clarify

Good. Thank you for the clarification.

Your final question comes from the line of Giles door with Jeffries.

Thank you. Just picking up on one web topic. Do you have any interest in any of the assets anything in there that you want?

As we look we're looking at that as well as a lot of other things that are unfortunately starting to develop, you know, because of the change in business depend demux brought forward slash, you know, are there things with one website overall business, there's things that are very attracted to to us and we you know, if somebody ends up acquiring one lab, uh assets and then want to to to re-engage that entire service we know will be a big part of that. So, you know, it would be unfair to say we don't have any interests because we watched that kind of stuff on a day-to-day basis, but I I just seen an interest in yeah, go ahead.

Oh, sorry. I'm just hearing my hair I come back to me. I thought it was anyway, I don't need an interest in the situation. I mean do you have are there any specific assets should be it? I don't know satellite Hardware anything that that you would, you know want to to bye-bye.

Again, do we have interest? Yes. Are we going to be totally involved in bidding on specific parts of the assets? I don't expect so at this point in time, but you know again, my crystal ball has a work very well the last couple of months so

Well, I don't think you need to apologize. I understand there's a bad Echo and we don't know where it's coming from. So we're trying to stay muted most of the time. I'm okay. Thank you. I can I can leave. Okay. So speaking with one web. There was the March announcement just prior to Bangkok of a distribution agreement. And can you just confirm I think I know the answer but it is the fact that one we're going bankrupt. Is this a material impairment to any kind of services Revenue growth that that you were anticipating no choice for way out there. I think it's three years later. It's not a benefactor. So nothing in the next three years.

Like the child to be to be clear. I mean there were certainly Revenue that we expected over the course of this year and into next year for deployment of the remaining gateways. Clearly. We're both are no longer expecting that with the outcome of the bankruptcy process whether that becomes re-engaged yet to be seen But after we set here today, we certainly do expect an impact of the revenue going forward. I can give the guys was talking about the distribution agreement we signed in India.

the last one

Yeah, that one would have come into effect for three years. Okay.

At this time, I would like to turn the call back over to management for any closing remarks.

Yeah, thank you. Thanks everybody for joining today. We're now ready to conclude the call. So everybody have a great day.

Thank you for participating in today's teleconference. You may now disconnect.

Thursday Thursday