Q1 2022 Plantronics Inc Earnings Call
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Good day and thank you for standard.
And welcome to Poly Q1 fiscal year 2022 conference call.
At this time all participants lines are in a listen only mode. After the speaker's presentation, there will be a question and answer session.
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I would now like to hand, the call over to your speaker today, Mr. Mike <unk> head of Investor Relations.
Welcome to Poly's financial results conference call for the first quarter of fiscal year 2.
My name is Mike <unk> head of Investor Relations and joining me today are Dave Shull, Polley, President and CEO and Chuck Boynton Executive Vice President and CFO. The information presented and discussed today includes forward looking statements, which are made under the safe Harbor provisions of the private Securities Litigation Reform Act of 1000.
<unk> 5 <unk>.
The risks and uncertainties related to such statements are detailed on our most recent 10-Q10-K on today's press release and earnings presentation.
You should also refer to the materials providers a day for an explanation of the non-GAAP financial measures discussed on this call along with a reconciliation of those measures to the nearest applicable GAAP.
GAAP measures.
These non-GAAP measures are indicators that management uses to provide additional meaningful comparisons between current results.
And previously reported results and as a basis for planning and forecasting future periods.
All of our earnings materials are posted on our Investor Relations website at Investor Day.
90, dot com with that I will now turn the call over to Dave.
Thanks, Mike Good afternoon from California, and thanks for joining us from wherever you work today, Chuck and I are calling in from our Santa Cruz office.
<unk> delivered strong financial results for the quarter, Chuck will provide more detail, but the headline numbers are as follows.
GAAP.
Paul is a $431 million were above our guidance range of $4.10 million to $430 million and up 21% year over year net.
Adjusted EBITDA of $61 million and non-GAAP EPS of <unk> 60, <unk> were also above the guidance ranges and represent year over year growth of 29% and 82% respectively.
<unk>.
Gross margins were 44, 8% reflect temporary pressures created by global supply chain issues that we spoke about at length during our Investor day.
Including a volatile component supply and transportation costs.
Poly moderated these issues with quick action, managing both Opex and investments.
<unk> spend during the quarter.
Finally, as part of our strategic transformation and we recognized a 1 time restructuring charge of $29 million, we are minimizing G&A costs investing in sales and marketing and reallocating R&D to areas of growth.
On the product side, our launch of the Voyager focus to.
Has said at the very beginning of the quarter has been a huge success shifting roughly 50000 units and we sold our $30 million Blackwater headset in the quarter a product Frost <unk> Sullivan recognized with their 2021 global product leadership award, citing unmatched audio quality and innovation that addresses customer needs.
Needs in.
In July Microsoft named Poly, 1 of 3 finalists for the device partner of the year Award due to our excellence in innovation and implementation of customer solutions for teams.
Finally, we entered into an OEM relationship with 1 of the top 3 global PC manufacturers.
Buyer of high quality professional headsets, making it even easier for end users to access our pro grade communications gear and moving US 1 step closer to our goal of reclaiming the number 1 position in the headset market.
All of which is to say we have been busy.
But there is much more to do.
We had said at the beginning of the year than anyone looking for a quote returned to normal would be disappointed because there is no. There is no normal to return to and so far we've been spot on first the transformative shifts we see on Enterprise Communications for example, every meeting and moving to video and the increasing complexities on managing communication.
<unk> infrastructure are intact and accelerating.
Second the aftershocks of the pandemic are still with us as our customers Grandpa each day to manage highly distributed workforces, even as new uncertainties present themselves right. Now for example, the worldwide surgeon Delta variant cases.
Continues to disrupt countries and economies.
These uncertainties mean that more than ever poly is a critical partner for any business navigating the current environment something that is reflected in each of our business segments and across all of our geographies.
Remember that long term, we actually benefit.
A fit from the return to the office.
At the same time as we detailed during our Investor day policies challenge as a business challenge share by every company in the world that makes and shifts products is how to manage volatile global supply chain factors, so that ultimately our customers get the gear they need.
First let's talk about the demand side of our business.
Looking at our product lines, we again had strong growth in video with <unk>.
94% increase in sales year over year and that number would have been even bigger without supply chain pressures.
We're pretty certain that we're taking share on the category. We're now the number 1.
On single code a provider in the world measured by units and according to research by synergy we gained 13 points of revenue market share year over year and USB conference cameras. The largest video category and we think it still keeps growing I can't think of a single company I've met with large or small that doesn't.
And is the shift to video is inevitable.
It's not just businesses our results. This quarter were also boosted by strong sales in government and education.
Voice delivered strong results this quarter with a 34% year over year gain.
And a slight sequential decline down 5% as a function.
Red light chain impact as businesses around the world continue to transition to the cloud it creates an opportunity for service providers to deliver upgraded equipment to their customers.
Partners closely with many <unk> to ensure our gear ends up on the desktop.
In addition business.
<unk> are preparing for a return to office and we're seeing increased demand for conference from phones sales during the quarter were constrained by supply and we see continued growth thanks to the ongoing upgrade cycle.
As we make progress managing supply shortages will be able to catch up on our existing backlog.
Business finally, we see stable headset demand as the tension between work from home and return to the office continues to be unresolved.
Sales were roughly flat year over year on the sequential drop of 16% suggests to us that impart buyers or pausing in anticipation of a return to office.
We see growing demand.
Our Bluetooth headsets, including the new Voyager focus too and recently announced Voyager 4300, but looking ahead, we expect seasonal weakness for our USB connected Blackwater headsets in Europe that will likely net out against demand upticks in the Americas and APAC.
So, let's take a look at our regions.
In the Americas, we continue to see strong demand across all product categories every customer I talk to says the same thing every meeting is moving to video and every meeting we will always have at least 1 remote participant day.
<unk> for video in the Americas is up 70% year on year in the market.
But we're also seeing strong demand for voice products as businesses prepare for a return to the office and headset demand remains stable as professionals continue to make sure. They are prepared for long term hybrid work.
Our expectation is that all of these demand drivers will remain in place for the balance of the year and well into the future.
<unk> Europe continues to be hampered by uneven vaccination rates are fragmented and still evolve in response to the Covid Delta variant and general uncertainty surrounding when Workforces will return to the office and what that return will look like.
Our sales pipeline is growing we see this caution reflected in.
<unk> deployments for video.
Even as its ultimate importance that communications is clear.
Demand is strong in Europe, the component shortages are affecting poly's ability to supply products.
Headset demand is stabilizing as last year's work from home surge has largely been satisfied.
Near term.
The labor heading into the seasonally soft summer demand period in Europe, which right now is being compounded by jumps on the Delta variant cloud and returned to office plans.
In Asia Pacific, We are seeing particularly strong demand in Australia, and New Zealand and China.
While there have been some return to office delays in general APAC has returned.
Term and remained in the office more than in other regions. As a result, our video pipeline in Asia has been increasing rapidly with strong demand for pro grade headsets and to a lesser extent phones as well.
Taken together all of the demand drivers for poly and Orange are intact and will be for some time to come.
This is encouraging because it means the long term growth targets, we set for ourselves are achievable.
Land is strong so let me now turn to our supply chain.
Our current issues won't come as a surprise because first we catalog them in may.
And second there've been experienced by companies everywhere, our front page news.
<unk> press and even caught the attention of the President just 2 weeks ago. The Washington Post ran a front page story headlined by an on target high shipping costs as pandemic ravages global supply chains now ravages is pretty hyperbolic word that said our margins were pressured this quarter by.
Price volatility in the spot market for searching.
As highlighted.
And the Washington Post article shipping availability and costs are also both challenging.
I'll repeat what I said last quarter about the supply chain issues. Our view is that these challenges are temporary right now we think the right thing to do.
To be conservative and assume that supply chain conditions will be settled for the balance of calendar year 2021.
We've also made the decision to insulate our customers from these pressures rather than to increase the cost of them, that's necessarily going to create margin pressure, but that again represents a.
A near term short term strategic decision we have made.
I will also say that we're seeing signs of stabilization with increase in commercial air traffic and more space is opening up in air freight channels.
In addition, a grant grant Hoffmann, who runs our supply chain has been able to move a number of our product lines to water.
All of which will show up as cost savings.
To be clear, we want to be able to build and ship more gear at a lower cost than we're doing today.
As we detailed during Investor day, we've been working not only to improve the whole of our supply chain, but also directly with our customers. So we can help them manage order timing.
Deployments.
Yeah.
Near term like many we're looking at a pretty significant collection of variables shipping in component costs and availabilities.
Uneven recovery from Covid and the global Spike in the Delta variant and related economic closures, we get new information every day.
But as we look forward. We are encouraged first demand is strong.
Chuck will provide more details, but we expect to have sequential quarter over quarter revenue growth.
Second the broad secular trends that support poly's growth are intact, we still believe there are strong underlying.
<unk> double digit growth in our markets.
Third we're working tirelessly on our supply chain. This means we expect to be able to deliver sequential revenue growth for our investors even as in the near term our margins will continue to be under pressure.
Lastly, before I turn the call over to Chuck So we can go through the numbers.
<unk>.
Give you a sense of how we're setting up for the second quarter I do want to point out that over the course of the past few quarters, Chuck and his team have transformed our balance sheet, our borrowing costs are down and leverages decreasing.
We're carefully managing our resources and investments and at the same time, we remain committed to.
Long term growth goals for our revenues and our margins. Yes. These goals are ambitious.
But we believe we can attain them we have the right gear the right people and the right technology to get there.
Chuck now over to you.
Thanks, Dave as Dave mentioned, it was another strong quarter.
Based on year over year revenue trends, but as we expected down from last quarter.
In spite of the global supply chain challenges, we were able to secure additional components and capacity to deliver revenue above the top end of our estimates.
While we were able to satisfy additional customer demand.
The answer to that was increased freight in costs associated with spot market purchases <unk>.
Non-GAAP revenue was 432 million a 20% increase from the prior year, driven primarily by video and voice, which were up 94% and 34% respectively.
<unk> spoke about accelerating demand for desktop phones last quarter, which continues unabated and we are now seeing stronger demand for conference from phones, growing 23% sequentially and 33% year over year.
We view this along with strong video demand as a clear.
We patient of building momentum around return to office.
It seems that return to office changes as the news changes.
While we benefited from work from home, we expect our business to be stronger when there was a more substantial return to the office business.
This has proven out as our sales pipeline.
Year indicative expanded globally as companies prepare to return to the office.
Service revenue was $61 million as expected down 12% year over year due to service contracts on legacy systems being replaced with lower cost and disruptive Nexgen video gear.
<unk> have you expect this trend to continue over time, and eventually change direction and start to grow again in the future.
Last quarter, we highlighted our expectation that supply chain challenges would impact gross margins by several hundred basis points sequentially and as expected gross margins declined.
160 basis points from the prior quarter.
Our current expectations are that spot market purchases and continued elevated freight coupled with a mix shift towards desktop phones will continue to negatively impact gross margins in the near term.
Operating expenses.
<unk> were down slightly year over year at 142 million on operating income of $52 million was up 42%.
As Dave mentioned, the demand environment for poly products remains strong despite supply chain challenges.
Our Nexgen video solutions.
Continue to gain traction and all those sell through was impacted by supply shortages and shipment linearity.
Sales out of the channel were up 245% year over year, even though we shipped over 25% of our new video units in the last week of the quarter.
Backlog remains elevated and has shifted the video and voice as enterprise customers prepare to return to the office.
Lastly, channel inventory was up slightly compared to the prior quarter due to a significant amount of shipments late in the quarter.
Turning to cash.
Operating cash flow was impacted by the overlapping interest on the 2023 and 2029 bonds and the payout of variable compensation from fiscal 'twenty, 1, resulting in slightly positive operating cash flow for the quarter.
We ended the quarter with $213 million of cash and short term investments.
Cash with a 2023 bonds now retired and our new interest rate hedge in place, we expect interest expense to be approximately $16 million per quarter going forward.
Turning to guidance.
The demand environment remains strong and under ordinary circumstances would support significantly.
The higher revenue in fiscal Q2.
As we sit on our last earnings call and at Investor Day, We are clearly targeting sequential revenue growth in Q2.
However, as we continue to experience challenges associated with the global semiconductor chip shortage situation.
<unk> remains fluid.
As a result, we are providing guidance largely similar to what we provided in Q1 on.
Our long term views on Poly's financial model has not changed but we continue to see near term pressure on gross margins due to freight spot market purchases and absorption of factory cost.
Costs.
These impacts on margins may be more pronounced in Q2.
Based on our current view of components supplier commitments and impacts from COVID-19. This variance we expect to deliver financial results for fiscal Q2 within the following ranges.
GAAP revenue 420.
Situate $440 million.
Adjusted EBITDA $50 million to $60 million.
Non-GAAP earnings per share 50% to 70.
Our non-GAAP tax rate is expected to be 14% to 16% and the shares outstanding should be approximately $44 million.
Regarding our.
<unk> tax rate, a 1 time benefit impacted the fiscal Q1 non-GAAP tax rate. However, we still expect a full year non-GAAP rate of 14% to 16%.
Lastly, there are several discrete tax items that may be resolved this quarter potentially creating a significant favorable impact.
<unk> results.
Since it's difficult to predict the timing or magnitude of the tax rate, we are providing excludes this impact.
The model, we outlined on Investor day remains intact, and we are optimistic regarding our ability to deliver long term value to our shareholders through revenue growth and continued improvement.
2 our net leverage.
I'll now turn the call over to the operator to begin the Q&A operator.
As a reminder to ask a question you will need the breast star 1 on your telephone to withdraw your question breath, Becky and please standby, while we compile the Q&A roster.
Once again to ask.
Ask a question. Please press star 1 on your telephone.
Your first question is from Amit <unk> on many of Evercore. Your line is now open.
Good afternoon, everyone and thanks for taking my questions I have 2 I guess.
First on chocolate was hoping if.
And on quantify the supply can impact you had on your P&L.
<unk> June and what do you think it's going to be for September I think June.
About 60 million topline 300 basis points on the margins on an update on that and how does that had been translate into September would be helpful.
Certainly amit thank.
The question.
Yeah.
The June impact in the September impact.
We're cautious about September.
The situation has not really changed that much we have gotten additional supply and that drove to a pretty strong end of quarter for us. We are proud of our team there working.
Thank you for your hard and had really strong shipments, but the products came in late in the quarter.
And as a result.
Cautious about margins in Q2, partially because the the components spot purchases did not have a full impact on Q1. So we're cautious there although we're optimistic.
Nick on getting additional supply for Q1, so we are targeting revenue growth in Q2.
The margin impact is pretty straightforward at Investor day, we outlined a model that we think is north of 50% gross margins and I think that would have been the case in both Q1 and Q2 if not.
Incredibly supply chain challenges and we have a very detailed chart as you'll remember from analyst day that that sort of breaks that out.
And so.
It's pretty clear that if not for these disruptions revenue would be significantly higher than margins would be north of 50%.
4.
That's really helpful and then.
Just follow up on the video side of the equation.
Do you see from really impressive growth over here.
I think a compressed on to get difficult in the back half of your fiscal year.
From the time, how do you think of medium growing on what does that look like in the fiscal year for you.
And then how should think about the puts and takes maybe return to work.
Pause will start a little bit reported median market specifically.
Yes. This is Dave let me, let me take that 1 on and Chuck will provide color commentary afterwards, if you want so the demand for video remains very very strong.
It is it is tied actually to.
Return to office and so my commentary on the Delta Covid variant in Europe, specifically is they've had some delays on the return to the office with with Delta and so I think that is that has driven out some of the projects to later in the year. The pipeline on video is the healthiest I've ever seen and.
Pipeline continues to grow so the demand is massive.
I guess, what I would say is there's been real supply constraints on the video products as well tied to both imaging centers, but also some of the chips, but we remain very very optimistic on.
On the demand for this fiscal year for video.
So that also on our ability to continue to take market share.
The way, we have been with our video products.
Perfect. Thank you very much.
Thanks, Amit.
The next question.
Your next question is from meta Marshall.
Morgan Stanley Your line is now open.
Hi team. This is Erik on for meta thanks for taking our question, maybe if I could go back on the gross margin step down on understand things.
Things could look worse in September, but you've also talked about some mitigation efforts youre putting through so I'm wondering just as we think through the rest of the year on into next year.
Sure.
How should we think about the cadence to potentially start improving some of the impacts are coming is it.
We're seeing is it purely.
The broader macro issues starting to improve or is there anything you can your efforts can do to start driving improvement aside from that.
Yes.
Len.
Let me hit the efforts and then Chuck can talk about the macro issues that the simple answer is absolutely we put some pretty significant cost targets on our team in terms of more efficiency there as factory utilization tied to that of course, which is partly driven by our throughput.
But the team the team is doing design to value kind of all over the place and Theres some pretty substantial targets on the supply.
Apply chain team to get US there the far bigger factor, though is the is the macro issues that Chuck has mentioned, which is the price premiums that we're paying from components and the freight issues I don't know checkpoints to talk about anymore.
So as you think about sort of drivers purchase price variance, where youre buying spot market purchases and whatnot.
I don't know when those will go away entirely they will but I'm not sure when they when they fully abate, we're getting commitments for additional supply from the suppliers, where we can buy direct versus on the spot market and that will help but it will take a quarter to flow through inventory. So I think that will be a good guy in the back half.
Year.
Dave talked about freight a little bit and we've seen more airline traffic, which should drive down freight costs of course, the December quarter can be challenging because of Christmas and the and all the buying but I think the the water ship.
Shipment routes or are getting better there.
Half of the container shortage right now and so we're starting to put some of the products that are not supply constrained on the water.
So that should help as well on the back half of the year.
On the I guess the good news is grant Hoffman on the work he's been doing he has been here now for 2 quarters.
He has put a new team in place and they are.
Or is working really hard to secure significant additional supply in the back half of the year. So while we can't forecast with.
Precision the back half of the year I think David on our quite optimistic that we will see really strong revenue quarters in the back half of the year end.
Can see euro.
Our 3 year revenue growth, Eric maybe I'll comment a little bit more on that to provide a bit more specificity, even though it wasn't directly your question building on some important comment which is in the past we've.
Made short term buys right in a quarter out 2 quarters at most.
We knew we had to make some changes when we brought in Brandon in a whole new team.
We.
Year on all of those issues back in May we're now, making orders a year or more out and on the long lead components and we're being aggressive to match the demand that we see to the supply and it's changing the dialogue on a very very healthy way with our suppliers, where they are excited about the upside for our business and.
Theres still allocation issues, we're still battling with the likes of Apple and some some big players, but the fact that we're willing to bet on the business a year plus out is it's encouraging to them. I think is what is giving us optimism that we will see sequential growth this quarter and for a few quarters.
<unk>.
Obviously, I don't see it faster.
But we're pushing as hard as we can either.
I appreciate the helpful color.
Thank you.
Thanks, Eric.
Your next question is from Doug. Thanks.
To come from Dougherty <unk> Company. Your line is open.
Good afternoon, just wanted to talk about the professional.
Net business.
There's a little bit surprised by the magnitude of the sequential decline islands.
Year over year of analysis on it.
The depressed quarter.
So kind of a colon breast quarter from a year ago. So we're back below.
Yes.
Backlog free.
Covid.
Levels.
So I just wanted to get a feeling for whats going on in that market.
Moving market share I know you rolled out on a handful.
Total new products like your phones and other.
Other thing.
Yeah, we're probably going to fill some product gaps for you and help help.
Help on the revenue front, but if you could just maybe.
Talk about what youre seeing in that market from.
From a demand perspective, as well as from a market share perspective.
Yeah. This is Dave I'll provide some high level commentary and then again as always.
I'll chime in with other points that he sees but so the contact center business continues to be very soft we're not seeing much of a return.
By the call centers, yet, we're monitoring that but that business is down Q over Q, almost 20% and it's down year over year to 37% still so there is a substantial weakening there.
But probably more interesting to me is the dynamic around sort of our traditional USB connected blackfire headsets versus Bluetooth.
And we are seeing some softness in Europe around the Blackwater headsets we.
Don't believe we lost market share there, but we're watching that carefully.
Chuck and obviously were waiting for some of our competitors to share their results.
We are seeing a general softening for those wired products in Europe, we have not seen that in the Americas or APAC. We're seeing continued strong demand, which has given us comfort that I think we're going to see sequential growth in our headset.
Free in this quarter over quarter.
I'm also seeing a lot of demand for the Bluetooth products. So specifically the new focused product that I mentioned and the 4300 Voyager products.
We are we are constrained on some chips for those products and so demand is outstripping supply specifically on the Bluetooth side so to.
To summarize yes, the quarter was down I do think you will see substantial significant sorry sequential growth Q over Q for the headset business driven by the factors that I just mentioned.
Okay, great. Thanks in terms of.
Opex.
Great.
Great job, adding net this quarter came on kind of well below what we were looking for on down pretty significantly sequentially. So how much of that is.
Desirable on a temporary versus.
Permanent like how should we think about opex as the year progresses.
Thanks, Greg it's Chuck.
We're trying really hard to protect our margins you saw a restructuring charge this past quarter.
And we're doing everything we can to drive efficiencies in G&A.
We're investing in sales and marketing actually so we're putting more resources out on the field to drive.
Unit growth and capture this wave of demand.
And then more importantly, reallocating engineering resources to future areas of growth.
So that's certainly helped a little bit on the expense side as well as just the company the employees have done a phenomenal job responding.
In a tough time where were supply constrained.
Constrained.
River of abundance of demand and with that we pulled together on rallied and had been able to drive costs out.
We plan to continue to be cautious on spending while demand while supply is constrained I would expect longer term opex too to grow above these levels.
<unk>.
<unk> revenue returns and.
And we have more supply, but I would sort of expect the numbers to be somewhat in line next quarter.
Okay. Thanks, and then last.
And in terms of the cash flow.
Do you have a target.
Light this quarter.
Sure.
With you outlined but full year.
On.
Generation.
Yeah. So we talked about at the analyst day about $150 million of operating cash flow that would still be our target for this year.
Q1, we had some restructuring and sort of timing.
The reasons to will likely just because the profile of revenue and shipments being somewhat backend loaded that Q2 will not be a great cash quarter, given the profile, but that will set us up for a strong Q3, and Q4 and we would expect material operating cash flow in both Q3 and Q4.
Similar to last year actually that was a very similar profile to what we did last year and we drove very very strong.
Both operating and free cash flow in Q3, and Q4 last year and then that would obviously drive continued delevering.
Yeah.
Okay, great. Thank you.
Thanks, Greg.
Your next question is from Paul <unk>.
At this time of Cowen Your line is now open.
Paul Your line is now open.
For Josh can you hear me.
Yes, yes.
Sorry, I'm still learning to working on from my apologies.
On a Thursday, I apologize diplomat's third repeat yourselves that was passing through securing their approach on a portion of this call I do apologize.
Strong results.
Somewhat disappointing guidance.
Yeah.
On the Oregon net on balance positive how.
How much of the weakness.
Looking at <unk>.
On the current quarter is due to supply constraints.
Much of it as weak demand in connection with my question I heard your comments about Europe.
How much of your European European business headsets.
Well.
What happened with your overall European business that would inform whether the headset issue.
Editor loss issue.
Something else.
So this is Dave first of all at a macro level.
The issue is all supply.
I am very very confident.
Guiding up on unconstrained demand basis that I would've guided.
Much much higher.
We had said before that on a pure demand basis, we sequentially would have been above the $4.78 for Q4, and I think that remains the case from a demand perspective.
So therefore.
About supply Europe is up overall at 33% year over year.
Down a little bit Q over Q on 25% Q over Q and that is on the video side that is.
Supply constrained on the headset side, there is definitely a softening of demand.
It's all in EMEA.
But it's offset by growing strength in Europe, and Asia Pac. So it is kind of.
Multiple series of.
Stories that we're trying to enter wafer you also you can kind of get a macro sense. So at a macro level I would say video growth through the roof tons of demand.
<unk> and were flat out trying to make sure. We saw the supply issue headsets stabilizing I believe they are stabilizing somewhere between last quarter and this quarter so to be specific that somewhere between $1.70, and 200 I do think you will see substantial <unk>.
Increases this next quarter bouncing back, but mainly in the Bluetooth area.
And then voice.
It's growing and we are very supply constraint there, but we're seeing a lot of growth in voice, so we'd like to be able to fulfill and Paul I would just add on.
Both Americas and APAC had sequential growth in handset revenue. So if you looked at Q4 to Q1.
Both.
APAC and Americas had growth sort of a decline in headsets was 100% driven by Europe and.
Mostly driven because of the shift from quarter to cordless and so.
I think the.
We feel very good about the headset business.
Globally.
<unk>.
But I think it's black wire in Europe was softer however, we believe we actually.
Probably increased market share, though in Europe.
Alright, then on the.
Video business, how much of your video revenue.
<unk> quote on quote legacy Mueller.
Multi tens of thousands of dollars or even $100 plus the old expenses room system. This versus your other wounds. This what's the split this quarter.
Let me, let me get back to you here shortly.
Becoming a smaller and smaller piece however, it's been pretty stable.
And I'll come back to you here shortly with.
A more precise answer on the percentage.
That'd be great, but Chuck you're indicating that legacy business you think.