Q3 2020 Stratasys Ltd Earnings Call
[music].
Greetings and welcome to the Stratasys third quarter 2020 financial results Conference.
At this time all participants are in listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded it is now my pleasure to introduce your host Mr. Yonah Lloyd Vice President of Investor Relations.
Thank you Sir please go ahead.
Thank you good morning, everyone and thank you for joining us to discuss our Twentytwenty third quarter financial results on the call with US today are CEO Yobs IPH and our CFO, we lost Payorski.
Mind, you that access to today's call, including the prepared slide presentation is available.
Oh and at the web address provided in our press release. In addition, a replay of today's call, including access to the slide presentation will also be available and can be accessed through the investor Relations section of our website.
Please note that some of the information you will hear during our discussion today will consist of forward looking statements, including without limitation.
And those regarding our expectation as to our future revenue gross margin operating expenses taxes, and other future financial performance and our expectations for our business outlook all statements that speak to future performance events expectations. Our results are forward looking statements actual results or trends could differ materially from our forecasts.
Yes.
The risks that could cause actual results to be materially different from those set forth in forward looking statements. Please refer to the risk factors discussed or referenced in Stratasys is annual report on form 20-F for the 2019 year as well the Stratasys reports on form 6K that we are furnishing to the FCC today.
Moving the related press.
Release concerning our earnings for the third quarter of 2020, and our operating and financial review and prospects, which are attached as exhibits to those reports on form 6K.
Stratasys assumes no obligation to update any forward looking statements or information, which speak as of their respective dates.
As in previous quarters today's call will include GAAP.
<unk> non-GAAP financial measures the non-GAAP financial measures should be read in combination with our GAAP metrics to evaluate our performance non-GAAP to GAAP reconciliations are provided in tables in our slide presentation and today's press release now I would like to turn the call over to our CEO Yobs ice you off.
MGM China.
Good morning, everyone and thank you for joining in today's call.
I reach to first take a moment to recognize the hard work and the dedication of our entire revenue.
Helping our company navigate through the challenging economic environment caused by Koby 90.
We continue to proactively ensure the EPS and safety of our employees for both our customers and assist the community around us worldwide.
We were pleased to see sequential improvement in both our top and bottom line for this quarter.
A positive.
Brent as we expect to continue in the fourth quarter as well.
Reflecting what we believe is the beginning of a recovery from the pandemic.
We were encouraged by the improved sales of hardware and consumable sales in government, specifically aerospace echo as well as healthcare and.
Location.
On our last call.
We shared our new strategy with you.
And now it will drive our action going forward.
We are laser focused on leaving the polymer threed printing market the largest value pool in the additive manufacturing.
Execution plan is based on delivering the most innovative next gen technologies.
To address the fastest growing and most one small plants more formative manufacturing applications.
While leveraging the strongest go to market infrastructure in our industry.
This is the beginning of new.
And in terms of execution strategies.
Led by an experienced board and management team and then organization better aligned to support our strategic objective.
To maximize the investment in our resources, we have streamlined organization to support the specific sector that.
He served.
Design engineering manufacturing of factory retooling production of end use parts and healthcare plan.
Last quarter, we announced a number of cost mitigation efforts to help offset the impact of COVID-19, I'm happy to say that we have implemented them successfully too.
The Tivo savings goal.
This past quarter.
We announced our executive team by hiring a new COO NCPS Chief people officer.
And Intel only promoting a CTO.
We are also making good progress in our search for a chief marketing officer.
Part of.
Which focused on the manufacturing space, we look forward to welcoming a new board member.
Michael Schall Moen, the COO of Airbus.
Who was nominated for election at our annual shareholders meeting taking place later. This month, we are excited to work with Michael on advancing the execution of our strategy.
Across all manufacturing industries.
I'm confident.
We are building an excellent leadership team with experienced and proven capabilities to enable us to achieve our goals.
Our strategic objective.
Is to be first choice in polymer additive manufacturing.
With the broadest.
Thousands of solution addressing the leading application and positioning both stratasys and our customers for success.
And they are out of our strategy is innovation our polymer technology roadmap includes major upgrade to our own FDM Polyjet line as well as expanding output.
O'neill with manufacturing focused platform that will generate incremental revenues.
Our joint venture with Dell will Ed what we believe is the best partner best fusion system in the industry.
And this is planned for launch next year. We are also considering inorganic best in class technology.
What's the opportunity to help complete the full range of polymer addressable market.
This near and mid term growth catalyst.
With the powerful by Grabcad, our technology agnostic software platform.
And brought to market via industry specific application expertise.
End of.
Just go to market ecosystem.
We envision that this next Gen technologies will allow us to offer customers end to end digital manufacturing everything from design to production and aftermarket parts will be seamlessly digital geographically adaptive.
General and incredibly incredibly fast and robust designed for industry 4.0 integration.
A good example of our manufacturing capability is our continued penetration into aerospace applications.
The Us Air Force recently, often its first advancement effect.
Timberland picks.
This event was followed by multiple branches of the military and many of their top suppliers.
We are very proud.
Our Stratasys team won two silver medal.
One was for developing a supply chain strategy the juice, the threed printing to support field operation.
Through leveraging our Stratasys direct manufacturing logistics experience. The other was for designing a threed printing hydro plant for the F 16, five digit we used our advanced antero material for the club, which is installed on the ground decline in the lending Gill.
We'll we'll stratasys with also feature when another winning team use our antero technology for production of Bob that was installed and flown on an F 16 at the event to demonstrate its potential.
Additionally, Boeing recently added our antero.
808 thermoplastic to its qualified Barclays. After.
After an extensive evaluation of the materials performance.
Oil recognizes the utility of Threed printing with Antero to meet application that were not previously possible. It gets boring the opportunity to extend relative.
Fixturing into many more on aircraft use cases.
These are outstanding examples of our polymer manufacturing leadership strategy in action.
Further elevating our reputation for high quality additive solution as we continue to build our business relationship.
Even with leading aerospace and defense organization.
I look forward to updating you on further progress in the execution of our strategy.
I will now turn the call over to visa will share the financial results of the quarter we lost.
Thank you.
And good morning, everyone.
Total revenue.
In the third quarter was $127.9 million compared to $157.5 million for the same period last year and decline of 18.8% due to the pending however, DTC and 8.8.
8% sequential growth from Q2, and what happens and end market improvement from last quarter, 27.9% equal the hill decline.
We view this result, and indication of an initial recovery in the broader market from the impact of covered 90.
Capital.
Operating loss for the quarter was $404.3 million compared to an operating loss of $6 million for the same period last year.
During the third quarter, we took a non cash goodwill impairment charge of $386.2 million or segment.
One dollar.
A in one cents per share related to our strategies objective 14 unique desimone, specifically cover the FDM and Polyjet technology Surcharging is primarily the result of COVID-19 any impact on the fair value of strategies LG.
In both in unique non-GAAP.
Operating loss for the quarter was $1 million compared to operating income of $8.1 million for the same period last year GAAP.
GAAP net loss for the quarter was $405.1 million or $7 and 35.
Adjusted diluted share compared to net loss of $6.9 million or 13 cents per diluted share for the same period last year non-GAAP net loss for the quarter was $3 million or five cents per diluted share compared to non-GAAP net income of six months streaming.
Onion or 12 cents per diluted share in both for the same period last year.
Product revenue in the third quarter was 83.5 million a decrease of 21.4% compared to the same period last year within product revenue system revenue.
Increased 20.8% compared to the same period last year consumable revenue.
Decreased by 22% compared to the same period last year service revenue was $44.3 million a decrease of.
13.2%.
Compared to the same period last year within service revenue customer support revenue decreased by 1.6% compared to the same period last year. We're now almost halfway through the fourth quarter and while there are still uncertainties about the pace of coordinating with.
Naturally we currently expect to see sequential revenue growth of about 5% to 7%.
GAAP gross margin was 78.9% for the quarter compared to 49.2% for the same period last year non-GAAP gross margin was.
The total 6.8% for the quarter compared to 52.4% for the same period last year.
GAAP gross margin improved sequentially from Q2 by 170 basis points offered by the intangible asset impairment non-GAAP.
Gross margin improved by 140 basis points, primarily due to a greater percentage of consumable in the sensor mix.
Gross margin was below our historical range due to the impact of provisioning team, which reduced the shell of hardware consumable in the overall sales mix.
As well as lower revenue and production levels, resulting in operational inefficiency during the quarter.
We believe the growth margin will continue to improve.
As and when our customers returned to the pre cobiz utilization level.
GAAP operating expenses will.
$454.1 million, an increase of 444.7.
Percent compared to the same period last year non.
Non-GAAP operating expenses decreased by 18.3% to $60.8 million for the quarter.
As compared to the same period last year.
GAAP operating expenses, excluding goodwill impairment was 53.1% of revenue for the quarter compared to 53% for the same period last year non.
Non-GAAP operating expenses will.
So.
37.6% of revenue for the quarter compared to 47.2% for the same period last year.
The reduction in Opex was driven primarily by the recycling measure we took in Q2.
We also continue the cost mitigation related to.
If we maintain the entire companies working at an effective folded will work week with many employees working from home. There has been minimal travel no trade shows booth and other reductions. These measures are still in place and we will continue to evaluate them as needed.
We generated 2.6 million of cash from operations during the third quarter as compared to use an 8.6 million of cash in the same quarter last year cash generation demonstrates the health of our business, which is notable during this challenging time.
We ended the call.
Walter with 308.2 million in cash cash equivalents and short term deposits compared to $313 million at the end of the second quarter of 2020.
We believe that we are well positioned to navigate the COVID-19 pandemic given.
Our strong balance sheet with no debt, while focusing on cost control and cash generation.
I would like now to turn the call back to Europe.
Thank you Mark.
This is an exciting time.
For three D printing industries.
I see.
We believe that our innovations of today will drive competitive production advantages.
For the factories of tomorrow.
Stratasys, we are committed to leading this meaningful change.
As we prepare to bring several next generation.
In manufacturing technologies to market.
We are confident we will achieve our objective to be the first choice for polymer production because arrow also then Doug healthcare and all of our end markets, resulting in growth and value creation for our customers.
And shareholders.
Thank you operator, you may please open the call for questions.
Thank you ladies and gentlemen at this time, we will be conducting a question and answer session. If you would like to register a question. Please press star one on your telephone keypad.
We are asking people to please limit themselves to.
The question and what immediate follow up question in the interest of time.
If you do like to remove your question from the queue. You may do so by pressing star to once again Thats Star One to register a question. Our first question today is coming from Shannon Cross of Cross Research. Please go ahead.
Hi, Thank you very much I was just curious.
When was form next on right now.
Its virtual <unk>.
How much you know sales and product launches and not just you know so you didnt industry and your company, specifically typically do and I guess, how are we supposed to think about opportunities around some of these trade shows given the virtual for.
No Matt is that you know less sales and more education and just wondering how things have shifted from that perspective.
Hey, Shannon.
It's a bit early completion date, but the owner, but we always viewed to lead on these exhibition even if it's very true.
And.
Our leaders in this industry, we have digital booth and we.
I have a whole series of Webinars and we are doing many activities I don't see any impact on our new product introduction next year on the contrary, we get more lead more interaction that then you wore me I'll walking him.
We have now definitely we will have a you know keep supporting that Ajay 55 years, we have just wrong and if we get very solid traction for the market to be the pipeline will have bizarre ER positive infusion next year and the phone. It is a good start to get people to join us.
And our great offering and focus on boarding process.
Okay, and and then I guess I'm just a quick question on on good well then I'll get back in the queue I'm I'm curious what what drove the write down I guess it was cold bid related one would think that this will reverse at some point so.
He said she said since you basically taken all the goodwill off of your your balance sheet at this point in time.
Yeah. Good morning, Shannon, it's a it you're right. They are the main driver for the reduction in good we want the Colgate related in a given day.
A big Capex is longer.
He is not the scoping that it's probably not going to be a show them in a V. V V shaped recovery they've told me he said industry sales ever want to speak about it and then it will take more than two years to come back to Billy COVID-19 lessen the.
The impact on the projection.
<unk> Oh. These days the technology was very significant and this is the main reason why we are too they booed he's done.
So I guess it does this I'm just trying to understand from your company's perspective.
It is this is it are you basically saying you expect to see.
Significant pressure or was this more sort of an accounting treatment decision. You know just how should we think about this in relation to how youre thinking about the opportunity you'll have maybe over the next you know couple of years.
[noise].
Shannon aim. These these bullies mainly related to the FDM and Polyjet technology. These goodwill impairment does not mean that we do not expect any significant long term growth based on all that.
I think Jay and we are extending our leading portfolio and we see new technology.
We definitely expect to see it will also within FDM and Polyjet and MDM and the project, we do expect to see growth, but even that copied impact significantly the I would say short term between two to three years. It will take time to go back to clean a total.
The 19 led with the entire projection is a where went down and you start with much lower age. They we do expect to see growth, but it will take time it will not only be immediately V shaped recovery as has been expected. They know Justin I'll be isn't a quote in <unk>.
Elderly economically a projection.
Okay. Thank you very much.
Thank you. Our next question is coming from what I see Mohan of Bank of America Merrill Lynch. Please go ahead.
Hi, yes. Thank you good morning.
Your consumables revenue saw a 15% quarter on quarter increase, but yeah competitors talking to you about almost double I was wondering just given that the consumables is and installed base business and as you know the economy Reopens you saw some pretty good sequential sales in auto.
In industrial end markets in terms of their own productions and their manufacturing I would've expected a slightly sharper rebound in materials usage can you maybe share some thoughts around that and then I have a follow up.
Yeah.
Uh huh.
I would be happy to have to ship.
Our perspective, so we see a rebound.
Ah, but are we in general have a very broad base of customers. We have dissolved installed base in the industry and this is an advantage when you have many customers, but when you have many customers you move we did economy, because you're kind of.
So because of the economy.
Oh other players in the industry, we gone to relating to specific players have more concentrated installed base and then if one of the customer is rebounding throw more strongly like in dental and also our dental customers.
Bounced dropped more strongly and you see a stronger rebound or stronger increase sequential increase but that's only a matter of time because the fact that we are not having concentrated customers means that we will keep growing and we have a more diverse and more secure.
Most safe offering and stores.
Okay. Thanks, you and then as my follow up you shared some really nice wins here right U.S. Air Force and Boeing how large do you see these opportunities for Stratasys and more broadly can you give us some sense of how large aerospace revenues.
For you today and what do you think they can be over the next few years. Thank you.
So I can talk generally about aerospace job, but we don't show specific but I hope it will be a good direction.
So aerospace and also for also the leading.
Industries, we believe definitely.
In those two industry because they are so advanced because that advantage additive manufacturing as both in terms of supply chain, but not less important in terms of the mechanical properties of the power our innovation.
No its stack.
Paving the way into.
Two.
Really use of additive manufacturing as a production tool in those industries and add to that the fact, the trends that exist in terms of footprint environmental footprint in terms of the need to have lighter part Alec strong electronic vehicle those trends will support their deployment they didn't manufacture.
Strength and we are we have the best positioning those two industries by far the best position and with the new technologies and with the new system of hardware software material and service.
We believe we will be we are the leader and we will be the leader when those industries will take off and we'll start using equity model.
Factoring for ongoing production of.
And our mean small series.
Of production.
Okay. Thank you.
Thank you. Our next question is coming from Greg Palm of Craig Hallum. Please go ahead.
Yes.
Yeah.
For taking the questions here as it relates to the quarter ending.
From an end market or geographic standpoint, maybe what outperformed relative to your expectations anything that was a bit softer or any color you can provide.
Okay.
So.
Of course as you understand.
The recovery is not distributed equal across different segments. So I can say geographically the pandemic sales in India is but it is recovering faster than.
The the western World that's on geographically.
Aspect on that segment.
Sagnol phase, it's clear that government is recovering education is recovering as we roll government, especially the aerospace of government is recovering fast there has.
Curious recovering much faster than the other segments, which is natural because it was a store in the second quarter and the aerospace and auto we see side, but it's a slower recovery.
Okay Thats.
That's helpful and then.
Relates to the guidance for Q4 of the 5% to 7% sequential.
Will increase.
Are you baking in any sort of assumptions for year end spending flush in there I mean is the guidance based on what you've seen so far in the quarter or maybe you can give us a little bit more color on how you got to that number specifically.
Good morning, Greg.
Yes, it's true we are highly dependent on a ongoing assumption on the traditional 24 hour blunder quarter in Q4 because of a they even spending that companies are a haven't traditionally and so it will come from that Hey, we also in college by definition.
It looks like obviously, we saw in Q3 and hope that they will see similar if not better recovery in Q4, we see company, our basically learn to live with Covidien team and coming back to walk with covenant in situation.
So we expect to see some recovery coming from that we also money and rely on our npis ability JCC seismic eat beginning to ethanol revenue to upon a back at the same time, we are cautiously optimistic a regarding India recap.
Finally in there we shake a lockdown in various aspects of the of the world in any any to really matches very and change and that we are confident that we probably will be able to demonstrate 5% to 7% goes.
Okay, all right. Thanks.
Thank you. Our next question is coming from kind of balance out there in Burke. Please go ahead.
Hey morning area ever on Ah. Thanks for taking my question here I want to kind of a guidance.
Going into the product launches a little bit here, particularly the powder.
Ed fusion printer, just kind of wondering if you could offer a little color around.
How that product might be differentiated.
The market opportunity may look like well to be kind of new use cases with this printer relative to kind of your legacy business, perhaps new end markets just.
Just some any color there would be really helpful.
So both of the fusion for the weekend. Thank you quoted for asking sort of infusion is we believe our first step into production, which is a larger volume.
It's off production and this.
Technology already exists, but we are going to come with something which is better.
Better in different aspects of the technology.
Mainly around the power quality and ER.
Here the ability to use it for long time, which reliability because its manufacturing its production and we are very proud of what we are achieving currently with the initial results of initial thoughts, but bottom line is about quality, it's above quality with a very good cost profile.
And this.
They said this.
While the confusion is only one catalyst Apple a whole set of catalysts that we have in our.
Okay. So if I go one by one we have growth catalyst.
On three different horizons.
For the here and now for the short and mid term and for the long term and those growth capabilities that we have are mainly now here and now it's about.
The recovery from the COVID-19 based on the fact that we have the largest installments.
Within the industry, if our customers like on the Capex will we are growing that.
Since the very show them immediately I'm confident the here and now then if you look at their meeting showed them its clear that the whole.
You know economic system, but mainly.
Production and manufacturing or customer.
They stopped practically many of their product development and they are facing delays of nine to 12 months in the product lifecycle of developing new products and there is no better and quicker way to close this gap.
Then additive manufacturing because we are shortening this product cycle.
By months and it's amazing what you can do with that if the manufacturing versus the traditional approach. So this is the.
I would say the media showed me Deb plot.
The npis that will fuel.
And our little bit fusion is only one of them.
And in the long tail. We are you know seeping all being supported with the data we have.
The very strong growth rate of around 20, 25% of the industry and this strong growth Brett it's fuel.
Primarily by the shift to manufacturing.
And our strategy is to go to manufacturing and to introduce best in class technologies and system on a factory. So just to summarize it immediate them will ensure the recovery in our installed base in the short term, we will enjoy does need to.
We'll catch up on the production or the product development lifecycle and in the long term will enjoy the tailwind of moving and shifting to manufacturing and we aim manufacturing we will lead the ship.
Of polymers.
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Great and then just kind of a follow up here.
You know the partnership with I believe Anthropologie last we remain as earlier sneak on kind of tooling applications can you perhaps speak to.
The ftn business and kind of how penetrated.
Your view the opportunity is in tooling applications.
And kind of would you categorize it could sales linked to tooling and MTN is the climate accelerating business kind of more.
Steady growth is it kind of flat year in year out.
And could we see this partnership perhaps accelerate adoption of your technology into applications.
Thank you great question.
So I think there are two aspects to that I would like to a.
A bit elaborate on there one is the SDN SDN is.
Most prominent the biggest technology very promising won in a foreigner and.
We are the leader there by far the leader.
But we also understand.
That in order to keep leading we need to take SDM.
Into a real.
Be liable manufacturing machine and welcoming manufacturing it has to.
Use cases, why is the manufacturing of tooling.
And the other is the manufacturing of love, how they show a serious of production.
And then for tooling by the way possible.
Production, but also opportunity.
Our cooperation with the.
Topology is a great example, because we understand that we need to bring a whole solution to our customers and the whole solution means also the ability to really better understand the part and what is the most.
How to optimize.
The creation of the production of the file and on Anthropologie is a great example of how we can cooperate bringing the best software understanding and analysis with the best machine plus material and really and you saw that.
Together with them, we won the prices and ER and the Air Force Olympics.
But just to sum up FDM is very promising we are leading there we will focus both on manufacturing tooling, but.
In the near future actually starting already.
In the aerospace in production reproduction of into sports.
And our long term strategy to create.
And software.
What we call it an ecosystem that we support our foods solution. So you will see more and more corporations.
We will leverage in order to bring the best solution that that's pulling us solution to our customer.
Awesome. Thank you very much for answering the question I'll hop back in queue.
Thank you. Our next question is coming from camera Shitty up Needham and company. Please go ahead.
Hi, Thank you.
With respect to the queue for guidance, if I think of your revenues say at the mid point of that guidance is there any reason why you wouldn't see gross margins.
At or above your Q1 level, just given some of the cost actions.
Actions, you've taken because that would put you above where you work Q1.
Good morning.
Good morning, welcome Mat.
Do you have any way.
Yes, I think some some good morning to you.
Margene name, we do it we expect to have a relatively flat just slightly higher growth 19, Q forward compared to Q3 and the reason why we ask the second to see that significant increase in gross margin is is because we see it has a relatively significant high inventory Amanda.
And our production.
D V D as ousting very low.
So we and we will be challenged by six production cost, it's not something that we can easily and addressed immediately we would never know that match flexibility, but we definitely a address in this no to the long term perspective.
Oh. Thank you that's helpful and as you think about those inventory levels that had been built up.
What is your sense as you exit the year in terms of should we start to see if we see the revenue the activity within the customer base continuing to improve should that'd be passed you as you enter 21.
A store.
Early to assess a but I believe that is gonna be a a immediate change after one quarter. It will take a few more quarter to get to the right level of inventories optimize our regular a production level optimization wait.
Okay. Thank you.
Thank you. Our next question is coming from by Brian Drab, hopefully and Blair. Please go ahead.
Hi, good morning, Thanks for taking my questions I've just been.
Doing some thinking about some of the comments he made on the last call in the second quarter call related to your strategy longer term strategy and how F. D. M. In college out as the two core strategy or technologies that you have now.
Account for only about one third of the the additive market uhm for polymers and and the growth rate slowed in those applications and talking about the faster growing applications.
Uhm are going to require these other technologies that suit that need better to use your words.
So I guess, we're talking about SLA and powder bed fusion and I'm. Just wondering if you could talk more about why those are better suited.
Number one why those are better suited than your current technologies to.
Lead to growth in the future and secondly, how is <unk>.
Different from other technologies I think it'd be helpful for people to get it I don't understand why is that different from other technologies out there like say from.
O S and and third you know what is the strategy for SLA, because I know you introduced and escalate machine of course last year and I'm wondering if this is the strategy, an SLA now organic or or <unk>.
I think I know, there's a lot of questions are I'll just leave it there.
Hi, Brian quick question.
So I'll go on by one principal 40 jet and that's D M. How powerful technologies and we bid our dianoetic of fully American putting their chemistry based on them and we all day.
The lead there in both technology.
Just to make sure that we.
No starting from the same page any bozo technologies, we'd grow but like the finisher fully Janet is a rapid prototyping technology.
The best rapid prototyping technology, because it's full <unk>.
And you'll get the best fault.
<unk>.
Still we need to educate the market to adopted because most of the market.
Seemed your material and we have the multi material capabilities and the color capabilities.
And we actually we invented.
And I believe that there is a long runway also 244 digit.
If we look at the ammo already related to these F. D. I mean, one of the best technologies mainly to aerospace.
And we are going to focus on engineering.
Manufacturing of two and that's what we called Jason picture tooling.
And on manufacturing high and because of the mechanic appropriate is a very good we'd composite with our machines and we focus on those three segments. So engineers.
Hi, and prototyping with functionality on.
Tooling jigs and fixtures and the third segment of manufacturing many aerospace and also.
Good mechanical pumps unlikely. So this is SDM few long runway to develop it and to make it affecting your machine that that's what we're doing and hope Butler.
The upgraded to upgrade that we mentioned.
Now if I look at okay.
Longer theater production on production on manufacturing.
Father, but fusion and fat.
<unk>.
Clear advantages of the mechanic appropriate these on the speed and the Costco fault.
Because it's it's a production machine.
And therefore, I decided to get into power been fusion as I already mentioned, it's a unique farther but fusion because we believe we will have the best path quality in the industry.
SLA I would related.
In general and we believe that they are clear.
Clear applications.
That's what is the most suitable solution for them.
Like for example.
A mall.
Like a specific followed for example.
Also an arrow for example, where you need followed that is.
More.
The way is not so important but the threat is more important and those those specific obligations. This is the role of story of the strategy, we want to make sure that in 40 now we're covering all application and we'd go application by application to make sure that we are bringing the full solutions orchestre.
The story.
I hope either that's really helpful are you <unk> are you leaning more it's super helpful are are you leaning more toward organically going building SLA or Inorganically and then I'll leave it there. Thank you.
We are examining we are examining both pathway.
Okay. Thanks very much.
Thank you at this time I'm showing no further questions in queue I'd like to turn the floor back over to management for any closing comments.
[noise] standard for joining.
Safe and healthy looking forward to updating you again next quarter. Thank you.
Ladies and gentlemen, thank you for your participation. This concludes today's event you may disconnect. Your lines are lock off the webcast at this time and have a wonderful day.
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