Q2 2020 Sierra Wireless Inc Earnings Call

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[music] I would now like to hand, the converts over your speaker today Mr., David Climie, Vice President of Investor Relations at Sierra Wireless. Please go ahead.

Thanks, and good afternoon, everyone. Thank you for joining today's conference call and webcast on the call today are kept thaxton, president and CEO and Sam Cochrane our CFO.

As a reminder, today's presentation is being webcast will be available on our website. Following the call. Today's agenda is as follows can't will provide his corporate update in Seattle provided detailed review of our second quarter 2020 results followed by acuity.

Before we get started a reference the company's cautionary note regarding forward looking statements. The summary of our cautionary note can be found on page two of the webcast and is now being displayed.

Today's presentation contains certain statements and information that are not based on historical facts in constitute forward looking statements within the meaning of securities laws. These statements include our strategy goals objectives expectations and commentary regarding the outlook for a business are forward looking statements are based on a number of material assumptions, including.

Also listed on page two the webcast presentation, which could prove to be significantly incorrect. Additionally forward looking statements are based on her managements current expectations and we caution investors are forward looking statements, particularly those relate to longer periods of time are subject to substantial known and unknown material risks and uncertainties that could cause.

Actual events or results to differ significantly from those expressed or implied by are forward looking statements I draw your attention to a longer discussion of our risk factors what are annually from issue for and management's discussion and analysis, which can be found on SEDAR and Edgar as well as other regulatory filings. This presentation should be viewed.

In conjunction with our quarterly earnings release with that well now turn the call over to care for his corporate update.

Thanks, David our second quarter results were in line with our expectations. Despite a very dynamic operating environment and some supply chain challenges.

Occurring and other services revenue in Q2 was 28.1 million.

Year over year and sequentially.

The sequential increase was the result of improved activity in our I O T solutions verticals, while absorbing some usage slowdowns due to cold it.

The overall number of connected devices with stable in Q2 compared to the prior quarter.

Our team again engaged in a broad range of Aiotv solutions opportunities in Q2, and El Toro design wins were 20.4 million.

Actually lower than the strong 40 million in Q1 due to cope with my team slowing some contract signatures.

I will share later on some solid service wins and that the overall funnel of opportunities and strong.

With an increasing number of people working from home and remotely during cold with my team, our networking and PC OEM business also experienced a sequential increase in Q2 as our customers had improving demand throughout the quarter and we expect this trend to continue into the current quarter.

Given the impact of the covered my team pandemic revenue in Q2 was largely impacted by the weakness in the automotive segment.

You know the automotive manufacturers temporary close many of their production facilities and that impacted our demand in the second quarter.

However, we are pleased to see most are we in factories have reopened including a car makers retail showrooms and overall demand is a proven.

Excluding the coben related decline in our Q2 automotive revenues the rest of our business was up sequentially. Despite some supply challenges and slowdowns from Cowen.

Internally, our workforce has been productive during the pandemic and we recently reopened our offices in North America in Europe, as our Asian offices had opened earlier.

We are taking a prudent gradual approach to the reopening and is progressing well with our employees. I'm also pleased that our global teams are working very closely with our customers suppliers and manufacturers to make sure planned shipments production allocations and support services are being managed properly.

I'd now like to take a few minutes to talk about the announced divestiture of our automotive product line to brolin wireless I can sort evenly spread by fiber come wireless publicly traded on the shandling stock exchange.

On July 23rd we announced a definitive agreement to the best our automotive embedded module line for 165 million, including approximately 19 million in cash.

Revenue for the automotive line last year was 166 million.

The strategic divestiture enables us to strengthen our focus on fully integrated device to cloud Coyotes solutions that generate higher value recurring revenue.

It also allows our R&D teams to focus on our key Fiveg enterprise programs, including embedded modules for our mobile broadband and our new gateways and routers prior enterprise networking customers.

The sale of the automotive been product line unlock shareholder value improves our balance sheet by providing additional liquidity and allows us to increase our market leadership in indicated <unk> solutions.

We expect the transaction to close in the fourth quarter of 2020 and is subject to normal closing conditions as well as approval from the Ministry of Commerce in China.

Going forward our go to market teams, we remain focused on delivering device cloud platform and connectivity service solutions to our customers, we're seeing more industrial and enterprise aiotv customers adopting our fully integrated iced tea solutions, because they have a low total cost of ownership faster time to market and they are easily.

The scalable.

The advantage and working with customers early in the design cycle, starting with our devices and our ability to bundle quality hardware with fully integrated connectivity service and 24 by seven support is a key differentiator when we're up against our competition.

As mentioned L. tried to second quarter was 20.4 million sequentially lower due to the impacted the corporate 19 situation.

That said, we did secure a number of solid wins I would like to share for case examples from Q2.

One of our customers needed an io Te connectivity solution. They could deploy initially in the U.S. and then roll out in Europe, It's a retail enterprise locker delivery service, where items purchased online are placed in collection lockers for pickup and customers can open to lock or the QR code and email to them.

The differentiator in this deployment was our integrated end to end solution, where we provide customers with a crs smart Sim our cloud platform and then like 60 gateway device.

The turnkey Aiotv solution the customer immediately has a scalable reliable single source solution.

The services Alkar is expected to be 1.8 million and the gateway hardware is about half a million.

Another customer specializing in industrial industrial Air compressors was looking for an ice tea solution that can gather real time data from its equipment at the edge of the network.

The company had compressors and located in South Asia, Europe, and the U.S.

Our initial discussions with them starting with an LP WH gateway and quickly moved on to Hollywood going to connect and manage the data.

And integrated solution that included our FX 30, gateway and smart superconductivity with the answer.

And they could use the solution to scale worldwide quickly and easily.

The services L. times expected to be one point threemillion.

And hardware revenue approximately 0.7 million.

Another example is a leading global medical device manufacturer the develops patient lift systems to monitor the equipment in hospitals and homes.

The combination of our LP W.A. cat, one and one module and Crs conductivity services provides the customer with a single solution across regions and enables him to proactively manage downtime and maintenance.

The services Alkar is expected to be 1.2 million.

And told the hardware revenue.

Right 8 million.

For example is a global automotive solutions customer there was looking for a leading aiotv solution to collect and analyze vehicle data.

We are enabling there in vehicle hardware with R.W.P. 76 ready to connect module and then we went onto when the connectivity business using our global Smart Sim unified robust solution is being deployed in the U.S. and scaled into other geographic regions. The services L. times expected to be below 1.4 million and the revenue from hardware.

Just over $5 million.

These four design wins are good news case examples of how we bundle our device with recurring services to win against the competition increase our subscription based revenue and drive shareholder value.

As we look forward I'm also excited but the market opportunity for our new fiveg embedded modules and Fiveg gateways and routers.

We've been working very hard for some of our top customers on key design wins in enterprise networking and we'll be launching our fiveg products. Starting later in the third quarter.

Fiveg final the strong.

We have 15 design wins to date with some key customers and the market interest looks good.

We believe key end markets for Fiveg application. In addition to enterprise networking include public safety public transit and asset monitoring in the area such as manufacturing energy infrastructure utilities and commercial security.

Along with the scheduled launch for Fiveg embedded modules, you'll be announcing several high end fiveg gateways and routers for industrial and enterprise applications.

But those customers requiring high speed wireless broadband connectivity, but low latency fiveg will certainly be the aiotv solution that meets their needs.

Globally, our team at Sea area remains very focused on launching a fiveg program just mentioned as well is delivering innovative fully integrated aiotv solution, they generate higher margin recurring revenue and.

And with Sam Cochrane as our new CFO, we're very much focused on improving the company's overall operating efficiency with a strong focus on cash and cash generation with that I'll now pass over to Sam for his review the second quarter results.

Thank you Kent good afternoon, everyone.

I'm very excited to have joined Sierra wireless as Chief Financial Officer.

My focus will be on running a profitable growth company that delivers free cash flow.

Given the current macro environment.

The coal that 19 pandemic.

It is vitally important that we focus on cash improving the company's overall operating efficiency and generating positive earnings.

I will make additional comments on that in my prepared remarks shortly.

As a reminder, our second quarter financial results reported in the U.S. dollar and all the U.S. GAAP basis. You also present non-GAAP result to provide a better understanding of our operating performance.

Full reconciliation between GAAP and non-GAAP result is available on the IR page of our website.

Total revenue in the second quarter was 144.1 million.

Down 24.7 per cent compared to Q2 29 team.

In a challenging global environment, our quarterly results were aligned with our expectation.

Non-GAAP gross margin in the second quarter was 31.8%.

Compared to 30.8% in the second quarter last year.

Reflecting slightly improved margins in both are all reporting segments.

Our non-GAAP operating expenses in Q2 were 55.8 million.

Basically flat year over year from Q2 2019.

The second quarter all back this year, including the addition of the M. M Group, which we acquired in January 20 Twond.

Our non-GAAP net loss was 11.1 million and adjusted EBITDA was negative 5.3 million compared to a non-GAAP profit of 2.5 million, an adjusted EBITDA of 7.9 billion a year ago.

Operationally given the global covert 19 pandemic, we did experience some tight component supply issues in Q2.

Ladies and some of our suppliers and Malaysia, the Philippines and Mexico.

Additionally, we also had some challenges related to the transportation of goods and logistics.

Cargo capacity on carrier and specialized flights remain tight.

Revenue in our I O T solutions segment was lower by 17.5% year over year.

Within our I O T solutions segment recurring and other services revenue was 28.1 million.

Up 12% year over year, driven by growth in connected devices and the addition of acquired M. M Group revenue.

Recurring and other services revenue represented 19.5% of consolidated revenue.

The growth in recurrent revenue in Q2 was offset by lower hardware revenue, primarily due to slower economic activity in energy seldom payment and public safety.

Some supply constraints related to the cobot 19 pandemic.

And continuing pressure from low price competitors in hardware only cycle.

Revenue in our embedded broadband segment was down by 32.5% year over year.

The decline was primarily the result of automotive revenue being lower in the quarter as a result of the Oems closing their factories and weak end market demand for vehicles in the quarter related to the covert 19 pandemic and lower mobile computing revenue year over year due to prior design win losses.

Total gross margin was 45.9 billion for 31.8% in Q2 compared to 30.8% the prior year.

Compared to Q1 2020 gross margin increased sequentially by 410 basis points.

This reflects I OTI solutions gross margin of 37.3%.

Up 170 basis points sequentially due to higher recurring revenue.

And embedded broadband gross margin of 24.6% in Q2.

480 basis points sequentially due to higher volumes and mobile computing networking sale at higher gross margins and lower volume in automotive at lower gross margins.

Moving to the balance sheet. We ended the second quarter was 62.5 million of cash.

Specifically during the quarter cash flow from operations was positive 5.7 million.

Capital expenditures in the quarter were 6.5 million, resulting in free cash flow just under breakeven.

During the quarter, we repaid 10 million from the existing revolving line of credit.

These activities resulted in a 10.3 million decrease in our cash balance from first quarter 2020.

During the quarter, we amended our revolving credit agreement with C.I.D.C. to increase our total borrowing capacity from 30 million to 50 million and the maturity date was extended to April 2023.

And in late July we entered into a 12.5 million Canadian dollar term loan agreement with VC backed by the Canadian government credit program right additional liquidity.

Regarding full year 2020.

The impact of the Tobin 19 pandemic, our global business continues to remain uncertain.

Given these conditions, we will continue to not provide guidance, although we are seeing some business improvements.

In conjunction with the recently announced divestiture of the automotive business and our focus to grow profitably. We have initiated actions to reduce operating expenses by approximately 20 million, which serves to rightsize the remaining business.

This cost reduction program includes the opex associated with the divestiture of the automotive product line as well as other initiatives, we're taking in the second half of the year.

These measures are to ensure that company is profitable and cash flow positive in 2021. Following the closing of the automotive divestiture, which we expect to be completed in the fourth quarter.

That ends my prepared remarks today, operator, I would now like to open the call for questions.

And that's a reminder, asking question you will need to press star one on your telephone to withdraw your question press the pound warehouse Keith Please stand by well, we compile that you in a roster.

Your first question comes from line of Mike Walkley from Canaccord Genuity.

Your line is open.

Great. Thank you very much just first question just just 'cause it to the last point on the guidance and understand lot of companies aren't guiding but there can you just yes update us a little bit on the maybe the linearity throughout the quarter yes.

She's seeing if you're seeing some gradual improvements in the global economy and if so did those trends continue into July.

Hi, Mike Good morning, Capex in here. Thank you for the question good to speak with you. So linearly throughout the quarter I would say that we June we saw more business activity started to pick up and I think that.

In general we're seeing progresses as he mentioned on the call. There are areas that are stronger in areas that are weaker in our in our networking and bendbroadband area. We've seen strong demand combined with some supply challenges is that as that area that ramp other.

Industrial segments like oil and gas have been slow.

But in general we've seen a.

Activity start to pick up in June and so we you know we're continuing to ER to progress and are seeing.

Seeing progress progression the business and you know while uncertainty remains you know we're out we're happy with how things are moving forward.

Great. Thanks.

Just a follow up question on the on the Fiveg progress can you just help us think about the opportunities for both lines of your business here. When you think this could really help kind of the networking and PCL OEM module wins, along with some of the Fiveg routers and gateways you how much of a step function could this be for your business a video into 2021.

Yeah, Mike.

Five geez, it's shaping up nicely I think it is more about 2021 impact we expect to launch our first fiveg modules in Europe. This quarter Q3, and in North America in Q4.

And so while it activity starts to come in it'll be fairly early stages, we have a strong pipeline of customer interest as mentioned in the call 15 design wins already inside its strong so will it will start to out and we'll start to provide revenue positive.

Impacts in 2021 also as we refreshed our airlink enterprise gateway business with.

Fiveg devices. So it's a full product refresh update that we'll be rolling out.

In 2021, so we're excited about the opportunities there for more advanced software and features on our you know our leading position in.

Public safety and industrial mainly.

Great. Thanks, and just question maybe for for Sam on the on the gross margin trends in the business can you help us think about maybe embedded broadband where the gross margins trend you know once you do the divestiture and then I O T solutions as businesses you recover hi.

Your margin gateways come back into the mix.

And your continued to nicely grow recurring revenue, where you remind us kind of long term margin targets and I have t. solutions.

[music].

Yeah sure I would keep solutions all start without one you're right on the mix you know as we see a recovery in oil and gas utilities.

You know public safety, we won't see that higher margin business or pick up and that will be upward trajectory on our gross margins.

The second piece of that is also our connectivity as we see more connected devices Rowan would grow or recurring revenue that will also be in increasing share of our mix.

So gross margins will also be no nothing good tailwind for gross margins there as well.

No on the in better broadband you know as you know automotive was a lower margin business. So as that is divested as we work towards closing that transaction.

Remaining mix on these are mobile computing.

Working <unk> networking modules, and such our or higher margin than than automotive, but but still a an overall sort of lower margin business in the OTI solutions business.

Long long term target not provide any at this time, but you know.

You got to think that with automotive on on the way out.

Recurring revenue growing and as enterprise or they'll backed up with a you know oil and gas public utilities picking back up post cobot, there's a lot tailwinds for margin as we move forward.

And Mike maybe Ken Thanks, everyone for other does not make one for went really comment on gross margin spending that you will see as as the divestitures complete we expect that will happen in Q4.

That tell you know in.

Clean quarter, you'll you'll see a good step function in the in gross margin is.

The business is dominated by a t. solutions.

Right.

Everybody still feel the calling thanks for taking my questions.

Thanks, Mike.

And again that star one if you would like to ask a question. Your next question comes from line of Paul Treiber from RBC capital markets. Your line is open.

Okay. Thanks, very much and good morning, just was hoping they provide some background on the sale the automotive business. How long has not been in the works and without a key element of your strategy. When you first joined as CEO.

Oh, Hi, Paul Good morning. Thank you for the question. So I think that on our our strategy has been consistent are being the global leader in I O T solution.

Building, our capability provide complete bundles of of hardware Whit conductivity with cloud with security. So that's been our focus and that's where we've been working to drive to automotive didnt have a lot of synergies with with that strategy. It has been an area.

Strong R&D investment it's been important part of a of the company's growth of the opportunity for us for this transaction came along and.

We look at opportunity can analyze them and we felt this was a vast for creating shareholder value to be able to to realize the and the value that asset, which we think we've done very favorably and continue to act to work focused really on the growth of our I O T solution, the and enterprise business line. So I wouldn't say that this was.

You know you have to be a I get to a focus on the market opportunities. This was potential area of strategic opportunity and that yes. It has come to fruition.

And.

For modeling purposes, or when we look up for the year, even just forget the quarter could you provide some indication of how automotive revenue was tracking or is expected to track.

Through the year and I'm, just trying to gauge the magnitude of contraction in the automotive relative to your other.

Hardware business lines.

Yeah, Paul I think that you'll you'll see as we report Q3 in November we'll be giving a complete rollout of Ah automotive segment, so not going to get into.

That makes specific details right now we're going to focus on getting the transaction closed in well what role through that but if we did announce that automotive revenue last year was 166 and I think than you can you know we would we would expect that over all that would be modest growth on that number you know in a whole year basis as we Uh huh.

We include the slowdown in Q2.

And.

Over the last couple months I mean, you've had a number of newborn board members. Joining you know whats being the you know the the feedback from them on that on the company strategy.

And you know what's being there their contribution.

Today or tomorrow or perspective.

Yeah, Thanks, Paul well, we put a lot of energy and effort into Onboarding, new directors to get them up to speed with you know industry details our strategy et cetera, and then obviously a transaction of this nature is a is important board consideration. So we did a lot of.

We're bringing the board up to speed on the transaction caught a lot of a useful input because we work to complete the deal parameters and ER and took a true to completion and had unanimous board support for the transaction as we got to the finish line. So I think that the.

The frequency and intensity of meetings was strong because of this transaction like I think we'll be very helpful. For us a lot of a tremendous insights from the board strong new experience.

Basis across a across various aspects.

So we've had.

I mean, as well supplied new board members, Greg waters, with relatively new and Ah as the CEO of several semiconductor companies, providing great unhelpful insights Tomlinson joined a is retired from flextronics, but from that part of our businesses provided a great insights or another Jon Andersen another set of.

Conductor CEO with lot of semiconductor so lot of lot of good business wisdom that has been a has been helpful. Some you see that in a short term as we completed its auto transaction, but more as we work to continue to drive our strategy and the end dry for global leadership and I have t. solutions lots of.

Lots of great great help coming from the board.

Great. Thanks for taking my questions.

Thanks, Paul.

Your next question comes from line of Scott Ciro from Roth Capital. Your line is open.

Hey, good morning, Thanks for taking my questions. He just a couple of quick clarifications to start off can't I'm not sure if I missed it but did you quantify the topline impact from some other component headwinds that you saw and I. Just wanted also clarify could give us an idea again about the size of the.

To EM.

Revenue base as well as employees and then I want to make sure I heard clearly as well embedded broadband would've been up excluding auto was that correct I had a couple of follow ups.

Well, let me let me, let me try to each impact each of those so in terms of the supply chain.

Impacts no we didn't quantify that specifically I think that it's it's happened with Colgate some of our manufacturers and part Chad facilities that were closed and and any impacts on their supply chain that are fed through so we've been working very closely with our suppliers what it meant for Q2 with some of the volume that we.

What do those ships could have shipped in Q2 or you know rolls forward into Q3, and we have areas, where you know where we're growing faster than our our lead times would necessitate for some part. So we know we continue to to work hard to I forget those complete so we you know well we expect that we will.

Get all that product produced in the year Merle substantially catch up in Q3, but not not completely likely.

The wheel.

I need to comment that at that level on the on the M. group is we.

As we talk about that business you know upon announcing it in January.

Out about a I just shy of 10 million recurring revenue run rate, we fully integrating that business now so we're not breaking it out discreetly I'm very pleased with the you know with the progress integrating some of our products into their offerings, taking some of their a good business strat practices into other area.

As of <unk> of our business, we've been able to leverage and I think on your your third question of embedded broadband and would it be Alf X auto so the the on a sequential basis, yes on a year over year basis.

As we've mentioned before the revenue from Lenovo and Dallas, which was a you know Uh huh.

Over 100 million annual run rate you know those businesses are were were lost before I joined to not full impact about is in the numbers now so on a year on year basis, no. It would be down because of the impact of a about PC OEM sector.

That said our networking other part of them better broadband in terms of networking is is going along well.

So so pleased with that and as I mentioned in my overall comment if you take auto while I'm not all of the rest of our business combined was up sequentially from Q1, So X auto we were yeah, we're executing well.

Great and if I could on the Fiveg front exciting to hear that you guys are getting products into the marketplace and started and get some design wins certainly it brings a higher ARPU along with it but I was wondering about the recurring services opportunity do all of the Fiveg design wins have some component or opportunity to attached that recurring revenue.

Due to it and the ARPU is on that front Fiveg does it change that dynamic it all should it be higher for you guys and and one other on the or the recurring services front now you're running north of 110 million kind of running where the breakeven is on that business and if you could just update us in terms of gross margins in that business did we see unit.

Proven sequentially. Thanks.

Okay.

You and your squeezing the question didn't hear nicely Scott, let me try to make sure I capture them all so on the on the five different use the word ARPU, we tend to use ARPU for our recurring revenue business I think that the device value will be higher in fiveg. So as we sell five devices the average.

ASP, we will see per module and when when its including gateways will be hotter.

Our early areas our design wins are mostly in our networking area and those are areas, we generally do not.

Attached recurring revenue too. So that's another routing customer that is selling five de onto enterprises enterprises tip of the doing they had the connectivity themselves I wanted to get more of our connectivity and industrial Aiotv with Selic complete solution to a much.

Nick or that is selling devices around the world and a exceed up kind of market total cost of ownership to have our embedded connected together.

On on Fiveg.

Overall on our gateways, yeah, we will start to see recurring revenue off of off of those businesses, but a you know segmented before embedded broadband areas that we don't typically expect to drive I could write fiveg revenue and given that it so early.

A lot of this work with Ah you know will be done in tight conjunction with a carrier, but we would expect that to evolve overtime. Our fiveg gateways has a and built into them to the latest L.P. technology, So fiveg coverage won't be that cubist and launch.

But it'll fall back to Cat 20, which is the high speed Fourg technology available so it'll be the leveraging both fee and forging overall, so hope that answers the question about to about Fiveg Scott.

Yeah perfect.

Okay.

The on the recurring revenue side, you we've talked before about our.

Gross margins on our on our recurring revenue aspects being around 40% and they we expect that we'll continue to grow with scale.

So we are you know we're still not exact same trajectory I don't haven't answered your question about where the breakeven is on the on the connectivity side, perhaps that's something we can now we can take offline, but its you know it it's where a you know we're pleased with both whenever going on overall growth. We're pleased with a continued progress on.

Our wholesale costs to enhance that business and as we continue to get or get more scale in our products like Austin, where we do a advanced analytics at the edge and a wee transmit events versus data, we're able to increase our margins further because we can provide the same information value to the customer.

Or payload over the air So all of those aspects continue to grow towards reduce wholesale costs better compression at the edge and overall scale benefits on cost or infrastructure would drive increasing gross margins interconnectivity businesses, we continue to scale.

Great. Thank you.

[noise] and your next question comes from line of Stephen Lee from Raymond James Your line is open.

Thank you quick one from me Kent.

The PC OEM. So those slots were lost or what's your outlook in terms of getting them back.

Interesting question, Steve [noise] so.

<unk>.

What we've been focused on doing is trying to grow in areas, where we have mark and leading products and differentiation. So when you when you look at the.

Customer examples that I went through where we're able to bring these sorts of.

Customers.

The market, so global medical device with embedded L. PW a.

Okay, and one module and our connectivity services. Some embedded that's highly differentiated nobody else has that sort of product on the market I end up in the PC OEM area. It's a it's hardware only and that sort of a less differentiated position and you know that has been a area historically of.

Design wins and design losses.

Over the cake Sierra wireless history.

So I would say, it's an area of less strategic focus.

So going after trying to win back Lenovo or dells.

Business, you know that could be some step function up and then step function down sort of products were looking to have more steady and consistent growth. We have a number of a PC OEM customers that are.

Are you able to continue with us and and we value those customer relationships and work hard to continue to service their need, but where you know where we're focused on winning and a in industrial aiotv and enterprise and less so one big game hunting in that in a couple of these areas. So always opportunistic, but I wouldn't I wouldn't.

We expect our gains you're just going to be consistent from the strong overall pipeline that we have a the l. tar wins, we talk about it as al cars converts into recurring revenue.

And in areas like Fiveg will see growth and a less focus on and you know a big step function change in that part of the market.

It makes sense and and can the I'd tell you provided 20.0, how much was it yoba you up down.

Sorry pardon me.

The other dog metric you gave for the Q2 that $20.4 million how much was it a yoga ya.

Yeah. So I don't have been my notes and last year's Q2, but we've had been area of strong growth last year, we had 93 million of El Toro total through Q1 in Q2 were over 60 million. So were up you know what were up strongly year on year in Q2, the pipeline with strong the conversations were strong we're still seeing the demand for our served.

This is being very present and it was.

Slowing of getting contract signed you know companies with a work from home and decision, making being somewhat delayed. So we are not expecting this the quarterly number to have an impact on our but our goals and our success and my teams just message being the background that did even though Q2 was.

You know half of what Q1 was there was still up 15% year on year, but I'm more focused on.

This continued overall growth that you will see so increased from 93 million last year with a more and more at batches, we attach our connectivity to our design wins on the on module to gateways.

Got it thanks, Ken.

[noise] and we have no further questions at this time I'll turn the call back to our presenters for closing remarks.

Well. Thank you very much a very good questions. This morning, I know, it's a very busy earnings day. So we wanted to keep our our comments quite distinct to add to help everybody out I will just reiterate that we you know where where we're focused on completing our auto divestiture.

And our pursuit of a leadership in the T. solution to enterprise Gateway space. So we'll continue to do a update I'm on those fronts and we'll have we'll look forward to completing Q3 and speaking to everybody at that point in time, thanks very much.

[noise], ladies and gentlemen, thank you for your participation. This concludes today's conference call you may now disconnect.

[music].