Q2 2020 Sierra Wireless Inc Earnings Call
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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 kids, Exton, 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 sample 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 and 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 those.
Listed on page two the webcast presentation, which could prove to be significantly incorrect. Additionally forward looking statements are based on our managements current expectations and we caution investors a 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 our forward looking statements I draw your attention to a longer discussion of our risk factors, what our annual information form 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 I'll now turn the call over to cancer, where 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.
Our recurring and other services revenue in Q2 is 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 slowdown due to coven.
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 LTR design wins were 20.4 million sequentially lower than the strong 40 million in Q1 due to colder 19 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 covert 19 pandemic revenue in Q2 and largely impacted by the weakness in the automotive segment as 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 OEM factories have reopened including the car makers.
Retail showrooms and overall demand is improving.
Excluding the Kobin 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 their offices in North America in Europe, as our Asian Austin's 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 ensure planned shipments production allocations and support services are being managed property.
I'd now like to take a few minutes to talk about the announced divestiture of our automotive product line to rolling wireless a consortium and led by fiber come wireless.
We traded on the Shenzhen stock exchange.
On July 20, Threerd, we announced a definitive agreement to divest our automotive embedded module line for 165 million, including approximately 19 million in cash.
Revenue for the automotive line last year was 166 million.
This strategic divestiture enables us to strengthen our focus on fully integrated device to cloud aiotv solution that generate higher value recurring revenue.
It also allows our R&D teams to focus in our key Fiveg enterprise programs, including embedded modules for our mobile broadband and our new gateways and routers for our enterprise networking customers.
The sale of the automotive bit product line unlock shareholder value improves our balance sheet by providing additional liquidity and allows us to increase our market leadership in indicated I O <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 I go to market teams will remain focused on delivering device cloud platform and connectivity service solutions to our customers. We are seeing more industrial and enterprise customers adopting our fully integrated I have t. solutions, because they have a low total cost of ownership faster time to market and they are easier.
The scalable.
The advantage of 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. trying to second quarter was 20.4 million sequentially lower due to the impact of the cobot 19 situation.
That said, we did secure a number of solid wins, we'd 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 that is email to them.
The differentiator and this deployment was our integrated end to end solution, where we provided that customers with a crs smart Sim our cloud platform and then like 60 gateway device.
The turnkey Aiotv solution the customer immediately has a scaled 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 W.A. gateway and quickly moved on to Hollywood going to connect and manage the data.
And the integrated solution that included our FX 30, gateway and smart Sim for connectivity with the answer.
And they could use the solution to scale worldwide quickly and easily.
The services Al times expected to be one point threemillion.
And hardware revenue of approximately 0.7 million.
Another example was a leading global medical device manufacturer that develops patient lift system to monitor the equipment in hospitals and homes.
The combination of our LP W.A. cat, one and one module and theorists conductivity services provides a customer with a single solution across regions and enables them to proactively managed downtime and maintenance.
The services Alkar is expected to be 1.2 million.
And told the hardware revenue material point 8 million.
The fourth 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 on to win the connectivity business using a global smart Sim. This unified robust solution is being deployed in the U.S. and scaled into other geographic regions. The services L. times expected to be about one point fourmillion and the revenue from hardware.
Just over $5 million.
These four design wins are good use 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 about the market opportunity for our new fiveg embedded modules and Fiveg gateways and routers.
We've been working very hard, but 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.
Our Fiveg final is 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 applications. In addition to enterprise networking include public safety public transit and asset monitoring any areas such as manufacturing energy infrastructure utilities and commercial security.
Along with the scheduled launch of our Fiveg embedded modules will be announcing several high end fiveg gateways and routers.
Industrial and enterprise applications.
For those customers requiring high speed wireless broadband connectivity with low latency Fiveg will certainly be the aiotv solution that meets their needs.
Globally, our team at Sea area remains very focused on launching our Fiveg program, just mentioned as well as delivering innovative fully integrated aiotv solution that 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 of 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 coven 19 pandemic.
It is vitally important that we focus on cash improving the company's overall operating efficiency and generating positive earnings I.
I will make additional comments on that in my prepared remarks shortly.
As a reminder, our second quarter financial results reported in U.S. dollar and all the U.S. GAAP basis. We 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 our 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 OPEC this year, including the addition of the M M Group, which we acquired in January 2020.
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 and adjusted EBITDA of 7.9 million a year ago.
Operationally given the global covert 19 pandemic, we did experience so tight component supply issues in Q2 related to some of our suppliers and Malaysia, the Philippines and Mexico.
Additionally, we also had some challenges related to the transportation of good and logistics.
As cargo capacity on carrier and specialized flights remain tight.
Revenue in our I O T solution 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 covert 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. This 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 Andrew.
Lower mobile computing revenue year over year due to prior design win losses.
Total gross margin was 45.9 million or 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.
Up 480 basis points sequentially due to higher volumes and mobile computing and 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 a 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 see IVC 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 the ITC backed by the Canadian government credit program to provide 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 right size 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 as a reminder, tasking question you will need to press star one on your telephone to withdraw your question press the pound, perhaps Keith please stand by well, we compile the Q and 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 to the to the last point on the guidance and understand lot of companies aren't guiding but there can you just you know update us a little bit on the maybe the linearity throughout the quarter.
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.
Do we saw more business activity started to pick up and I think that.
In general we're seeing progresses as you mentioned on the call.
There are areas that are stronger in areas that are weaker in our in our in our networking and Bendbroadband area. We've seen strong demand combined with some supply challenges as as that area the ramp other segments.
Industrial segment like oil and gas and 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.
You know are seeing.
See progress progression the business and while uncertainty remains you know, we're we're happy with how things moving forward.
Great. Thanks.
Just a follow up question on the on the Fiveg progress can you just help us think about the opportunity for both lines of your business. You. When you think this could really help kind of that networking and P. C. O 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 into 2021.
Yeah, Mike Fiveg is shaping up nicely I think it is more of a 2021 impact we expect to launch our first by be modules in Europe. This quarter Q3, and in North America in Q4.
So while it activity starts to come in it'll be fairly early stages, we have a strong pipeline of customer interest.
As mentioned on the call 15 design wins already is a is strong.
So it will it will start to 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 there will be going out.
In 2021, so we're excited about the opportunity there for more advanced.
Offer and features on our you know our leading position in.
Public safety and industrial Gateway.
Great. Thanks, and just a 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. Once you do the divestiture and then I O T solutions as businesses you know recover.
Higher margin gateways come back into the mix.
Your continued to nicely grow recurring revenue, where can you remind us kind of long term margin targets and I O T solutions.
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Yeah sure I don't see solutions, all start without one you're right on the mix as we see a recovery in oil and gas utilities.
You know public safety, we will see that higher margin business, a pick up and that will be upward trajectory on our gross margin.
The second piece of that is also our connectivity as we see more connected devices grow and would grow a recurring revenue that will also be in increasing share of our mix. So gross margin will also be a you know about the good tailwind for gross margins there as well.
Now on the embedded broadband you know as you know automotive was a lower margin business. So as that is divested as we worked towards closing that transaction. You know the remaining mix on these are mobile computing networking <unk> networking modules and such our or higher.
Margin than than automotive, but but still a an overall sort of lower margin business and the OTI solutions business.
Long long term target not providing the at this time, but you know.
You got to things that with automotive on on the way out.
Recurring revenue growing and enterprise or no backed up with the oil and gas public utilities picking back up post cobot, there's a lot tailwinds for margin as we move forward.
And Mike maybe it's Ken Thanks, everyone for there does not make one but 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 a in gross margin is.
You know that the business is dominated by a IP solutions.
But I hope everybody Sofia, 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 being in the works and what that a key element of your strategy. When you first joined as CEO.
Oh, Hey, Paul Good morning. Thank you for the question. So I think that on our our strategy has been consistent the being the global leader in I O T solution.
Building, our capability provide complete bundles of of hardware with conductivity with cloud with security. So that's been our focus and that's where we've been working to drive to automotive didn't have a lot of synergies with a with that strategy. It has been an area.
With strong R&D investment has been important part of a of the company's growth.
The opportunity for for this transaction came along and.
We look at opportunities and analyze them and we felt this was a best for creating shareholder value and be able to realize the the value of that asset, which we think we've done very favorably and continue to act to work focus really on the growth of our I O T solutions and the and enterprise business line. So I wouldn't say that this was.
You have to be a I get to a focus on the market opportunities. This was a potential area of strategic opportunity and that yes. It has come to fruition.
And <unk> for modeling purposes, or when we look up for the year, even just looking at 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 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 of automotive segment, so im not going to get into a that make specific details right now we're going to focus on getting the transaction closed and we'll go 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 overall that would be modest growth on that number you know in a whole year basis as we as we include the slowdown in Q2.
And.
Over the last couple months I mean, you've had a number of newborn board members to wane, what's being the.
You know the the feedback from them on the on the company strategy.
And you know what's being there their contribution.
To date from a from a board perspective.
Yeah, Thanks, Paul well, we put a lot of energy and effort into Onboarding, our 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 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 as 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.
You know.
The frequency and intensity of meetings was was strong because of this transaction, which 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 as the five new board members, Greg waters with relatively new and a as a CEO of several semiconductor companies is provided great unhelpful insight Tomlinson joined a is retired from flextronics, but from that part of our.
This is provided.
Great insights or another.
Jon Andersen another semiconductor CEO with lot of semiconductor so lot of lot of good business wisdom that to the has been there has been helpful.
You know some you see that in the short term as we've completed its auto transaction, but more as we work to continue to drive our strategy and the end dry for global leadership in I O T solutions lots of a 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 clarification stood to start off can't I'm not sure. If I missed it but did you quantify the topline impact from some of the 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.
But let me let me, let me try to each impact at each of those so in terms of the supply chain.
Impacts no we didn't quantify that specifically I think that Oh. This is happened with Colgate some of our manufacturers apartheid 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.
Would have shipped could have shipped in Q2, 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 continue to to work hard to to get those complete so we you know.
We expect that we will.
Got it all out product produced in the year middle substantially catch up in Q3, but not not completely likely but will.
Lead the comment that at that level on the on the M. M group as we.
As we talk about that business you know upon announcing it in January.
At about a I just shy of the 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 drop practices into other very.
As of of our business, we've been able to leverage and I think on your your third question of embedded broadband and would it be op ex auto so the the on a sequential basis, yes on a year over year basis.
As we've mentioned before the revenue from Lenovo in Dallas, which was a you know.
Over 100 million annual run rate those businesses are we're we're loss before I joined in that full impact of that is in the numbers now so on a year on year basis, no. It would be down because of the impact of 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 you know 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.
Two attached that recurring revenue 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 grow.
Gross margins in that business did we see an improvement sequentially. Thanks.
Okay.
You are 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 used 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 per module and when it's 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 two subjects another.
Routing customer that is selling five de onto enterprise enterprises tip of the doing the decline activity themselves.
Get more of our conductivity and industrial Aiotv with Selic lead solution to a mission. Although if you think or that is selling devices around the world and a exceed that kinda market total cost of ownership to have our embedded connectivity on that.
On on Fiveg overall on our gateways, 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 to drive Fiveg revenue and given that it's so early.
Early you know a lot of this work with Ah will be done in tight conjunction with the carrier, but we would expect that to evolve overtime, our fiveg gateways.
Have a built into them to the latest LTP technology. So fiveg coverage won't be Vicki based on launch, but it'll fall back to cat Twentyk, which is the high speed Fourg technology available. So it'll be the you know leveraging both energy and forging overall so.
I hope that answers the question about to about Fiveg Scott.
Perfect.
Okay on 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 we're still not exact same trajectory I don't have an answer to 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 we're pleased with both whenever going on overall growth. We're pleased with a continued progress on.
Our wholesale cost to enhance that business and as we continue to get or get more scale in or products like October 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 and cost or infrastructure would drive increasing gross margins Interconnectivity business as we continued scaling.
Great. Thank you.
And your next question comes from line of Stephen Lee from Raymond James Your line is open.
Thank you quick one for me Kent.
The PC OEM so those slots.
Loss or what's your outlook in terms of getting them back.
Interesting question, Steve [noise]. So what we've been focused on doing is trying to grow in areas, where we have a market 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.
[noise] customers to market, so global medical device with embedded LP WH.
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 on oval 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 in 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.
I wouldn't I wouldn't expect.
Our gains you're just going to be consistent from the strong overall pipeline that we have the El Toro when do we talk about it as al cars converts into recurring revenue.
And in areas like Fiveg will see growth and a less focus on a you know a big step function change in that part of the market.
Make sense and can the I would tell you provided 20.0, how much was it yoga you up down.
Sorry pardon me.
It's all the trick you gave for the Q2 $20.4 million how much was it a year over year.
Yeah. So I don't have been my nose to hand last year's Q2, but we've had been area of strong growth last year, we had 93 million at El Toro and total.
Through Q1, and Q2 were over 60 million. So we're 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 services are being very present.
And it was.
Slowing of getting contract signed companies with.
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 half of what Q1 was it was still up 15% year on year.
But I'm more focused on the discontinued the overall growth that you will see so increased from 93 million last year with a more and more at bats, as we attach our connectivity to our design wins on the on modules and 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 very good questions. This morning, I know, it's a very busy earnings day. So we wanted to keep our our comments quite to think to add to help everybody out I will just reiterate the we you know where we're focused on completing our auto divestiture.
And our pursuit of leadership in the T. solutions and enterprise Gateway space. So we'll continue to do a update.
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.
Ladies and gentlemen, thank you for your participation. This concludes today's conference call you may now disconnect.