Q4 2021 Inseego Corp Earnings Call
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Okay.
Hello, and welcome to CECO Corp's fourth quarter and full year 2021 financial results Conference call. Please note that today's event is being recorded all participants will be in a listen only mode should you need assistance. Please signal conference specialist by pressing the star key followed by zero.
After todays presentation, there will be an opportunity for analysts to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two.
On the call today are Dan Mondor, Chairman and CEO , Ashish Sharma, President and Bob <unk>, Chief Financial Officer.
And other members of the management team.
During this call non-GAAP financial measures will be discussed a reconciliation to the most directly comparable GAAP financial measures is included in the earnings release, which is available on the investors section of the company's website.
An audio replay of this call will also be archived there.
Please also be advised that todays discussion will contain forward looking statements. These forward looking statements are not historical facts, but rather are based on the company's current expectations and beliefs for a discussion on factors that could cause actual results to differ materially from expectations. Please refer to the risk factors described in our Form 10-K .
10-Q, and other SEC filings, which are available on our website.
Please also refer to the cautionary note.
Regarding forward looking statements section contained in today's press release.
I would now like to turn the call over to Dan Mondor, Chairman and CEO . Please go ahead.
Thanks for joining the call today.
2021 proved to be a transformative year for <unk> Segal.
The investments we have made have resulted in a remarkable year and pave the way for a very bright future.
We are better positioned today than we have ever been by nearly every measure.
I'd like to touch on the two most important takeaways for this call.
First we had a great quarter with revenue of $72 9 million up 15% sequentially when adjusting for the sale of <unk> Africa last summer.
We improved on almost all are important benchmarks, including <unk> revenue recurring software revenue and others.
We launched new products, one important new customers, both in North America and abroad and benefited from our supply chain investments over the last three years.
You'll hear the details from Ashish Bob on this and more.
The second is the announcement that ashish will be taking over as CEO and I will assume the role of executive chairman.
There are a couple of reasons that the board and I thought this was the right time to make this transition.
The company that I joined in 2017 was very different from where we are today.
We had essentially one large carrier customer a single hotspot product based on <unk> technology, underpinning everything and a balance sheet that needed fixing.
Today <unk> is an entirely different place with an entirely different future than we had five years ago and it is also not being singled just a year ago either.
The future of this company will be driven by multiple <unk> products, including importantly, our fixed wireless lineup sold increasingly enter the enterprise, whether alongside carriers or through distribution partners.
In single will be centered around five G. Low <unk> is proving to be resilient and a broad portfolio of software solutions driving recurring revenue.
Ashish who are recruited to join me here in the beginning has been the architect of our product and go to market strategy, including our industry, leading <unk> roadmap and global rollout.
We see <unk> mobile fixed wireless and software solutions for enterprise as our future instead of hardware devices sold to carriers.
I am immensely proud of all that we've accomplished in Segal, thanks to the hard work by many dedicated <unk> employees.
So with our business model clearly validated and our leadership in <unk>. This is the right time for Ashish to assume leadership of the company and preside over what I see is the single largest opportunity in <unk> history.
With that let me turn the call over to Ashish.
Thank you Dan I'm honored to be named the next CEO of <unk> and appreciate the confidence that Dan and the board have shown in me and they excited for the future for <unk> and hope to accomplish as much as the CEO as we did over the last five years.
We closed the year with an outstanding fourth quarter revenue was $72 9 million, which is sequential growth of 15% after adjusting for the sale of <unk>, South Africa, and 10% on an as reported basis. The stellar revenue performance reflects strong demand for our <unk>.
<unk> cloud portfolio across carrier and enterprise.
Our target markets, our business grew sequentially in each quarter of 2021, driven by a five <unk> and software solutions for.
For the full year <unk> revenue increased 132% year over year and grew quarter over quarter throughout 2021.
And together with cloud solutions grew 73% in the fourth quarter compared to the first quarter on a pro forma basis.
Importantly, we are making solid progress in our transformation into an enterprise company. Our <unk> pipeline has grown from 30 enterprise customers in early 2021, who over 200 and continues to grow at a rapid pace.
Our success with initial deployments and trials with global Fortune 500 companies points, the significant expansion opportunities in 2022.
It is important to note that <unk> has the unique capability to be adopted as primary van connectivity by enterprises.
This is in Stark contrast to <unk>, which was predominantly utilized as temporary backup via broadband service failures.
Makes a huge difference in how <unk> will be deployed and is the fundamental reason the enterprise <unk> addressable market is four times as large as our current carrier market.
In 2021, we launched a new family of <unk> <unk> solutions based on our leading high performing <unk> and kept expanding on our value added cloud delivered software portfolio, our <unk> enterprise solutions have higher software attach rates and higher gross.
Arjun then our carrier hotspot business, we grew our partner ecosystem by adding 79, New channel partners, including 39 internationally. These partners are critical and expanding our go to market reach to enterprises.
Our products are certified in several regions internationally and all three tier one carriers in the U S have certified our five <unk> family of products.
We expanded our strategic relationship with T mobile to encompass five enterprise fixed wireless access products on both our salaries and stock basis.
And I am pleased to say that in 2021 T mobile became our largest <unk> customer.
We continue our expansion internationally announcing our growing partnership with Vodafone, Qatar, which began offering our <unk> devices in Q4, and most recently, we announced our first <unk> launch in Saudi Arabia, Zain KSA, Dan as a member of one of the largest and most influential group.
Mobile network operators in the middle East with approximately 50 million subscribers.
Australia is another region, where we are expanding in Q4, we launched our five <unk> outdoor CPE with Tetra. In addition to the launch of all of our <unk> Mifi with Optus at the end of the third quarter.
We've also ramped up our activity in Washington, engaging with Congress cabinet departments and federal agencies that are shaping legislation funding and standards to accelerate security and trustworthy <unk> deployments. This includes our engagement with NTIA on its domestic implementation of the broad.
<unk> portion of the infrastructure Bill.
Thats partnering with departments and agencies on setting highest standards globally that protect critical and emerging technologies and infrastructure.
Such as lower participation in the U S and EU trade and technology Collinson. Moreover, we are working with ecommerce and state Department U S. XM Bank and U S International Development Finance Corporation, and U S. Embassy officials to help level, the playing field and promote our products and into.
National markets.
Looking ahead to 2022, we see the enterprise <unk> opportunity developing further and expect top and bottom line contribution from enterprise fixed wireless access to ramp as the year progresses.
This reinforces our robust outlook for 2022 of 25% year over year growth and free cash flow positive by year end.
Finally, given how much of a strategic asset. It is I wanted to talk about our current supply chain dynamics.
We've built an agile and flexible supply chain that has helped us avoid the major disruptions experienced by many of our competitors that said the dramatic cost and lead time increase in components and freight we experienced in 2021 did impact our gross margin this quarter.
Although we are starting to see some supply chain stabilization. We expect these conditions to persist throughout the year and our financial outlook for 2022 takes these challenges into consideration.
I'm, therefore confident in our ability to execute our plan for the year and believe our supply chain will remain a source of competitive advantage for a CEO .
Over the past year, we built a strong foundation to capitalize on the numerous opportunities enabled by <unk> I'd like to share our view on how these efforts will transform our business.
First we continue to drive ahead with latest enhancements in <unk> technology with support for <unk> stand alone <unk> and C band technologies, placing <unk> at the forefront of enabling the next wave of enterprise applications. These technologies expand our footprint of broadband services.
And provide carriers with the opportunity to bring out the best of their networks with Standalone carriers can separate broadband traffic from smartphone traffic.
We will offer a new dedicated service plans with Cvs and C band carriers can offer even more services to their enterprise customers.
And we successfully completed an <unk> five to <unk> 10 in one test with our devices on live networks in Europe , and North America.
And I am proud to say that five of our <unk> solutions are now certified or T. Mobile's <unk> Standalone network.
In 2021, we achieved several key performance milestones and that we believe validate our leadership in <unk>, most notably we help U S. Cellular achieve lug record setting long distance molybdate performance with a commercially available <unk> CPE that is greater than one gigabit sparse.
Second or a seven kilometer strange. This is just one example of how we demonstrate outstanding performance with solutions for our global carrier customers. We are delivering on the promise to bring out the best of our customers' networks.
Although we are still in the early innings of <unk> adoption. We are encouraged by the pace at which our products are garnering acceptance across the globe and the air expanding list of used cases being tested and deployed in.
In the Middle East, which is one of the best five G develop regions in the world with over 9 million five users and 905 <unk> users, we expanded our relationship with Vodafone Qatar.
And they are now selling our <unk> solutions. They also recently announced that Zain KSA is now selling our <unk>, mifi and 2000 and Saudi Arabia.
In addition to the Middle East, we also shipped <unk> to led products to Telstra in Australia to support the launch in the fourth quarter.
Domestically our <unk> portfolio is now certified for use with all <unk> carriers in the U S.
Perhaps the most important development over the past year, but our expanded relationship with T mobile for business, which significantly advances our five DFW efforts.
As we mentioned last quarter, we have a number of additional five DFW air products certified by T. Mobile and we are incredibly excited about the pipeline of opportunities we are building with them.
Our expanded go to market strategy with both channel partners and carriers as opening up numerous opportunities with enterprise customers that are testing of a cloud managed <unk> solutions, our commitment to designing the most robust high performance solutions on the market is paying off.
Outperforming the competition and numerous instances both in speed and importantly sustained <unk> connectivity.
Early use cases are for primary and fill our wireless Lan connectivity. Moreover, they're laying the foundation for future digital transformation efforts and adopting <unk> as the enabling technology and increasingly we expect these customers to use our cloud management solutions to simplify their it operations.
Yeah.
We are seeing strong demand for our <unk> solutions in many verticals.
We provide a few recent examples of our expanded customer use cases, and the retail logistics manufacturing and construction sectors.
In the retail sector, we are working with several fortune 500 retailers, including a leading grocery chain and apparel and specialty equipment retailer and a discount fashion and home goods retailer. Each of these companies were searching for a reliable cloud managed <unk> solution because in many areas cable and fiber are either too costly.
Not feasible or unreliable cumulatively they represent thousands of locations in North America.
And the logistics vertical one of the top 10 food distributors in the U S has been testing of our five G. Cloud managed solutions. In addition, we are expanding the scope of the Dod smartly a house project, we've been working closely with G&A wireless on that initiative and our partnership is now gaining momentum as we look to provide.
Cloud managed connectivity.
Government private network installations and manufacturing customers are testing, our <unk> solutions to power applications that are essential to their digital transformation strategies.
A leading automotive manufacturer in Europe is preparing to test our <unk>.
A fixed wireless solution for their own industry for that are initiatives, which requires highly secure ultra reliable low latency connections.
Some use cases that they're investigating of large scale that trucking of machines economist transport systems robot robot communications and augmented reality applications.
In the construction sector. Our solutions was recently selected by one of the largest self storage companies in the United Kingdom as the primary connectivity technology for new locations. We have five G proved to be most cost effective quick to deploy option.
In addition to commercial and residential construction, we're looking to bring the power of <unk> to the heavy civil construction vertical we are working with two large construction and engineering companies.
One company in the U S Pacific Northwest has integrated our <unk> solutions to monitor onsite deliveries and inventory and one of the Uk's largest construction and engineering companies is testing our <unk> wireless edge solutions to power traffic monitoring and video AI in an effort to make roads.
Safer moving forward our focus is on both growing the number of enterprise trials underway and converting these opportunities to broader deployment. We also expect <unk> revenue from carriers to build as the year progresses as several key partners are in the late stages of deploying new data planned packages and pricing.
As our revenues from <unk> ramp, we believe our business model will be platform due to the higher margins on our enterprise grade solutions. We are no longer deemed <unk> or we are the leader in enterprise <unk> and with that I would like to turn the call over to Bob.
Thank you Ashish, let me now review the results of our fourth quarter fiscal 2021 .
Q4 revenue was $72 9 million up 15% from the prior quarter after adjusting for the divestiture of <unk>, South Africa, and 10% on an as reported basis, our strong results reflect growing demand for our <unk> mobile broadband and fixed wireless products and continued market momentum.
Over our cloud solutions.
Our next generation solutions, which are comprised of Iot devices and all of our cloud software assets increased 29% over Q4 fiscal 2020 and represents 58% of total revenue in this quarter.
Full year fiscal 2021, five tube device revenue was up 132% over 2020.
Fourth quarter, Iot and mobile solution revenue was $66 2 billion up 16% from Q3. The strong performance was fueled by improving demand for our mobile hotspots from our carrier partners, who continue to expand their <unk> footprint.
Footprint globally.
We also benefited from continued demand for our advanced LTE hotspots.
Although sell through of these products remains relatively stable looking forward, we anticipate greater variability in <unk> demand from our carriers all of our partners shift their focus to driving adoption of <unk> devices.
Enterprise SaaS solutions revenue was $6 $7 million, which was flat on a sequential basis, excluding <unk> South Africa. We are currently integrating and transforming all of our software assets into a new cloud driven <unk>, enabling solutions suite.
We will provide more information in the coming quarters, but needless to say, we believe this will be an important growth driver in the coming years.
Gross margin for the Iot and mobile business was 22, 2% down from 24, 4% last quarter the.
The gross margin decline reflects a product mix shift of LTE device sales and higher freight costs.
As Ashish discussed earlier, while challenges continue in the supply chain and logistics, we have seen some stabilization in recent months in these areas.
That said, we expect Iot and mobile gross margin will improve in Q1.
We see potential for significant gross margin expansion over the long term as our enterprise initiatives and sales of next generation solutions will comprise a greater mix of our revenue.
Our Q4 operating expenses totaled $25 6 million down slightly from $25 8 million in Q3, despite lower levels of capitalized R&D.
We expect total Opex will not increase materially from these levels and expect to see improved operating leverage in 2022 as revenue growth accelerates.
Q4, net loss was $8 million or eight cents a share in line with the prior quarter, we reported an EBITDA loss of $1 2 million compared to a $773000 loss in Q3. The sequential decline was largely due to the sale of <unk>, South Africa and the impact.
The device mix of freight cost discussed earlier.
For additional details on our non-GAAP or adjusted EBITDA results. Please refer to the reconciliation tables in our press release.
Cash cash equivalents and restricted cash at the end of Q4 was $49 8 million.
Our outstanding convertible debt remained unchanged at $157 9 million net of the impact from fair value adjustment and amortization expenses related to debt discount and issuance costs.
Turning to 2022, we are reaffirming our outlook for pro forma revenue growth of 25% adjusted for the divestiture of <unk>, South Africa, and we are still targeting the second half of 2022 to turn free cash flow positive.
Between <unk> technology leadership strong demand for our next generation products and our growing enterprise pipeline, we remain confident that the company is positioned well both strategically and financially.
From a timing perspective, we expect some normal seasonality into Q1, although we expect to see growth from the prior year normalized for the divestiture of <unk> South Africa.
Beyond Q1, we expect our revenue to ramp driven by increased adoption of our cloud solutions and carrier and enterprise markets.
As our product mix gradually shifts toward higher end <unk> enterprise solutions, we expect to see benefits in gross margin. Later this year in the meantime, we are being conservative in assuming the challenging supply chain and logistics environment remains throughout 2022.
We plan to remain disciplined with respect to our operating expenses, which will support improved operating leverage in 2022 with that let me turn it back to Ashish for his closing comments.
Thank you Bob before we turn it over to Q&A I want to reiterate how excited I am about the remarkable transformation and <unk> and <unk> business as Dan said in the beginning not that long ago, we were dependent on selling one product to one large carrier that either the <unk>.
Investments, we've made have allowed us to enter 2022 as the leader in helping carriers and enterprises embrace the <unk> future, we've expanded our products beyond a single <unk> mobile hotspot.
<unk> five <unk> mobile and fixed wireless portfolio of enterprise device to cloud solutions.
Expanding our go to market with channel partners and multiple regions and are engaging with enterprises to help them succeed in their <unk> transformation.
Demand continues to be strong and as 2021 demonstrated we have an agile and flexible supply chain that has delivered despite the challenging environment.
That along with the significant operating leverage in our model makes me confident in saying 2022 will be the breakout <unk> Segal. Thank you, let's go to Q&A.
Thank you.
We'll now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
If youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And the first question will come from Scott Searle with Roth Capital. Please go ahead, hey, good afternoon. Thanks for taking my questions Dan Ashish Congrats on new roles.
Thank you Kelly just maybe quickly to dive in on the gross margin front, Bob I'm wondering if you could provide a little bit more color in terms of.
In terms of the gross margins being down how much of thats coming from component freight or otherwise.
And then as we look forward into 2020 to typical seasonality in the first quarter I mean, how.
How much gross margin pressure do you expect to persist on mobile and Iot solutions in the first half and where do you think we exit the year in 2022.
Hey, Scott good questions, Let me, let me start with this.
We I think overarching and important point is we don't expect Q4.
To reflect our margin expectations for all of 'twenty two.
So we faced.
Three major headwinds one was basically by divesting.
Of our South African business think of that as about.
And half of margin compression because we did have the benefit of that in Q3 sequentially.
Second we did have.
Just fix and freight cost.
Surprise, something we chatted about in the past.
Probably to a similar impact.
But we do see stabilization there and we're not expecting worsening of that and also one of the things we took advantage of his education opportunity.
We managed our supply chain of our capacity quite well and we are an opportunistic.
The situation, where we can take advantage of this opportunity.
And the mix at a slightly lower margin still profitable store contributor and that also kind of affected Q4.
Each of those three things, we do not see continuing as a drag so we're not giving outlook.
For the specific line of gross margin.
This coming year as of yet, but we think Q4 is not the barometer or the run rate that youll expect to see from us. So we're feeling and we also have some tailwind et cetera barging.
So your enterprise solution kind of growing a mix of importance that will add.
Two our margin mix.
Software also as we kind of buildup and Scott as you know most of our software is engaged in a 36 small SaaS type of model. So that is a gentle ramp up including the mix of our overall revenue stack and that will also improve the mix and solid gross margin.
So with that that's the.
That summarizes the guidance or the outlook, we're ready to provide right now, but I think during the year, we're going to articulate maybe a bit deeper, but I don't want people to miss.
Alkylate or must assume what's going on here. So we do see an upward trend in margin throughout this coming year perfect. Bob that's very helpful. Ashish if I could.
Turn to the outlook and the guidance reaffirming the 25% adjusted growth is encouraging it really implies that.
Continued inflection in the back half of the year, you talked about the pipeline of opportunities growing from 30 12 months ago to over 200, I think the number was you put out there I was wondering if you could talk a little bit more about the pipeline of deals the size of the deals the adoption cycle. The sales cycle, there and what gives you the confidence really in terms of your <unk>.
<unk> ability, where we stand today that we get to that inflection point in the second half of this year, thanks, and congrats again.
Yeah. Thanks, Scott So let me provide some comments there right. So first off those.
Those pipeline deals had been already engaged with all of last year right. So many of those up beyond the initial stage of just getting the enhancement of product all of those customers have not quite the products, allowing in there.
Theyre going through their internal decision, making.
How to rollout fiber.
From a couple of places too.
Hundreds of thousands of locations in some cases so.
<unk> that the end customer it goes too on how to stretch there.
Legacy van from either <unk> or <unk>.
<unk>.
Fixed technologies that we're using in the past two five years now and we're super optimistic on how that processes going on right now and in most cases.
Good to know and the rest of the gang here to note that.
Working with large carrier partners and pretty much all of these teams. So we're super optimistic off.
That journey takes us and just a lot of excitement from the customer base on these opportunities up to use <unk> for these use cases.
Great. Thank you.
Thank you. The next question will come from Mike Walkley with Canaccord Genuity. Please go ahead.
Great. Thanks for taking my question Dan.
Congrats complex inter ashish.
Ashish I also my congrats on the promotion well deserved.
Thank you all right. Thank you.
My first question just kind of building off of Scott's part first question that I don't think you answered the second part just thinking about seasonality for the year with all of the pipeline of deals is that you kind of a normal sequentially lower Q1 off of Q4, and then a steady build or is there more like an inflection into that second half.
Based on the timing of some of the deals combined with maybe supply chain improving.
Okay.
Hey, Mike.
Sure, Yes, so listen we've got multiple growth drivers toward 2022, right. So we've got Taylor.
Our mobile business, which is which has been on growth path so that.
On its own project.
More customers scaled lending as we just launched with Zain recently.
I'll ask a blip that maybe signed up new ethylene carriers globally in multiple markets and then <unk> got the enterprise pipeline, which is what Scott was asking about so thats on a separate trajectory we're working both.
Carrier customers in many cases.
Settlement program, plus we are working through a distribution channel in multiple markets in Australia Middle East North America. So that's on its own trajectory. In addition to that we also are growing significantly in our software business. So you take a look at all of those growth drivers.
So it's less about the seasonality of one of those its all about the mix of how we have modeled them together, 40% to 25% growth.
For the year.
Okay.
That's fair.
Trying to delve a little deeper in those off a smaller base on an as adjusted basis does software growth faster than hardware to contribute to margins exiting the year or are they kind of grow in parallel any comments on those two different business growth rate.
Yes.
So in parallel.
Tyler, let me SV as a shipping.
More <unk> product to.
To the enterprise the attach rates are high.
And that part of the business is growing well start to contribute more as the time goes goes wrong because the software recognition.
For a lot of your cash rates works that way.
But yes, it's all happening in parallel.
Okay. Thanks.
Then Bob a question for me is as software ramps you had the sale of <unk>. So you get kind of that negative effect on revenue, but a software ramps where does that gross margin get to over time as you ramp that up.
Alright.
Mike.
We have internally.
Have not decided to put a specific number rather than provide direction. So don't want to frustrate you or anyone in the audience with that we may come out with additional forms of outlook, but directionally.
Yes.
We see a good solid contribution we do believe five Mg.
Especially in the enterprise higher gross margin as that grows and mix that will bring up the gross margin.
Software as we as we continue with the.
<unk> 36 per sale ramp that'll become a bigger and bigger mix over time and all of that SaaS follows a more traditional SaaS type of gross margin so that improves the mix as well so.
Perhaps later in the year will maybe get a little bit more granular, but we're not ready to kind of make that commitment, but the direction is up.
Thank you and the next question will come from Jonathan memory with Cowen. Please go ahead.
Hey, good afternoon, and congrats congrats Dan and his age.
I mean for Lance.
So my first question.
So I see that T. Mobile is now the largest customer in terms of.
Just trying to get a feel.
How much of the <unk> revenue.
T mobile account for.
Buffy percentages perhaps.
Yeah.
So.
We have not broken that out publicly.
Okay.
Alright.
<unk>.
Okay.
So on the third quarter.
<unk> accounted for 42% revenue cloud for 'twenty.
Now in the fourth quarter, you mentioned that both segments both products now represent 68% could.
Could you maybe give us a little bit more.
Detailing to top that 58% breaks out four for.
<unk> crowd.
Yes.
Yes, Jonathan I can add to that so so that's about.
About 19 close to say, 20% of that is software revenue and the rest is <unk>, which is close to $39 40%.
And it has slightly declined from a percentage perspective, because we shipped more <unk> product in Q4 than we did in Q3, so <unk> actually didn't decline <unk> with smaller and that was because.
Even though <unk> is.
<unk> are running really steady in the market, but we had some seasonality in the inventory stocked up in Q4 that caused the <unk> revenue to.
It could be more than Q3.
Okay.
The next one just two more on my end.
The goldfields stance that by the second half of 'twenty two.
That will be positive in terms of.
Free cash flow.
Does that imply that maybe by the end of 'twenty two will the.
Companies sort of breakeven or is it like a good possibility that it will and 22 on a positive note that in terms of free cash flow.
The outlook.
Guidance.
<unk>.
That said when we exit this year.
We will be cash flow positive products getting bigger.
Okay, just second half, Okay, and my last one.
What are you expecting in terms of Capex for 'twenty two.
I think capex would parallel our opex. So we're not we're not presuming any growth.
We kind of look at the place almost like a fixed cost absorption type of model, where we think we have both capacity and the field capacity in our <unk>.
Lonestar teams, both go to market and R&D teams and so on to grow.
At a faster rate at a much higher level of revenue so.
I think the best way to assume as we are not going to grow the cost and the capex lines, we're going to grow revenue.
Got it okay. Thank you.
Okay.
And again, if you have a question. Please press Star then one.
The next question will be from Mike Latimore with Northland Capital markets. Please go ahead.
Yes, Thank you and congrats Ashish and Dan.
Thanks, Mike Thanks, Amit.
Sure.
Just on the enterprise solutions, you highlighted that as a gross margin tailwind I guess can you provide a little more.
Color as to.
What are you thinking enterprise solutions gets to this year or is it sort of mid single digit percent of revenue or just some ballpark. There and then you also highlighted that I think a few carrier customers are in late stages of doing data plans for these products, maybe just one more color on that would be great.
Yes, Mike Ashish I can take that so the first question about enterprise pipeline and deep bite that was the discussion earlier that.
We're still sort of in the early stages of the customers are starting to deploy.
<unk> connectivity solutions at scale.
So that is on.
From a ramp perspective ahead of us and so how that ramps up.
We're monitoring and working with closely with our customers.
And we are seeing great performance from the <unk> networks from.
From all the carriers to work with here and the focus region. So also looking positive and so once those.
Scalable deployment start to convert will start to see that is becoming a meaningful part of our revenue in Europe later in the year. So that's one and second question you asked about the <unk> plan and packages. So so that is still a work in progress and Mike.
<unk> seen that our carrier partners are getting extremely creative.
It turned out the coverage in that net <unk> on the type of plans that would then drive a lot of these enterprise offerings in the marketplace.
So I don't want to speak on behalf of a second carrier, but bunch of it is out in the news that you can read but that's that's all happening in parallel as we are making this push by the.
The market.
Makes sense. Thanks.
And can you talk a little bit about your R&D levels are.
It sounds like you're going to hold these roughly constant throughout the year or how should we think about just the R&D line. This year.
Yes.
I think the best way to think about it is.
Anticipate R&D to be relatively flat.
In some situations, we have already pre invested in some R&D that will get us to the outlook that we've talked about and beyond so we're not anticipating.
Growth on R&D, Mike.
The other thing as you know.
R&D is also.
When it hits the P&L I should say, it's reflective of what gets capitalized in period as well as kind of prior period spending that is amortized each of those are stratified by the type of projects. So sometimes there is quarter to quarter and so now that are not aligned with cash.
It's more of how it translates to the P&L.
But overall, if you're thinking about spending and much of this well along with the P&L.
Flat to absorbing that and then growing the top line off the back of the RMB, we've already put in place.
Okay got it.
And then just lastly, I guess on the C track business.
Now that we're sort of coming out of Covid is that theyre going to be a tailwind to this business or how should we think about that.
Yeah.
Yes, so Mike.
That's what we had mentioned earlier in the script is.
It has come back in.
And I can add.
We are taking that business as we are integrating that business with our <unk> business and we see great use case and as we can deliver.
For the technology <unk> got there.
As a standalone business there is growth in that business.
We had some.
We had some slowdown because of Covid last year and year before but things are back on track, but there is a bigger vision that we've got on taking that business and we'll talk about that in the future earnings calls.
Alright sounds good.
Best of luck.
Thank you.
Ladies and gentlemen, this concludes our question and answer session I would like to turn the conference back over to Ashish Sharma for any closing remarks.
Thank you operator, and thanks very much everyone for joining the call today and for the great questions. I also want to thank our customers our partners and our exceptional employees for another great quarter and remarkable year. Thanks again.
And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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