Q3 2021 Ceragon Networks Ltd Earnings Call
With more confidence and visibility.
The primary driver of this outperformance has been sustained strong bookings in different regions in Q3, our <unk> orders maintain the trend of previous quarters and showed a steady performance and once again, we achieved two new <unk> design wins.
Let me now provide a snapshot of our performance by each region.
In North America, our five <unk> related bookings accounted for over 50% of all North American bookings year to date.
As reported in previous quarter call. We were selected by a leading U S service provider for a multiyear managed services agreement.
Satisfaction from our level of services and professional is in so far has driven a discussion about potential network modernization.
We also just signed a contract with another new strategic operator in North America and are expecting orders in the coming quarters. Furthermore, we have one new <unk> design.
In addition to everything I've, just mentioned devaluation of our IP 50 products by two leading tier one operator, which we reported last quarter continued successfully if all goes well we expect to have two new tier one customers buying our solutions in 2022.
In India, Q3 was a healthy quarter for us as it was for telecom companies.
Industry performance was driven by subscriber additions, increasing data consumption and tariff hikes as well as recovery after a severe wave of COVID-19.
The quality of the network experience is becoming more important as such there is a growing demand for network upgrades and accept expansions.
India is moving towards rolling out five G by developing <unk> <unk> three.
Three telecom operators have recently been approved to start <unk>.
Interim auctions are expected to take place in 2022.
Commercial launch is expected during the same year and we will be there to meet the demand.
We are planning to participate in RFP processes.
Our competitive advantages include our indisputable local market leadership position driven by our technology.
Brand positioning and experienced in India as well as in other regions.
In Europe, we had a very strong quarter, especially in terms of bookings we continue to receive orders by a leading European operators from different countries secured new orders participated in trials and received great feedback on our POC.
We have multiple rfps in progress.
We are in the POC stage with a tier one global operator in Western Europe.
They are interested in our disaggregated wireless transport solutions with.
We have another we have achieved product validation and we are in the negotiation phase to secure orders.
Our European <unk> related bookings accounted for over 35% of all European bookings year to date.
We had one new <unk> design wins.
In APAC in terms of booking we have a relatively stronger quarter compared to Q2 2021, our <unk> related bookings accounted for over 25% of all APAC bookings year to date, we are in a POC phase with a global tier one vendor regarding our dis aggregated solution.
While we are building a solid pipeline and witnessing the emergence of a new momentum it might be too early to yield optimism.
The shock waves of the pandemic continue to radiate throughout the region affecting people economies and business decisions.
In Latin America, we experienced some improvement in bookings, even though the macro environment remains challenging we received a substantial <unk> from new customers.
We're working on POC and have multiple rfps and progress.
And majority of Latam countries have begun preparing for <unk>.
Several have already started trials, including Brazil, Chile, Argentina, Peru, and Colombia.
But finally spectrum allocations have just started and in most countries are to be assigned in 2022 or beyond.
We're taking this time to engage with existing as well as new players that may take part in the spectrum allocations in order to position ourselves as the lead <unk> wireless transport vendor.
In Africa, we acquired new material customers received a new appeal for managed services and are working on a number of new opportunities. When it comes to five G. Only a few countries have started assessing and investigating so investing in a potential infrastructure.
Overall, our global bookings increased our confidence in Q4 and beyond.
Among other things.
It will take US further is the expected growth in the total address addressable market. This is thanks to the acceleration in <unk> network Densification increased efforts to digitize the rural areas as well as the shift to the open ran architecture.
These developments are likely to continue to have positive and profound implications for us.
Especially in the medium and long term.
They create more opportunities for us to not only sell a product led solutions, but also expand our offering and business model to deliver managed services and increased sales of our software solutions.
I mentioned earlier, the tough external environment, we are operating in.
While we have maintained good control and were able to increase our revenue compared to Q2. We've also encountered challenges. We believe the component shortages across all across the globe will extend into 2022 at the same time international shipping bottlenecks will continue to prolonged.
Supply chain term loan.
It looks like there is no quick fix.
It impacts both delivery timelines and costs.
Our customer first culture leads us to take measures to stabilize our lead times and avoid delays as much as possible even on account of the current increased costs. Our Wagner in this turbulent period is to help customers continue with their plans and smoothly.
Smoothly as possible.
In parallel we're working to optimize our product costs, we've undertaken an in depth analysis of our bill of material cost in order to identify all the necessary cost reduction options that are in our control without sacrificing announced of quality along the way.
We believe our initiatives will start bearing fruit in the next few quarters.
While the Big picture is complex and global market dynamics are beyond our control we remain confident in our mid and long term prospects. We may experience shift of revenue between quarters and temporary gross margin pressures on which one will elaborate.
Before turning over the call to Ron I would like to refer to the progress of our new <unk> associates as.
As mentioned in our Q2 call, we expect the tape out towards the end of this year.
Immediately after the tape out will start the productive session process of the Src, which will be followed by the integration phase into ceragon future products.
Once launched our new <unk> Soc based product series will enable our customers to increase wireless transport capacity by 16 times using only a quarter as much of the spectrum, providing a several year lead on the rest of the market.
It is ideal for the bulk of the five <unk> networks that will be rolling out in two to three years from now. Moreover, it will be significantly more cost efficient and less component market dependent.
Reducing our inventory and improving our delivery lead times.
With that let me now turn the call over to Ron to discuss the financial for the quarter.
Iran.
Turning to the wrong and good morning, everyone.
To help you understand the results ill be referring mainly to non-GAAP numbers.
For more information regarding our use of non-GAAP financial measures, including reconciliation of these measures we refer to todays press release.
Ron mentioned during Q3 2021, we saw very strong bookings coming from North America, India, and Europe as well as some recovery in APAC.
In fact Q3 is the fourth consecutive quarter with book to Bill above one.
Our revenues for the quarter.
<unk> and <unk>.
Our projections.
Let me now review the actual levels with you.
Revenues for the third quarter was $76 $1 million.
Up by 8% compared with $76 million in Q3 last year.
This was achieved despite the challenging environment with regards to component shortages.
We are proud of this achievement and the fact that most of our customers demand were fulfilled.
Our strongest region in terms of revenues for the quarter was India, reflecting ongoing deliveries. So our main customers and in line with the strong demand we're seeing in this region.
Our second strongest region in terms of revenues for the quarter was Latin America effecting the deliveries and installations for the major wins, we had in the beginning of the year with a tier one carrier in Colombia.
Europe also had a strong quarter continuing its positive momentum and reflected multi initial revenues from <unk> projects.
In North America, we continue to see strong momentum with our tier one customer adds of leading Isps and smaller carriers.
However, even though the demand continued to be very strong we will not able to deliver in the same pace as previous quarters as a result of the component shortages.
Revenues in Africa, and APAC were slightly lower than in previous quarter, reflecting the still challenging situations in most regions.
Where we're.
We had three above 10% customer in the third quarter.
Gross profit for the third quarter on a non-GAAP basis was $23 $6 million, giving us a non non-GAAP gross margin of 31% compared with 73, 5% for the third quarter of 2020.
This gross margin is tech is thanks to and especially favorable mix of products and solutions sold to certain customers this quarter.
Great achievement for us.
That said they are going challenges associated with component shortages and high supply chain cost that can impact our gross margin.
Our efforts to satisfy our customers' needs as mentioned by the wrong is taking a toll as we pay significantly higher prices to resolve component scarcity.
We believe this situation will be temporary will be temporary.
Operating expenses on a non-GAAP basis for the third quarter were $19 6 million.
Slightly better than our expectations.
Research and development expenses for the third quarter on a non-GAAP basis was $6 $6 million a decrease from $7 3 million in Q3 2020, mainly as a result of the utilization of vacation in August.
We expect these expenses to be higher in the next quarter until we reach tape out to all.
At the end of the CFO.
Sales and marketing expenses for the third quarter on a non-GAAP basis was $8 3 million an increase of $7 8 million in Q3 2020.
But still reflecting the reduced travel that has come with COVID-19.
We expect to gradually increase our sales and marketing expenses as rockets open post pandemic.
General and administrative expenses for the third quarter on a non-GAAP basis.
We have $4 6 million a slight decrease from four <unk> in Q3 2020.
Financial and other expenses for the third quarter on a non-GAAP basis were $2 $3 million, an increase from $1 2 million.
In Q3 2020.
Our tax expenses for the third quarter on a non-GAAP basis.
We were <unk> 3 million in line with our expectations.
Net profit on a non-GAAP basis for the third quarter was $1 4 million.
Represent representing <unk> <unk> earnings per diluted share on a non-GAAP basis.
Our inventory for the third quarter was $53 2 million.
Higher than the $51 9 million in Q2 of 2020 and represents the activities. We are undertaking was facing the global component shortage of prices.
We have been taking measures to optimize our inventory model to make sure we meet our commitments to our customers.
Our trade receivables are now with $109 9 million.
A couple of $108 5 million in Q3 2020.
Although these songs now stands at 140 days.
Net cash used in operating activities for the third quarter was $7 million.
Net cash used in investing activities for the third quarter was $2 $3 million.
Looking ahead, our strong bookings in Q3, along with the very healthy backlog reflect increasing business activity, mainly in North America, India and Europe.
I am happy to report today that we continue to be confident about our revenue growth in 2021 is still expected to be on the IR end of our annual revenue guidance, which is between $275.
$195 million.
That said the global component and shipping challenges still create fluctuations in our quarterly revenues and influence our gross margin.
Despite these challenges we expect our net income for the second half 2021 on a non-GAAP basis to be around breakeven.
With that I'll now open the call for your questions operator.
As a reminder, if you wish to ask a question you will need to raise your hand, using the zoom that copper mobile application and wait for your name to the Enel.
Our first call today will be from the line of George <unk> from Oppenheimer. George Please go ahead.
Yourself.
Okay withdrawn and Ron can you hear me.
Yes, Hi, Joe Hi, George Great. Thank you for taking my question.
Congrats on the solid execution and the ability to grow in a tough environment.
The outlook from a design win opportunity sounds very strong.
<unk> map that with your visibility into the supply chain, especially as you look into 2022, how confident are you at.
Being able to maintain at $75 million to $80 million revenue run rate and are you able to start projecting even higher revenue level on top of that next year.
So George first of all thanks for this question.
I think that in terms of the supply chain and primarily focusing on the cheap.
Industry.
There's a lot a lot of turbulence.
Based on our new strategy in terms of procuring components.
We believe that we will see some relaxation.
During 2022, probably towards the second part of it.
Because we change our strategy in terms of procurement of the critical items.
Said that.
Even.
This strategy is still dependent.
On the I would say.
Reliability of the projections of the vent doors in terms of timelines and lead times.
All in all it is our belief.
That the situation will start getting better gradually during 2022, primarily on the second half.
But what we have seen in the last two or three quarters, sorry, two or three months.
<unk> is showing that things could change dramatically for the good side and for the bedside.
In terms of top line.
Obviously.
When we.
Looking into the beginning of 2022, we will probably come with a nice backlog, obviously, depending on the bookings that wed be able to generate in Q4 and that give us some level of confidence to the start in terms of having our revenue.
This range that you were just suggesting.
Alright.
You mentioned the favorable mix from the gross margin standpoint, so I have a couple.
Couple of questions related to that one how much is the regional strength contributing to that are you starting to see much of a lift from the managed services.
Standpoint, and then when you think about the supply chain costs. If your mix normalizes a bit would you expect it to tick down in the next couple of quarters, given the high <unk>.
Managing the current environment.
So I will start by answering regarding the managed services and we will give along to give you the trends in terms of the impact of the supply chain costs.
Terms of managed services.
This is a relatively new initiative that we have embarked on.
And it takes time to get to what I would call a very significant.
Significant business.
<unk> that can really impact.
Our boats.
Margins.
And I.
I would say the recurring revenue piece.
So it's just the start but looking by the deal.
I definitely I am definitely very optimistic about our ability to generate higher gross margin than the current ones.
If this becomes a.
Indeed, a substantial.
Part of our business.
So just to complement the Georgia law, the wrong said, let.
Let me.
It's hard to build a bit more specifics so we.
We have sometimes it can be even within specific regions specific deals.
<unk> come with more a favorable mix if it is because of software because the specific product and we benefited from that both in the second quarter as well as in the third quarter.
So the supply chain components.
<unk> gross margin.
I think the impact is.
On both comes from.
Two.
Two vectors. The first vector is the bulk of the ability to better predict our revenue because in both components and shipping issues.
It's hard for us to predict because some of the components that are missing.
And we can tell when we will get it.
And ship it and then converting to revenue and same for the shipping industries booking today's FSL and be accurate on time is more challenging.
And it was and I would say in the past few years off at all the second piece.
From this challenge is the cost that is come with in both aspects so both components and shipping.
Yeah.
They come with the call on our gross margin if I need to quantify.
This error.
I would probably say the accumulation of both.
Both form expediting some of the components and securing them.
As well as to the shipping.
I would say around 3% to 4% impact on our gross margins.
We are doing a lot to mitigate some of this.
We improved our fee versus air and other initiatives.
We are taking but.
<unk>.
<unk> seen the overall impact roughly around 3% to 4% on our gross margin.
Great and just one more question for me from a overall opex standpoint.
Very good.
The third quarter.
But would you expect it to trend more towards the second quarter levels in the fourth quarter.
Pick back up and that may be stabilized at that level.
Sure.
So the short the short answer is yes, I would say both on the R&D and sales and marketing which are.
The mall heavy lifting in our Opex.
Q3 was one of a kind phenomena because a lot of people.
Okay and vacations in August and that impacts of course the cost.
Do expect.
Next quarters to come more in the run rate of overall $21 million and when we look at 2022.
This is probably going to be.
The trend that we're seeing just one caveat on that.
The shekel has been very very strong and we do have a policy.
To hedge.
And to hedge on the shekel, but at these levels.
This is going to probably say at this point and impact of next year as an initial look.
Anywhere around $2 million to $3 million on 2022.
I will just add to this point of the operating expenses.
Sure.
The current assumption is.
Based on the fact that we have not finalized our.
Our annual operational plan.
And these days we are working diligently.
To decide.
What is the priority for us for next year, whether it's in R&D, whether it's with a new business, whether it's with new products and so on and so forth.
So the jury is still out there, but I think that we have a story of many years of keeping our opex in our control and from that angle you can rest assure that this trend will continue.
Thank you very much.
Thank you George.
Our next question comes from the line of Max Disorder, Matt Go ahead Andy.
Yes. This is actually Alex Henderson can you hear me.
ILEC.
Very well thanks Glenn.
Matt's name was announced.
[laughter] well.
Hey.
It does.
The registration farming.
Okay.
So a couple of questions for you, but I was hoping you could give us some characterization of the degree.
To which your book to Bill has run above the revenue lines over the course of this year.
And I think you said it was the seventh quarter in a row.
The book to Bill above one so.
How much have you built that backlog in kidney.
Can you characterize how much visibility that gives you too.
Achieving the level of revenues you had this year and next and the four year assuming supply constraints. So we're not an issue.
So first of all let's start by saying that we said that we had the four quarter not seven quarter.
In which our book to Bill was above one.
Generally speaking I don't want to start giving the exact percentages.
But the numbers all in all when you look at the accumulation of this.
Three or four all consecutive quarters.
<unk>.
A very significant NSA answer to George the question from a different angle.
Usually the big challenge for US is the start of the which is the first quarter I believe that subject to no big surprises in booking of Q4.
Q1.
It would probably be able to maintain the same level of.
Revenue more or less we are seeing in Q3.
And obviously the visibility is is good but it's not that our business model has changed so suddenly we have like a three quarter visibility I will just say that our backlog all in all.
Is that something that.
Provide us.
In an order of magnitude.
Two quarters, they had maybe slightly even more and in previous years. It was probably between.
One to one and a half quarters so thats.
That's the difference.
And then you made a comment about the tape out.
R&D for the fourth quarter can you quantify how large enough that is I assume it's a one quarter cost hit and then it falls back out in the first quarter. Once the tape out is completed can you give us some sizing on it.
So first of all Alex I think that the Paypal was delayed more than a quarter.
If I go back.
The overall delay this has come with a lot of free then is probably more close to <unk>.
And even when they were going to do the tape on financings is a wrong word comments Ed commented. This on the prepared remarks, we still need to do to protect utilization of.
The chipset.
And then two integrated into all the new products and this also will take some time so all in all.
The delay was around I will say one U.
The impact on the cost.
There is just maintaining.
Relatively high level of R&D, which which you see on the on their opex.
And the impact of it for the next year.
The tape outs is there going to be a final at the end of this year is yet to be determined that they are already comment on that because.
We will need and we're just looking at it now on the pace of 2022, and what are we are going to invest in other things in R&D that are worldwide. So this point of time, it's a little bit hard for me to comment how is it going to impact.
The level of R&D spending for the next year, just say Alex.
To add to run the answer in terms of cost.
Obviously developing a chip.
It's very costly, but this cost is spread over a couple of years.
And that would not make any change the tape out phase by itself.
He is not there generating significant additional cost for us.
Obviously the process after rate, which is the productivity <unk>.
In which we work hand in hand with the different.
Chip vendors.
During the packaging doing the evaluation boards and all this stuff is costly but.
As I said again, it's not a one time hit that we faced in this quarter or that quarter. It will either be part of our regular R&D expenditure or if the accounting.
<unk>.
Part of the.
R&D capitalization.
So just to be clear, you're saying that the fourth quarter of 2022 is when youre going to do the tape out as opposed to the fourth quarter of 'twenty one.
No what we're saying is as follows.
The tape out is a milestone where we basically finished.
All the tests, including the tests that are done by our chip vendor.
So that we can move to the next phase and product ties.
This was delayed.
And now.
We are on the process of productivity Asian.
Our cheap which is done by our chip vendor together with some subcontractors of Fam and that starts at the beginning of 2022.
So to be clear.
Year delay that you're citing.
Was.
In the rearview mirror that happened a year ago, yes, yes, not this is not a new delay that's happening now.
Alright.
Yes.
You're implying.
Delays happen, but it's not a delay it's new it's that happened well over a year ago, Colorado you are on schedule with the timeline around the fourth quarter of 'twenty, one and your product tithing at now and those costs are in the expectations in 'twenty, one or Q and in 'twenty two.
Yes, yes, okay that character exactly and unchanged.
Just one comment because I want to make sure everything is clear.
From our angle.
The delays are behind US now it's more of a process that is dependent on the chip vendors and subcontractors and due to the turbulence in this industry, even the timelines. We're getting today, we are taking them with a grain of salt.
Because of this turbulence.
But from our perspective, the majority of the effort to develop the cheap and to test it is behind us.
I understand and thank you very much for that clarification I thought you were saying you had an additional delay.
Could you talk through why you're unable to pass through the higher costs associated with your supply chain given most customers.
Yeah.
Turned from other companies have been willing to absorb that.
Because it's obviously not within the control of the individual companies and it's a broad industry wide problem and phenomenon.
Yeah.
So let's start by saying that I did not say explicitly that we cannot pass these costs.
And in fact, we have a few.
Discussions on ways.
To work with our customers so that they kind of participate in this time of pain.
The approach, which I'm, leading this company is first of all serve the customer make sure that you don't joppa dive here.
Rollout attempts as much as you can with all the things that are dependent on new and then when the customer fields.
Comfort core.
Comfortable and happy with your.
Performance than you can.
Easily or more easily come and have this discussion we're going to try that I can tell you that there is a lot of differences between industries.
And I can tell you that.
And it also.
It's also a matter of our culture is also a matter of particular policy of this vendor sorry. This operator that operator, and it's also a matter of what the other competitors in our industry are doing the bottom line is that we do have discussions with our.
Customers.
About sharing the pain with us.
Cannot give anything beyond that because at this point there is no I would say so to speak reliable projection I can give you based on the discussions we're having.
So just the lag.
Last question on the same lines the gross margins have been.
Bumping around 31% or so you've had a mix shift to India in particular in the current quarter.
Had very strong wins in EMEA and the U S. Those tended to be much higher margin more fully featured so should we anticipate the mix shift will actually shine through the margins or should we anticipate that.
The cost problems.
And the pass through.
Are there more dominant factors as we go out over the next two or three quarters.
At this point I would assume that the cost we are incurring to delivery on time, no matter what will be more dominant in.
This is why when looking at the second half of the year, we kind of toned down a bit.
Our expectations are.
Yet I think it's a temporary situation I believe that within a couple of quarters and I actually mentioned that too George if.
The lead times that are promised by our vendors are indeed slowed.
To speak.
Reliable.
They deliver to these lead times.
Think that.
Our cost to manage this.
Temporary situation will start going down and accordingly, we start seeing.
A better gross margin, but this will probably happen during 2022.
Alright, okay before thanks.
Sure. Thanks, Thank you.
Next question comes from the line of Rommel.
For capital.
Please go ahead Hello.
How are you.
Ireland.
Good morning can you hear me.
Yes, great. Thanks, Thanks for taking my question good morning. So.
Just over the long term as you look at Dovetailing on Alex's question on the pricing.
Or are there other things you can do.
Just over the long term from a supply chain standpoint, where they're sourcing from different partners or just to maybe diversify the risk that youre seeing today, obviously this might take some time and youre doing all the things you can.
Address the problems today, but just over the longer term.
Maybe some comments on how you think about that yeah basically there is a lot of the new initiatives.
Four.
Generally speaking for cost reduction of our products because we understand that this industry wants the best for the cheapest and yes, I know that there is some conflicting elements in those two.
Uh huh.
Exploration, but.
I think that the Ceragon is known for doing miracles and this is what we are doing now to be more serious.
First of all we are considering and deferring.
Different.
Manufacturing.
That will reduce our manufacturing costs significantly. This is one thing the other thing we're looking at some of it some of our products. What we believe will be the high runners for the years to come and going all the way even to look at the design of the product.
And change it to reduce our costs very significantly.
This will obviously take time, because it's more of a I would say.
Development work before being able to product time, but we even go that far.
To change the cost structure of our high runner products and I think that this will.
Be reflected grudge.
Gradually probably.
During 2020 to probably do towards our most significantly towards the second part of 2022 and beyond.
And just one follow up if I could you touched on India and the potential there for that market to eventually transition to <unk>.
Typically that market has been maybe a little lower margin than the U S.
Europe for you.
Is that a key margin driver potentially as that market transitions or is there something other other.
As the market transition to surprise you set a margin opportunity for you in India.
Where you are so strong.
Yes. Thanks.
India is.
<unk> is a major market for us.
And.
It's going to stay.
Okay.
The same.
I think that our advantage is that we know the Indian market very much.
And we usually can anticipate the price points.
And obviously.
One of the things we are trying to do is to look at what we believe will be the high runners for India.
<unk> is out there and make sure.
In this particular product we are doing the utmost effort.
To adjust our cost structure to the Indian market.
I know for effect, because I'm talking to these customers that the Indian market likes our product and technology very much and this is the most important thing that one of the business in previous years. When we just started the big journey with the 20 <unk> back in 2015 and 2014.
Our margins were very very low but over the years, we're able to reduce our costs significantly.
And have a much more significant margin.
And it is our intention to do the same we're going to fight for market share.
In the <unk> era, and I think that we are well positioned and even if the beginning we'll start with relatively lower margin. These story shows what with that with these volumes will be able to improve our margins at a very fast and continue with our strong correlation.
And ship with this market.
Great. Thank you very much.
Thank you art.
Our next call is from the line of Bryan Kipp <unk> from Alliance Global Partners. Please go ahead.
Thanks.
Hi, guys. Thanks for taking my questions.
Hi, Bryan Bryan just one Hello and.
You talked about just now youre lower opportunities to lower your costs, but you also mentioned earlier.
A change in your procurement strategy. So can you identify some of the key changes to help you work through the supply chain challenges.
Part of this strategy and how long before you expect to can have an impact on your procuring components.
So on their procurement strategy. The main change is basically.
Sure.
I would say the projection period.
Based on which we go out to procurement if in the past.
Our projection period was.
Just for the sake of the example was the nine months or six months projection, we have extended it to 15 months or 18 months projections now obviously.
We are doing that very very carefully because we don't want to get stuck with inventory that will become obsolete inventory of late and this is why we pick and choose the main components that are on the one hand critical and very difficult to obtain.
In this turbulent period, but at the same token.
We check that these components are for our high runners so the chances that we will get stuck with obsolete inventories are slim to none that's a major element the other thing that we're doing.
In components that were off so to speak is single source components, we are actually developing relationship with second source.
Sometimes it requires little changes.
That are not critical sometimes it doesn't even require any changes so that we're trying to reduce that.
The level of single sources as much as we can and this and the third one that is even longer term.
The new product clearance will have more and more common components. So that we have.
The commonality.
We'll create even a higher flexibility in terms of.
Delivery timelines and beyond that our new chip will take it once one once the further because with the new chip we put a lot of system elements into this new chip and that will reduce the number of components that we need to buy so it's a it's a very big strategic move.
Move.
And it has different ingredients some of them will pay out faster some of them will pay out in the longer term.
Great. Thank you.
We have no further questions.
Thank you all.
In the third quarter of 2021.
Not only enjoyed strong bookings and a healthy backlog. We also achieved concern considerable success in containing the impact of the unfolding challenges around us in different industries.
Looking beyond the operational challenges this turbulent period creates for us we see very high market traction that we expect to convert into growth and margin expansion in the mid and long term I look forward to update you updating you further on our <unk>.
<unk> core.
Thank you everyone and have a good day.
Yes.