Q2 2022 CalAmp Corp Earnings Call
The conference is scheduled to begin shortly please continue to standby. Thank you for your patience.
[music].
Welcome to count and second quarter 2022 financial results Conference call. As a reminder, this call is being recorded I would now like to introduce your host for today's conference call Joel a cram ovitz.
And I think director of Shelton group.
The Investor Relations frightened Jello you may begin.
Good afternoon, and welcome to <unk> fiscal second quarter 2022 financial results Conference call I'm, Joel <unk>, managing director of Shelton Group <unk> Investor Relations with US today are <unk>, President and chief.
Macro the ball for me Jeff.
Jeff Gardner and Chief Financial Officer, Kirk tender.
Before we begin I'd like to remind you that this call may contain forward looking statements. While these forward looking statements reflect <unk> current judgment they are subject to risks and uncertainties that could cause actual results to differ materially from those implied by these forward looking.
Projections. These risk factors are discussed in our periodic SEC filings and in the earnings release issued today, which are available on our website. We undertake no obligation to revise or update any forward looking statements to reflect future events or circumstances.
Jeff will begin today's call with a review of the company's financial and operational.
<unk> highlights then Kurt will provide additional details about the financial results followed by a question and answer session with that it's my great pleasure to turn the call over to <unk>, President and CEO, Jeff Gardner Jeff. Please go ahead.
Thank you Joel.
We finished the second quarter with strong growth in.
In our software and subscription services revenue, increasing 24% over the prior year period, and representing 52% of our total consolidated revenue.
Contributing to this performance in the quarter was the completion of a major trailer retrofit program that.
That we began last quarter combined with the initial conversion of a few strategic customers to our <unk> telematics cloud.
Platform under recurring subscription contracts.
As a result of the higher revenue contribution from the software and subscription services in the quarter.
Quarter, our gross margin improved to 42% of revenue.
In our telematics products business revenue continued to be impacted by the global component supply shortages, but.
But we continue to work closely with our suppliers to source as much inventory as we can.
As many companies are echoing across multiple industries. These supply chain headwinds are not subsiding.
And are likely to extend throughout this calendar year.
Despite some recent improvements in allocation, we are still far from optimal levels.
It's worth noting that with our backlog at record levels.
We could have recognized much higher revenue in the quarter, if we had been able to source more components.
It is our view that we are not losing orders as a result of this backlog there are just a bit.
Relative to our original plan, we have every confidence that our supply chain is operating as well or better than any firm in the industry.
The positive element to this situation is that demand remains very strong.
Forwarded by the worldwide <unk> to <unk> upgrade cycle.
This strength is especially evident at our largest customer.
Which continues to perform very well.
With our global operations team actively engaged we expect to ship approximately 20.
<unk> more devices in the back half of our fiscal year and in the first half.
Now, let me turn to the progress we made across our business during the quarter.
In addition to the ongoing market development efforts underway in support of our IR.
90, <unk> application in the U S.
We recently launched this flagship fleet management solution in Italy, and the UK.
As part of our EMEA expansion strategy.
And we'll be launching it in other international markets in the coming months.
<unk> Rich feature set provides real time data insights on vehicles drivers and assets are business critical decisions with.
With <unk> global sales training.
And organizational readiness underway and progressing very well we expect to continue.
Two to expand the reach of this highly effective connected intelligence platform to commercial and fleet operators across the globe.
We also enhanced our ion tag product family with the addition of our newest ion extreme temperature tag.
This new smart.
Tenure tag.
Utilizes a thermal coupled probe to monitor environmental temperatures of assets.
In conditions as low as negative 270 degrees Celsius and as high as 400 degrees Celsius, making the device ideal.
Sensor tracking and monitoring shipments of pharmaceuticals back.
<unk> <unk>.
Biological materials and liquid nitrogen.
Our ions extreme tag has been highly effective in the midst of the pandemic as our customers employ it for tracking.
And monitoring shipments of vaccines safely and at the right temperatures to pursue efficacy.
In addition to the smart trailer retrofit program I discussed earlier.
It also included the launch of a new solar.
<unk> powered gateway, we recently teamed up with higher end day translate to support.
The launch of a smart trailer technology platform Ht linked.
This powerful tracking solution employs our edge to cloud gateway.
Solar and provides one of the most open and smartest trailer enablement platforms in the industry.
With the Ht linked fence.
Great plan these trailer sensors.
On our CTC cloud platform and deliver actionable insights.
The.
<unk> an application to fleet operators, so that they can maximize trailer usage.
And safely.
While enabling the efficient delivery of goods.
High end <unk> translate as the leading manufacturer of dry and refrigerated.
<unk> in North America, and produced more than 66000 trailers in 2019.
No other trailer manufacturer in the U S S ship more trailers.
And now each one they sell could be equipped with <unk> smart trailer.
Trailing technology as a recurring subscription contract.
Also during the quarter, we continued to make progress.
Transitioning several customers to our new device management solution built on our CTC platform that I discussed on last quarter's.
Taylor.
The sunset of our older pulse device management system in.
In the coming months will serve as a strong incentive.
For our customers to make the move to this new SaaS platform.
The enhanced functionality includes faster and.
Call secure bulk updating of devices over the year compared to pulse and more enhanced account.
And device hierarchy management.
Is really resonating with customers.
We're excited about migrating our customers infield devices as.
Morris as all new orders to make their businesses run more efficiently as we accelerate our transition to a SaaS company with our industry leading edge devices.
In summary <unk>.
To make significant progress towards.
Well, achieving the objective of becoming a leading provider of recurring software and services in the telematics industry.
Our powerful new ion telematics application.
And device management, SaaS solution, or making a noticeable impact on the industry.
I'm proud of the team and what we've accomplished so far this year in this supply constrained environment.
And I'm excited about the opportunities that lie ahead for Cal Lam.
With that I will now turn the call over to Kurt for a closer look at our second quarter financial results and then we will open.
<unk> for your questions.
Thank you Jeff.
Today My commentary will include reference to the non-GAAP financial measures of adjusted basis net income adjusted EBITDA and adjusted EBITDA margin.
Full reconciliation of these non-GAAP measures with the closest corresponding GAAP basis measures is included in the press release.
The quality of our fiscal 2022 second quarter earnings that was issued this afternoon.
Also as a reminder, the financial results of our Lojack North America business that was sold effective March 15th of this year are being accounted for as discontinued operations. So the financials I will review reflect our continuing.
And innovations and we have revised prior periods for historical comparison purposes.
Total revenue from continuing operations in the second quarter was $79 million, which was up 6% year over year and down 1% sequentially.
The year over year revenue growth was attributable to solid performances.
In the transportation and logistics market vertical and to a lesser extent connected car.
International revenue totaled $31.0 million or 31% of total revenues for the quarter driven by solid revenue performances in the Latam region.
Software and subscription services.
<unk> revenue was up year over year, 24% to $45.0 million or 52% of consolidated revenue our software and subscription services business benefited from the completion of the trailer retrofit project with our major package delivery and transportation customer.
Services income by Jeff earlier.
This customer subscribes to our CTC platform services to manage its trailer fleet in the United States.
The shipment of the related solar powered devices requires upfront revenue recognition in this bundled subscription contract arrangement.
We will be selling the solar powered device.
As a standalone product to our other telematics device customers overtime.
As Jeff mentioned, we continue to make great progress in converting our telematics device customers over to the new CTC device management platform as we sunset our older pulse system.
With the new device.
<unk> management platform, we are converting our customers into multi year subscription arrangement.
In the second quarter, we converted a few strategic customers and we anticipate the momentum of customer conversions to continue into the second half of this fiscal year and beyond.
It should be noted that the revenue contribution.
From our software and subscription services business may vary from quarter to quarter, depending on the installation and activation of devices as well as the timing and progress of our transition of customers to our CTC platform.
But over time, our goal remains the same to increase the amount and percentage of revenue.
<unk> that is under recurring subscription contract arrangements.
In terms of performance metrics for our software and subscription services business.
Annual recurring revenue for the trailing 12 months was $86.0 million down slightly.
Slightly from 85.5 million.
<unk> in the second quarter of the prior year and down from $93.0 million in the prior quarter.
The sequential decline in <unk> resulted from customer churn of a number of smaller customers as we consolidated our existing customer base onto the new ion software solution.
Fiscal 2021 and in the midst of a global pandemic.
<unk> customer conversion initiative is now substantially complete we have observed customer churn moderating to more normalized levels.
As a reminder, our represents revenue from recurring application subscription and services with <unk>.
Dorian foods revenue from the hardware devices in a bundled arrangement with the customer that is recorded at a point in time or upon installation.
Remaining performance obligations in the second quarter were $136 million.
And compared to $137 million in the prior quarter.
And.
$118 million in the prior year quarter.
The slight sequential decline resulted from the completion of the trailer retrofit program mentioned earlier, which reduced our customer performance obligations in the quarter.
This metric represents all contracted revenue, including deferred revenue.
And contracted but unbilled revenue related to bundled contracts with customers.
Additionally, we are pleased with the growth in our base of active subscribers during the quarter.
Our total number of active subscribers at the end of the second quarter was 989000 up from 954.
4000 subscribers last quarter.
The subscriber growth is evidenced that we are successfully converting customers over to the new CTC device management platform and onto the ion fleet application.
Telematics products revenue in the second quarter was down 8% year over year and 16.
18% sequentially to $43.0 million, primarily due to the continuing constraints in the supply chain.
Customer demand, however remains very strong for our telematics solutions due to the ongoing global three G to for the upgrade.
We're doing everything within.
Our control to source components to increase inventory and although we expect these challenges to persist for the remainder of our fiscal year, we do expect to ship more devices in the second half than we did in the first half.
Within the telematics products reporting segment OEM products revenue decreased 20.
22% sequentially and 8% year over year to $24.0 million.
Our largest customer represented $14 million in revenue for the quarter.
This was up 2% from $20.0 million during the prior year quarter, although down from $20.0 million.
In the prior quarter once again due to the supply chain constraints previously mentioned.
We continue to expect solid demand from this customer and other customers for the remainder of the fiscal year.
Consolidated gross margin from continuing operations in the second quarter increased to 42.
Two 2%.
47% last quarter and 36, 9% in the same quarter a year ago.
The sequential and year over year increases resulted from the higher revenue contribution from our software and subscription services business and the benefit of.
A recent price increase that we implemented late in the prior quarter.
Additionally, the prior year quarter was impacted by a $5.0 million, one time charge related to the resolution of a product performance manner with the customer.
Our non-GAAP operating expense as a percentage of revenue was approximately.
<unk> 37, 7% of revenue for the second quarter.
We continue to evaluate our staffing requirements in order to support the customer order backlog and increased business activity with the transformation to a SaaS based business model.
In parallel we have ongoing internal.
<unk> further align our cost structure as a result of the sale of the Lojack SVR business in March.
These initiatives should lead to improvements in our consolidated operating margin over time.
Even though we will continue to judiciously make investments when necessary to drive our future growth, particularly in product development.
<unk> to sales and marketing.
Adjusted EBITDA in the second quarter was $11.0 million with an adjusted EBITDA margin of 11%.
Compared to adjusted EBITDA of $5 million or 7% in the prior year quarter, and $12.0 million and an adjusted EBITDA.
<unk> of 11% in the prior quarter.
Now turning to our current liquidity position at the end of the second quarter, we had total cash and cash equivalents of approximately $102.0 million as compared to $98.0 million last quarter.
Our aggregate outstanding debt.
Is approximately $237 million, including $230 million of the 2% convertible senior notes due August 2025.
Additionally, we have an unused $50 million revolving credit facility.
We expect to maintain a strong financial position and balance sheet with.
With significant cash for working capital going forward.
In reference to our outlook for the third quarter of fiscal 2022, we are maintaining our policy of not providing quarterly guidance as visibility into product shipments remains uncertain due to the global components supply shortages.
Yeah.
With that I'll turn the call back over to Jeff to provide some final comments before we open the call up for questions. Thank.
Thank you Kurt as you can see we continue to generate significant cash while controlling operating expenses.
As we work to transform Cal lab.
We continue.
<unk> doing component shortages represent a temporary obstacle for sure, but we intend to work through it as we pursue our objectives I want to thank our customers shareholders and employees for their strong support and commitment to our efforts with that I'd like to open the call up to your.
Contingence operator.
Thank you Jeff as a reminder to ask your question you will need to press Star and then the number one on your telephone keypad and to remove yourself from the queue. This press the pound key please standby, while we compile the Q&A roster.
Your.
Our first question comes from the line of Mike Wally Walker from.
From Canaccord your line is open.
Great. Thanks, so much for taking my question.
I guess the first place for me to start with just on the software and subscription revenue very strong 17% sequential increase.
<unk> called out the large trailer retrofit it with some hardware bundle then theyre just just as a baseline how should we think about modeling that business.
Ford and given there were some one time revenue in there. Thank you.
Okay.
Yeah, Mike obviously.
And you're clearly that's our focus here is to build a suit.
Sophomore company and.
50% was more of our long term target we benefited from a couple of things in the quarter, but maybe I'll ask Kurt to talk about how investors should think about that going forward.
Yeah, So Mike.
You know the.
The revenue contribution from the software and subscription services, we do expect to be a little bit uneven quarter to quarter. As we worked through installation and activation of devices, which is impacted by the supply chain challenges and then that is coupled with the fact that now we are aggressively.
Obviously transitioning our customers in the telematics device business, you know the hardware centric business over to our CTC platform. So that is expected to create some variability, but I think the best way to approach. This is really focus on two things first off is if you look at our a R. R.
Our annual recurring.
Revenue, we've disclosed and we do expect that annual recurring revenue to stabilize and grow here in the near term and then you couple that with our business, which we have in terms of telematics devices that we expect to essentially convert over to the platform over the base of probably two to three quarters.
Current revenue so there's the two factors that I would look at in terms of our forecasting and you know over the next quarter as we get greater visibility into some of the supply chain.
Availability will look to start giving guidance here shortly.
Okay fair enough that's helpful.
And just within within the software and services just a little more feedback it's great to see already some large customers converting to the CTC platform. How is that going and then also just curious on synovia with.
Students back in school in a bus driver shortage, how that solutions are faring in the market.
Yeah.
We've gone directly to our customers to meet with them about CTC DM and our plans to eventually decommission the pulse.
Product.
When we talk about the advantages of CTC DM or customer.
And are getting very excited about it.
It did a couple of things one it loud allowed us to engage with our customers at a level that we hadn't in a long time. Many of these many of these meetings where face to face because we're in a better situation as it relates to the pandemic and we took all of our product and.
In engineering team, along with Kurt and I. So that we could provide an executive level view of how we think this can help their product.
Eventually what we're trying to do is help all of our customers grow software revenue. That's the game for everyone, there and and I think they went extremely well.
And the second part of the question I lost track of them.
You asked about the the Synovia business in particular, the government municipalities space and I think the best way to answer that is I mean, we were generally very pleased with the results in the quarter as it relates to our subscriber growth when you look at that subscriber.
Even though some of those headwinds you mentioned our present, we were able to grow our subscribers in the government municipal municipalities face utilizing this novia platform. So generally pleased with that the two other areas, where we had some success where as already mentioned the conversion of our customers a few select customers.
Grow the device management platform and then the recovery services bounce back a bit principally in the EMEA region. So generally pleased with the subscriber growth and I think it's showing that a couple of things are happening well, one where we're getting traction on CTC device management platform coupled.
Two our ion software platform.
Great. Thanks, that's helpful last question for me and I'll pass the line just with your.
Your your comments about a 20% higher device shipments in the back half of the year to two year work on the supply chain.
Should we model maybe up 20%.
With you in the back half there could telematics products or is there a mix shift just trying to think about what that comment means in terms of your financial outlook for the back half of the Europe.
Youre not giving guidance.
We're not going to give guidance, obviously, but I think you'll see that our mixed in between the traditional MRM.
Revenue mix and OEM, both are our our business with our largest customer was affected by the component shortage as well as our regular MRM customers. So we're still very bullish but I think it's important for investors to note.
Obviously.
M probably thought those those sales would be stronger earlier, none of US anticipated. This pandemic to have such a long tail, but as I've said in my call on my My remarks. We think this is just deferring. These there is still the <unk> to <unk> transition is still happening.
Customers are still dedicated to our edge devices because of their unique capability. So we think that will be you'll see growth in both those areas at the end of the year and that'll continue to improve into 2022.
And I highlight that Mike on your comment regarding the.
The forecast.
The bounce back in the availability of supply is not anticipated to happen as dramatically as we initially thought in Q3, it's certainly going to be a more gradual a return to normalcy, we are seeing allocations.
Cause by chain get better, but nowhere near what we had originally expected and what we're starting to see is a situation where even certain other markets such as the automotive industry are getting reallocations because of some of the political background. That's that's out there. So anyway, we're working as streaming hard to with.
And the supply chain and our contract manufacturers to garner as much allocation as possible and so we're expecting that the components will be up a bit over the second half over the first half even in this last quarter I'll just mention a few things that I think.
Highlight.
The caliber.
With the supply chain that we have here at <unk> today, despite the semi conductor shortages and challenges across the industry, we hit 95% on time delivery with our largest customer and 85% with our MRM customers we successfully.
So completed at 35000 unit order for our largest tran.
Transportation and logistics customer that was all shipped in the second quarter.
Just as a few items. So despite the fact that yeah, it's very challenging our supply chain team is doing everything possible to meet.
Fleet by our customers.
Great. Thanks for taking my question and best of luck in <unk>.
Working through that supply chain.
Thanks, Mike.
Okay.
Thank you. Your next question comes from the line of Scott Searle from Roth Capital. Your line is open.
Hey, good.
The needs and thanks for taking my questions here real quickly I'm not sure if I heard on the call. I know you were certainly a supply constrained in terms of your ability to ship did you quantify the upside impact of that in the quarter and to follow up on Mike's comments as it relates to.
The SaaS side of the equation you had some one time benefits this quarter could you quantify what that number was.
Good afternoon, how to calibrate going forward because it sounds like youre projecting a R. R.
Grow stabilize and grow going forward, so that would be the debate. So I expect that we'd be growing off of.
Mhm.
So Scott to answer your question. So we didn't quantify what we would actually have been able to.
So we know we're on the quarter.
Obviously, we are our revenue was about $79 million for Q2, we do think that we probably had anywhere from on the low end, 15% additional capacity to potentially as high as 25%, there's some capacity to to ship to them. If the components were available to us so.
The backlog continues to remain at all time highs. We're extremely pleased it's both for MRM customers as well as our OEM customers and so I think that this is what gives us confidence that the second half will be stronger than the first and then it will continue out beyond fiscal.
And then 'twenty two as it relates to your question on annual recurring revenue.
Our our medium to long term target is to be growing our software business.
At or around the 15% to 20% range year over year that too has been constrained by supply chain.
2000, and we have to.
Install and activate devices of those devices aren't available it's tough to to ship and meet on those contracts, but we're very pleased with as I mentioned before the growth in our subscriber base and we are working expeditiously to drive new logo generation. So all in all I.
Obviously, you can expect.
Our or to grow over the second half of this year and then into fiscal 2023 men, Eric Diamond Our Chief revenue Officer is 100% focused on growing our and.
He knows exactly what that means in terms of managing our pool.
Attrition et cetera, and in addition in the quarter. He made a lot of progress in and with respect to hiring SaaS salespeople. So we continue to focus on that.
As the long term future of the company and we're making investments in those areas.
But Kurt did you quantify the onetime benefit of the smart trailer retrofit in terms of there was there were some one time payments in there.
It's got to what we had communicated a couple of quarters ago that was that on that particular retrofit program was about 35000.
Devices those.
Gotcha says are essentially replacing our previous the devices that were forgey devices, but in fact this one is solar powered and comes with.
Incremental computing power that allows them to transact more data flow through our platform and so they were anxious to get a hold of those devices in particular in advance.
Divide the blackout period, as you know or major logistics and transport company is a very particular about ensuring that they can be at 100% capacity during the holiday season, and so it was really important for them to get those devices in this quarter.
Ahead.
Of particular season, so we did prioritize that and pleased to say that our supply chain team executed well to deliver.
Great and lastly, if I could follow up.
Sorry go ahead.
Well I just wanted to also say this T. T. U 2900 is quite a unique device.
And the team has an extra.
Of that opportunity to sell that not only to our existing customer to today, but other transportation and logistics customers. So.
We'll see more benefit from that in the quarters to come.
Great and lastly, if I could just to follow up on the 20% growth in the second half.
Excellent first half on devices. It sounds like you said, it's a combination of MRM as well as OEM just want to clarify that also if that includes any I'll call. It internally consume devices to really drive the recurring SaaS model.
But if youre, if youre comfortable guiding to the 20% number that's pretty good unit growth I'm wondering what is the demand.
First the picture.
Outlook look like on that front and then also the gross margin impact certainly it's become a little bit more expensive to secure those components to secure freight on some of those components and finished products I'm wondering kind of how youre thinking about gross margins going forward on that front. Thanks, so much.
So Scott let me, let me just make sure we're clear.
Demand. So we are not forecasting a 20% increase in revenue in the back half of this year. So we're not providing guidance I just need to make sure we're pretty clear on that we just believe that the allocations that were getting are from our contract manufacturers and component suppliers are greater than they were in the first half so just something.
Clear on that for you to take into consideration. So on your question regarding the gross margins. We were very pleased with the gross margin performance in the second quarter in particular, what I think it showed is is as we truly shift to that software and subscription business model.
And in this case, reaching that 52% of our consolidated revenue or our gross margin will show market improvement and we showed that.
So that is our goal is to continue to change the mix of our revenue base move up to that 50 plus percent of the total consolidated revenue and ultimately drive too.
For medium to long term goal gross margin at the 50% target on a couple of things have been in play obviously, we talked to you in the previous quarters about some of the cost increases that were coming down through our contract manufacturers and component suppliers. Those cost increases we did try to offset earlier.
A quarter actually the end of last quarter by imposing a price increase which was generally accepted very well by our customer base. Although I'm not pleased no. One is as always are pleased with our cost up but but in fact understandable given everything that's going on I must just reiterate that though those price.
We are in mixes or cost increases across the supply chain haven't necessarily tapered off we have seen indications that are future price or cost increases could come and we will have to address those win win when.
When they do come upon us, but again our goal is really to focus on the software and subscription SaaS business.
Increased driving the majority of our revenue to that particular category through converting our CTC or customers on pulse the CTC D M as well as driving new logos around our applications and if we can do that then I think youll see nice consistent gross margin expansion beyond where we are right.
This model over the next several quarters.
Currently our margin for the second quarter was about 40 just over 42%.
Depending on how things fluctuate in terms of our subscription revenue in Q3, and Q4 that could move up or down 100 to 150 basis point.
Now just be aware that that's something that is sensitive to it.
Okay.
Thank you.
Your next question comes from the line of Mike Latimore from Northland Capital. Your line is open.
So you know how.
How extensive what how big was the price increase and how extensive was it across your customer base kind of during the quarter.
We we were approximately was approximately 4% and it was pretty much across our base.
We had to make some exceptions with some.
Customers that we had agreements with but it was it is around 4% that was our best estimate of what our costs were going up so.
That's how I would think about that Mike.
Okay. Thanks.
And then on these can you you mentioned a couple of strategic accounts converting to C. T C. It sounds like that lead.
Bigger more.
Software and services revenue, so I guess when they convert or are they buying more features more capacity or can you explain why the.
That went up per customer.
It really did not have a big impact on our software.
And subscription revenue this quarter.
Led to wheel going forward I think the point, we were trying to make is that we're having success in our discussions and we were able to convert over a few key customers.
Our software sales were more generated by our traditional software products.
In the quarter, but I mean, just.
If this business in the future if if that's the way we go to market with everything being.
On a subscription model, that's going to be a very positive development for the company and I think it gave us a lot of confidence that we had major customers shift over to that model.
Yeah.
Think about it got it.
And then just a clarification on that.
You're good.
And about the software and services business in the second half of the year did you say that you thought it would be.
In terms of absolute dollar number is bigger than the first half.
No we.
You can say that what we said is that we do expect growth, but the revenue contribution from software and subscription services will fluctuate from quarter to quarter.
So this quarter was impacted by our larger customer in the transportation and logistics space are taking.
Taking.
Didn't or two those solar powered devices we.
We don't expect that that particular type or a magnitude of that type of transaction or recurring in Q3. So again, there will be some variation in revenue within our software and subscription services.
But in general it is expected to grow in the second half.
Order and when you say grow in second half do you mean year over year or sequentially here.
First half to second half.
Okay got it all right. Thanks.
Sure.
Thank you. Your next question comes from the line of Anthony Stoss from Craig Hallum. Your line is open.
Hey, Jeff.
Sure.
You're talking about backlog at an all time high can you maybe quantify how much it was up either year over year or on a sequential basis, then I had a couple of follow ups.
So I would say that.
Year over year, it's it's probably anywhere from 30.
5% to 40%, but sequentially, it's been fairly stable.
Okay.
And then just following up on Scott's question related to the size of the one time impact in Q3, and maybe a couple of a little bit different direction notwithstanding that.
30, standing maybe you get a little more devices should we think of November revenue is kind of flat with the August or could it be down a little bit sequentially.
Well again, not providing specific guidance out we don't expect it to be down in aggregate the consolidated revenue should be flat.
That really up but the mix could change.
Okay.
Got it that answers all my questions. Thank you.
Alright, thank you.
Thank you and our next question comes from the line of Kyle Mcnealy from Jefferies. Your line is open.
Hi, Thanks, very much for the question.
I'm curious how much revenue you say we'd get.
Got held up by the supply constraints you have.
Mentioned that it was and you'd be able to significantly shipped more had you not had the supply constraints is there any way to quantify how much you would have been in a position to ship had you not have had the constraints.
Yeah.
Yeah. It would have been significant and Kurt gave you some idea when he said 10% to 15% more but.
It would have been significant RGA.
Our demand was very very strong and much of that demand was in the quarter. So that should give you we're not going to give you a precise dollar.
When curt's said, 10% to 15% I think that's the best way to think about it.
Okay, great. Thanks.
And one other question is there a way for you to give us a sense for what inning of the three to four G. Upgrade do you think we're in right now.
Maybe the mix of three <unk> to four D device shipments in the quarter.
Okay.
And how or how long you might think it could take to upgrade most of the installed base.
Well, our our mix has been primarily for.
For G for quite some time now so we've got areas like.
Latam that are still using two jeep products, it's a little bit different in Europe, but.
In North America, almost everything is.
As for G and what inning are we in probably in the fifth inning in terms of the <unk> to five three G upgrade cycle, even our bigger customers still have quite a bit to do so in terms of that being a catalyst in this business.
We're.
We're talking about.
Number of quarters, rather than just a couple in terms of what's in front of us and remember the largest one of the largest carriers has a conversion date in February of 2022 and another large carrier has it much later in the year. So it all depends.
On when customers are going to move to a four G. Some are moving early like our one of our largest customers seem to be real aggressive or smaller customers continue to be a little bit less aggressive. So I think theres a lot in front of us in terms of GAAP conversion.
Okay, great. Thanks very much.
Yes.
Thank you as a reminder to ask a question simply press Star and then the number one on your telephone keypad. Our next question comes from the line of Adam.
States are.
Fields from Goldman Sachs.
Yeah.
Hi, This is Adam.
From Goldman Sachs on the line for Jerry Revich today was wondering if there's any update on how you're thinking about pricing on the C. D C product.
Pricing on the pulse product.
Sure I can take that one so on the on the <unk>.
Pulse product it actually was incorporated in the overall.
Device pricing.
Pricing so there wasn't a specific fee associated with that particular feature with.
With the.
The rollout.
Of the device management platform and CTC, the pricing is going to vary a bit and it really is about the type of features in the telematics services that are the customer wants to consume we have customers that use.
<unk> used pulse or use the.
Device management feature just basically transact very simple data flow and information things like Okay is the device active is it in the field is it damage that kind of stuff. We have other customers that are actually do scripting, which when I say scripting it means.
Software configuration at the edge, where they're essentially going into the device and layering in a piece of software that changes the functionality from hour to hour day to day as well as changes the type of data that they can pull from that device wallets in the field and so the pricing is as.
And as we're communicating with our customers set some very based upon essentially data consumption and usage.
At this point in time, we're not in a position to give out or quantify the exact amount of that in terms of our pool, because we're having those discussions with our customers.
Currently, but I think over the next several quarters as we convert a majority of until now telematics device customers over to the new CTC dam platform, we'll be able to provide us with some quantification.
And I think it's very important to note that these Cte D C M.
Is not pulse right. It's got a lot more features security faster update capability, a new UI UX things that are very useful to our customers that allow them to run their businesses better so they're not at all.
<unk> products.
Okay. That's.
Helpful. And then my last question you touched a bit on realigning. Your staff can you help us think about where labour count is today versus a year ago.
Where it needs to be to meet demand in a normalized environment.
Is it it hasn't changed greatly its just shifted we've we were much more of a.
Company, that's focused on software in order to do that you had to hire a ton of software product people a ton of software engineers and a ton of.
Software salespeople and I think that's the biggest shift our actual numbers are pretty flat year over year.
Here, Yeah, we've been running at just under a thousand employees worldwide, probably about 952000 and as Jeff mentioned, it's split between.
Queen the U S or north American geography, and globally, and then within that that number we have been changing.
The overall mix such that it's heavily more focused on R&D as well as sales and marketing resources.
Great. Thank you very much.
Sure.
Thank you there are no further questions at this time I will.
I'll now turn the call back to Jeff Gardner, President and CEO.
Yeah.
Yeah.
Okay well. Thank you guys all for your time today, we appreciate it all the questions and your continued support of Cal lamp.
Curt and I are being.
Are going to be at another conference upcoming few contacts Shelton. They can give you more information.
Information on that conference, we'd love to spend some more time with you, but have a great day and thanks for your interest in Cal App.
This concludes today's conference call. Thank.
You for participating you may now disconnect.
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