Q4 2021 Airspan Networks Holdings Inc Earnings Call
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[music].
Speaker Change: Conference Center, may I have your name, please? Where's your name, David? Your last name, Brown?
Corporate Centre me every name please.
Okay. This is for air span.
I'll join Eater.
Thanks, Glenn on.
Speaker Change: On the fixed wireless side, we are particularly proud of our award-winning deployment in Amarillo, Texas.
On the fixed wireless side, we are particularly proud of our award winning deployment in Amarillo, Texas.
Speaker Change: This is a prime example of the opportunity in this space, particularly given the billions of dollars allocated to federal and municipal domestic broadband programs just beginning to be spent.
This is a prime example of the opportunity in this space, particularly given the billions of dollars allocated to federal and municipal domestic broadband programs just beginning to be spent.
As an example of how we are innovating to better address the broadband stimulus opportunity. We have introduced the new <unk> product line, which allows us to address projects previously reserved for fiber based rollouts as we offer gigabit speeds at much lower cost than a full fiber build.
Speaker Change: As an example of how we are innovating to better address the broadband stimulus opportunity, we have introduced the new A6C6 product
Speaker Change: which allows us to address projects previously reserved for fiber-based rollouts, as we offer gigabit speeds at much lower cost than a full fiber bill.
Speaker Change: In private networks, we ended 2021 having executed over 80 private network deployments, including our award-winning 5G network-in-a-box product.
And private networks, we ended 2021, having executed over 80 private network deployments, including our award winning <unk> network in a box product.
Speaker Change: We see a meaningful acceleration of growth in this area as evidenced by our recently announced partnerships with industry leaders mentioned above, as well as a substantial number of systems integrators and value added resellers active in the enterprise upgrade cycle to private 5G, which is a natural next step for millions of Wi-Fi enabled customers.
We see a meaningful acceleration of growth in this area as evidenced by our recently announced partnerships with industry leaders mentioned above as well as a substantial number of systems integrators and value added resellers active in the enterprise upgrade cycle to private five G, which is a natural next step for millions of Wi Fi enabled customers.
Speaker Change: We focus across both indoor and outdoor private 5G deployments. One outdoor private network buildout we are particularly excited about is with Air to Ground Communications Provider GOGO.
We focus across both indoor and outdoor private five G deployment, one outdoor private network build out we are particularly excited about is with air to ground communications provider Gogo.
Speaker Change: We supply the radio hardware, software, and air interfaces for what we believe will be the largest private network in the world, covering North America.
We supply the radio hardware software and air interfaces for what we believe will be the largest private network in the world covering North America.
Speaker Change: In the fourth quarter, Gogo announced they had completed their 5G air-to-ground test test-bed.
In the fourth quarter Gogo announced they have completed their five G air to ground Testbed.
Speaker Change: This is comprised of seven sites out of a 150-tower network expected to be completed later this year as the foundation of the deployment of their nationwide 5G network. Stay tuned for more on this important relation.
This is comprised of seven sites out of a 150 tower network expected to be completed later this year as the foundation of the deployment of their nationwide <unk> network stay.
Stay tuned for more on this important relationship.
Please turn to slide 11.
While the industry secular tailwind for five G are driving the largest capex cycle in decades, western governments and the politicization of five G have acted as strong accelerators as the adoption and growth of these technologies.
Speaker Change: While the industry's secular tailwinds for 5G are driving the largest CapEx cycle in decades, Western governments and the politicization of 5G have acted as strong accelerators of the adoption and growth of these technologies.
Speaker Change: These accelerators include direct funding to bridge the digital divide, geopolitical tailwinds from Western governments dismissal of law way equipment in their networks, and the resulting push for supply chain diversity away from the large legacy infrastructure provider.
These accelerators include direct funding to bridge the digital divide G.
Geopolitical tailwind from western governments dismissal of Huawei equipment in their networks, and the resulting push for supply chain diversity away from the large legacy infrastructure providers.
Wireless networks have become domestic national priorities and solving the digital divide, particularly in rural domestic areas and underserved urban districts.
Speaker Change: Wireless networks have become the national priorities in solving the digital divide, particularly in rural domestic areas and underserved urban districts.
In the United States $15 billion of previously funded initiatives are just first being bid and allocate while the recently passed infrastructure Bill provides an additional 65 billion for broadband deployment nationwide.
Speaker Change: In the United States, $15 billion of previously funded initiatives are just first being bid and allocated, while the recently passed infrastructure bill provides an additional $65 billion for broadband deployment nationwide.
Speaker Change: Being positioned as the only U.S. integrated full radio access company gives us a meaningful advantage in our ability to compete successfully for these projects.
Being positioned as the only U S.
Integrated full radio access company gives us a meaningful advantage in our ability to compete successfully for these projects.
Speaker Change: And these government initiatives are not limited to the United States alone. We expect billions of dollars of programs, some already underway in Germany and the United Kingdom as an example, with more to come around the world. Please sign up.
And these government initiatives are not limited to the United States alone.
We expect billions of dollars of programs some already underway in Germany, and the United Kingdom as an example, with more to come around the world.
Please.
Turn to slide 12.
As we look into the next few years, we translate the Tam in the tens of billions of dollars into our project funnel of 3 billion across customer types.
Speaker Change: As we look into the next few years, we translate the TAM into tens of billions of dollars into a project funnel of three billion across customer types.
Speaker Change: These are customer sectors we're currently engaged with and where we have a solid plan to roll out our product.
These are customer sectors were currently engaged with and where we have a solid plan to rollout our products.
Speaker Change: As we transition into the financial, this is a great point to turn over to David Brant, Airspan CFO .
As we transition into the financial this is a great point to turn it over to David brand Air span CFO .
Thanks, Eric Please turn to slide 14.
2021, with an exciting new product innovation and revenue growth for ASLAN.
David Brant: 2021 was an exciting year of product innovation and revenue growth for us.
David Brant: For the full year, we had revenue of $177 million, up 3% over $20 million.
For the full year, we had revenue of $177 million up 3% over 2020 products in software license revenue for the year was up 13% we.
David Brant: product and software license revenue for the year was up 13%.
David Brant: We had gross margins of 44% up dramatically from 2018 to 32% as we broaden our customer base and type and continue to add more software content into our products and products.
We had gross margins of 44% up dramatically from 2000, Eighteen's, 32% as you broaden our customer base and tight and continue to add more software content into our products and product mix.
David Brant: Gross margins declined from 2020's 49% due to a lower percentage of higher margin maintenance and support revenues and the effects of supply chains shorted.
Gross margins declined from 2020, 49% due to a lower percentage of higher margin maintenance and support revenues and the effects of supply chain shortages.
Gross profit for 2021 was $78 million down from $84 million in the prior year.
David Brant: Gross profit for 2021 was $78 million, down from $84 million in the prior year.
Turning to slide 15.
David Brant: We saw revenue for the fourth quarter of £50.4 million up 29% sequentially from the third quarter and down 38% from the same period last year.
We saw revenue for the fourth quarter of $50 4 million up 29% sequentially from the third quarter and down 38% from the same period last year.
David Brant: We're encouraged by strong revenue from existing customers, and expanding revenue in fixed wireless access, closing a record year.
Were encouraged by strong revenue from existing customers and expanding revenue and fixed wireless access closing a record here.
David Brant: In addition, the fourth quarter saw FCC approval of our Airstrand 2200 CBRS small cell, our first 5G solution for cable operators, and the start of the deployment with a large cable
In addition, the fourth quarter saw FCC approval of our <unk> 2200, <unk> small cell our first five solution for cable operators and the startup of deployment with a large cable customer.
Gross profit of $20 7 million was up 21% compared to last quarter, although down 44% over last year's fourth quarter.
David Brant: The gross profit of 20.7 million was up 21% compared to last quarter, although down 44% over last year's
David Brant: Fourth quarter net loss was $19.6 million compared to a net loss of $27 million last quarter and net income of $8.3 million in the fourth quarter of 2020.
Fourth quarter net loss was $19 6 million compared to a net loss of 27 million last quarter.
Net income of $8 3 million in the fourth quarter of 2020.
David Brant: Adjusted EBITDA was a loss of £8 million compared to a loss of £10.4 million last quarter and income of £12.7 million in the year ago period.
Adjusted EBITDA was a loss of $8 million compared to a loss of $10 4 million last quarter and income of $12 7 million in the year ago period.
Gross margin was 41, 1% down from 44% last quarter and 45, 8% in last year's fourth quarter with the majority of the variance due to supply chain pressures.
David Brant: Gross Margin was 41.1% down from 44% last quarter and 45.8% in last year's fourth quarter, with the majority of the variance due to supply.
David Brant: Demand for our products is strong, though supply chain challenges are still leading to increasingly long-lived shortages.
Demand for our products is strong very supply chain challenges are still leading to increasingly long lead times.
David Brant: We continue to work hard to mitigate these challenges by finding alternative components, instituting multiple technological design changes, and working
We continue to work hard to mitigate these challenges by finding alternative components into choosing multiple technology technological design changes and working closely with our partners.
In this environment supply chain pressures centered primarily around components availability highest spot purchase prices for hardware components and increased shipping costs.
David Brant: In this environment, supply chain pressures center primarily around components availability, higher spot purchase prices for hardware components, and increased
David Brant: While we have begun to pass some of these expenses on to customers through price increases, we expect the increased cost impact
While we have begun to pass some of these expenses onto customers through price increases we expect the increased cost impact of components and freight could do continue.
David Brant: We anticipate such supply chain challenges to extend through 2022.
We anticipate such supply chain challenges to extend through 2022.
While encouraged for our near term business prospects, we are cognizant of the supply chain environment.
David Brant: We expect Q122 revenue of approximately $38 million at a 32% gross margin due to significant supply chain costs and challenges from COVID-19 restrictions.
We expect Q1 'twenty two revenue of approximately $38 million at a 32% gross margin due to significant supply chain costs and challenges from COVID-19 restrictions in Asia.
David Brant: We expect Q2 2022 revenue of approximately £46-48 million, with a material improvement in gross margins from the first quarter.
We expect Q2, 'twenty two revenue of approximately $46 million to $48 million with a material improvement in gross margins from the first quarter.
For the full year, we anticipate topline growth of between 10% and 15%.
David Brant: For the full year, we anticipate top-line growth of between 10 and 50%.
<unk> ended the year with $63 million of cash while the fourth quarter represented a use of $22 million of cash approximately 14 million was for working capital requirements.
David Brant: Airspan ended the year with £63 million of cash, while the fourth quarter represented the use of £22 million of cash, approximately £14 million was for working capital requirements. With that, Eric, Glenn and I will open it up to questions.
With that Eric Glen and I will open it up to your questions operator, please prompt for questions.
Eric Glen: Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad.
Thank you we will now be conducting a question and answer session. You would like to ask a question. Please press star one on your telephone keypad.
Speaker Change: A confirmation tone will indicate your line is in the question queue.
Confirmation tone will indicate your line is in the question queue.
Speaker Change: You may press star two if you would like to remove your question from the queue.
Press Star two if you would like to remove your question from the queue.
Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we...
For participants using speaker equipment may be necessary to pick up your handset before pressing the star keys, one moment. Please while we poll for your questions.
Speaker Change: Our first questions come from the line of Chris Howe with Barrington Research. Please proceed with your questions. Good morning, Eric. Good morning.
Our first questions come from the line of Chris Howe with Barrington Research. Please proceed with your questions.
Good morning, Eric Good morning, David.
Good morning, Chris.
Hi, good morning, Dave.
Chris Howe: David, I wanted to follow up quickly here on some of your comments around the guidance. You mentioned the Q1 guide, also Q2 revenue with the material improvement and gross margin, 10 to 15% for the year.
David I wanted to follow up quickly here on some of your comments around the guidance.
You mentioned the Q1 guide also Q2 revenue.
With the material improvement in gross margin, 10% to 15% for the year.
Chris Howe: How should we think about the second half, particularly as it relates to your comments around the supply chain challenges? They'll continue to apply some pressure to an extent, but do you anticipate the second half, hopefully, to show some improvement within different areas of the supply chain?
How should we think about this.
The second half, particularly as it relates to your comments around the supply chain challenges. So they will continue to apply some pressure to an extent.
But do you anticipate the second half.
Hopefully.
To show some improvement within different areas of the supply chain challenges.
Speaker Change: Chris, yes, I definitely expect the second half to be stronger in the margin profile than the first half. Q1 was particularly difficult with a number of
And Chris Yes, definitely expect the second half to be stronger in the margin profile than the than the first half and Q Q1 was particularly difficult.
With a number of.
Intense shipping costs that we that we had to suffer in order to get to get the products to our customers.
Speaker Change: intense shipping costs that we had to suffer in order to get the products to our customers on the times when they needed it. I see that we were a little back-ended in the Q1 as well, and I see that Q2 and onwards we will be a little more spread out across the quarters, so that will allow us to increase our margin.
On the times when they needed it.
I see that.
We were a little back ended in Q1 as well I see that Q2 and onwards, we will be.
A little more spread out across the across the quarters. So.
That will allow us to.
Increase our margin profile as we go out to the second half of the year.
Okay.
Speaker Change: Okay, and a follow-up question to that. Can you comment on your level of confidence in the current inventory in the channel? And how should we look at your capital allocation priorities throughout the business as we move through the year?
Follow up question to that can you comment on your level of confidence in the current inventory in the channel and how should we look at.
Our capital allocation priorities throughout the business as.
As we move through the year.
Speaker Change: Well, we work with Foxconn as a Foxconn and Cape as our manufacturing subcontractors and they are active in resourcing components for us. We think that that will help us.
Well, we work with we worked with Foxconn.
As our folks common kpis are manufacturing subcontractors and they are active in.
Resourcing components for us.
We think that said that will help us.
Speaker Change: in the second half of the year. Inventories, we are buying components ahead of some of the products that we're buying. So I expect that inventory will continue to be at the levels it was at the end of fourth quarter, which is up slightly from Q3. But not substantially greater than that. Okay, great. I'll hop back into Q to get back to you.
In the second half of the year.
On inventories we are buying components.
<unk> of some of the.
Some of the products that we buy.
Buying so I.
I expect that inventory will continue to be at the levels. It was at the end of at the end of <unk>.
Fourth quarter, which is up slightly from Q3.
But not substantially greater than that.
Okay, Great I'll hop back into queue to give others a chance.
Thank you as a reminder, if you would like to ask a question.
Speaker Change: Please press star one on your telephone key.
Please press star one on your telephone keypad.
Speaker Change: Our next questions come from the line of Pierre Farragout with New Street Research. Please proceed with your questions. Hi.
Our next questions come from the line of Pierre Farragut with New Street Research. Please proceed with your questions.
Hi, Hi, can you hear me well.
Yes, Hello good.
Speaker Change: Thanks for taking my question. I was wondering about Mimosa, so you mentioned since the acquisition you've doubled revenues on that front.
Thanks for taking my question.
I was wondering about the most of it. So you mentioned since the acquisition you've debated revenues.
That Franz.
Speaker Change: And I was wondering how much of that, you know, is, I would say, growing organically the MIMOSA business, which is focused on fixed wireless access, the mid-market of fixed wireless access, and all these smaller operators deploying that kind of technology.
And I was wondering how much of that you know is I would say growing organically to me most of that business, which is focused on sheets. Toyota. This access is the mid market and fixed wireless access in all these like smaller okay. It does.
Deploying that kind of technology.
Speaker Change: versus you guys integrating the Mimosa technology with your more like carrier grade solutions, as you've done in at least in one geography I can think of.
As you guys invigorating to me most of that <expletive> Mucci wish you all know like carrier grade.
Solutions.
You've done in the at least in.
In one one geography I can think of.
Speaker Change: So, I was wondering about where you spend today in that mix and as you see the business doubling again, how do you see that mix evolving?
So so I wasn't worrying about where you stand today in that mix and as you see the business doubling again.
Or would you see that makes it holding.
Yeah, I'll take that Pierre so, yes, we've been focused.
Speaker Change: Hi, I'll take that, Pierre. So yes, we've been focused not only on capturing the expanding need for fixed wireless from the variety of sources that have been discussed, but also integrating into our carrier portfolio.
Not only on capturing the expanding need for fixed wireless from the variety of sources that have been discussed, but also integrating into our carrier portfolio.
Speaker Change: And the good news is that the quality of the products that operate in what's called the unlicensed spectrum has developed due to our technical innovation, such that carriers are beginning to use these products seriously versus a historical bias against them.
And the good news is that the quality of the products that operate in what's called the unlicensed spectrum.
<unk> has developed due to our technical innovation.
The carriers are beginning to use these products seriously.
Versus our historical bias against them and.
Speaker Change: And if you compare us with competitors like a ubiquity or a cambion, we have a much stronger proposition for.
And if you compare us with competitors like of ubiquity or a cambium, we have a a much stronger.
Proposition for.
Speaker Change: Carrier type customers because we have an integrated management system. We have a very QoS.
Carrier type customers, because we have an integrated management system, we have a very qos manner.
Speaker Change: managed approach with these products so they can be used for small-fell backhaul in a wide sense and they can be used now more by operators, particularly the one you mentioned, where they have a very comprehensive nationwide backbone for mobility and they're saying I'm going to add fixed wireless on top of this. So we, in the last quarter, managed to secure a major win with a carrier in South America, a major carrier in South America along the same.
Managed approach with these products. So they can be used for small cell backhaul.
And in a wide sense and they can be used now more by operators.
Particularly the one you mentioned, where they have a very comprehensive nationwide backbone for mobility, and they're saying I'm going to add fixed wireless on top of it. So we in the in the last quarter.
<unk> managed to secure a major win with a carrier in South America.
Major carrier in South America, along the same philosophy. We also have with some of the growth in nascent carriers in the U S. A significant traction on how to use this type of products.
Speaker Change: philosophy. We also have with some of the growth and nascent carriers in the U.S. a significant traction on how to use this type of product.
Speaker Change: as they pursue the fixed wireless opportunities, it gives the carrier such a leverage of their existing valuable spectrum if they can put fixed wireless users into a spectrum that they didn't have to pay money for. So it's just a screaming, logical thing to do, provided you get the speeds high enough. And we've really made unbelievable breakthroughs with our ASIC C6. We are clocking at over 3.5 gigabits.
As they pursue the fixed wireless opportunities.
It gives the carrier such at a leverage of their existing valuable spectrum, if they can put fixed wireless use.
Users into spectrum that they didn't have to pay money for it. So it's just a screaming logical thing to do provided you get the speeds high enough and we've really made unbelievable breakthroughs with our a sexy six we are clocking at over three and a half gigabit right now as we speak a three X mimo and that product is just being long.
Speaker Change: Right now, as we speak, 3x MIMO and that product is just being launched to market, so it didn't contribute any revenue through the end of the first quarter, but we see that as a major growth engine both for these carriers as they adopted for backhaul and for fixed wireless offload and also, of course, just as a better offering against the competitors I mentioned for the fixed wireless connectivity.
To market so it didn't contribute any revenue.
Through the end of the first quarter, but we see that as a major growth engine both for these carriers.
They adopted for backhaul and for fixed wireless offload and also of course, just as a better <unk>.
<unk> against the competitors I mentioned before with fixed wireless connectivity.
Alright first lien answer your middle question.
Speaker Change: I proceed to answer your next question, you know, looking a year out, a third of that fixed wireless mimosa business is going to be coming from traditional carriers, the household names that all own spectrum as they use these products to leverage their reach.
Looking a year out a third of that fixed wireless most of the business is going to be coming from traditional carriers. The household names that all own spectrum as I use these products to leverage their reach.
Great. Thanks, So that's all that and if I may a quick follow up I was wondering.
Speaker Change: Great. Thanks for that. And if I may, a quick follow up. I was wondering, um, uh, on, um,
On.
Speaker Change: Can you tell us about, you know, like the Rakuten's initiative, like the symphony, new business entity, and, you know, you guys seem to be part of that initiative as a deeply rooted partner. So how do you see symphony changing the game, changing the go-to market for you guys, and more broadly, you know, is that an inflection point in the adoption of open-run, do you think it's going to become like a major driver of opportunities for you?
Can you tell us about you know like the Rockies things initiative like the Symphony New business MTT.
And you know you guys seem to be bothered about the initiatives you guys are.
As a deeply deeply rooted partner so how do you see symphony changing the game changing the go to market for you guys and more broadly you know is that an inflection point in the adoption of open Ron do you do you think it's going to become like a major driver of opportunities for you guys.
Speaker Change: Well, certainly our relationship with RACU-10 is very deep. We got very good improvement in work performance in Japan over the last few months to super competitive levels against the incumbents ahead of schedule. So we have a deep DNA of working together with them and they remain one of our larger customers in the Japan market.
Well certainly our relationship with Rakuten, it's very deep.
We got a very good improvement in network performance in Japan over the last few months to two super competitive levels against the incumbents.
Schedule. So so we have a deep DNA of working together with them and they remain one of our larger customers in the Japan market.
Speaker Change: In addition, we are involved with Symphony in bids, case-by-case, working on something right as we speak, so I think there is potential to take that model that was built brick-by-brick in Japan so successfully and take that to other markets as an innovative, disruptive solution. The timing of adoption of that, I'll lead to them.
In addition, we are involved with symphony in in bids case by case are working on something right as we speak.
So I think there is potential to take that mark that model that was built.
Brick by brick and Japan, so successfully and take that to other markets as a as an innovator disruptive solutions.
The timing of adoption of that I'll leave it to them.
Speaker Change: to describe, but I think, you know, there's a lot of interest in the open-run concept. And, you know, independent of the construction to market, it's a super hot area at the moment. We're very active across a wide spectrum of existing customers, brownfield operators,
To describe but I think you know there's a lot of interest in the open ran concept and independent of the construction to market. It's it's a super Hot area at the moment and we're very active across a wide spectrum of <unk>.
Existing customers brownfield operators.
Speaker Change: meaning traditional MNOs, new operators, and novel upstarts.
Meaning traditional mmos are new operators and novel upstart.
Thanks.
Yeah.
Speaker Change: Thank you. Our next question has come from the line of Blake Mielke with Jeffries. Please proceed with your question.
Thank you our next questions come from the line of Blake Miotke with Jefferies. Please proceed with your questions.
Hey, Good morning, guys. This is Blake on for George Notter. Thank you for taking our questions.
Blake Milalki: Hey, good morning, guys. This is Blake. I'm for George Nodder. Thank you for taking our questions. I was wondering if you could give any sense for the price increases and if there was a pricing of the backlog and then how long we should expect the price increases to work their way into the model.
Give any sense for the price increases and if there was a repricing of the backlog and then how long we should expect the price increases to work their way into the model.
Speaker Change: Yeah, so just in general, we have been able to put a new price list into the marketplace. We did that effective April 1st, so no effect through the first quarter, but, you know, as new orders are placed,
Yeah.
Just in general we have been able to to put a new price list into the marketplace. We did that are effective April one so no effect through.
The first quarter, but you know as new orders are placed.
Speaker Change: We will see a benefit from those price increases they averaged between 7% and 10%. We do have contractual obligations, as you mentioned, on backlog, such that our entire backlog doesn't shift to the new pricing. However, we have negotiated new orders from two of our bigger customers with price increases, in one case in excess of 15%, and in the other case, substantial, they're not at that level.
We will see a benefit from those price increases they averaged between 7% and 10%.
We do have a contractual obligation, but as you mentioned on backlog.
Such that our entire backlog doesn't shift due to the new pricing. However, we have negotiated new orders from two of our bigger customers with price increases in one case in excess of 15% and in the other case.
Substantial though not at that level. So I think it's it's reasonable to assume it's a blend coming into the second half of the year that will be.
Speaker Change: I think it's reasonable to assume it's a blend coming into the second half of the year that will be obviously more impactful in the second half of the year, but we are, because our products are unique and differentiated, we haven't had any demand destruction.
Obviously more impactful in the second half of the year, but but we are because our products are unique and differentiated we haven't had any demand destruction.
Speaker Change: due to lead time issues that we don't have easily replicable products, we do have pricing power. That said, we also have existing contracts that aren't such that you can just modify them unilaterally.
Due to lead time issues that we don't have easily rapid replicated wool products, we do have pricing power.
That said, we also have existing contracts that arent.
Such that you can just modify them unilaterally.
Great. That's helpful. And then one more if I may with respect to the capital structure should we anticipate any need for additional financing as we look out to 2023 has strengthened the caspian cash position or add some flexibility to navigate these constraints.
Speaker Change: Great. That's helpful. And then one more, if I may, with respect to the, the capital structure, we anticipate any new need for additional financing as we look out in 2023 to strengthen the cash position or add some flexibility to navigate these constraints.
And.
Speaker Change: Let me tell you that one, you know, as we feel we have the resources necessary to execute to our plan, you know, if the right opportunity for additional equity or debt that may sense to our plans, you know, we would consider that. So, you know, as we look out and see the opportunities and how the market changes, we would think about additional capital if that opportunity came back.
Let me take that one then.
We basically we feel we have the resources necessary to execute to our plan.
If the right opportunity for additional equity or debt.
Makes sense to our plans we would consider that so.
As we look out and see the opportunities and how the market changes we would we would think about additional capital if that opportunity came about.
Awesome. Thank you all.
Speaker Change: Thank you. Our next question has come from the line of Tim Savage with Northland Capital Markets. Please proceed with your question.
Thank you. Our next question is coming from the line of Tim <unk> with Northland Capital markets. Please proceed with your questions.
Tim Savagen: Hi, pardon me. Hi. Good morning. Let's talk about your growth outlook for this year.
Hi, Pardon me hi, good morning.
Talking about your growth outlook for.
For this year.
Speaker Change: you know, especially given that we're a fair bit of the way into it.
You know, especially given that we're a fair fair bit of the way into it.
Speaker Change: in terms of Q2. So you're talking about 10-15%.
In terms of Q2, so you're talking about 10% to 15%.
Speaker Change: growth and I don't know if you guys broke down in detail how your business
Growth and I don't know if you guys broke down in detail how your business.
Speaker Change: Segmented across the carrier fixed wireless in private areas in 21 love any more data on that if you could provide it But obviously your cam growth there is much much higher In the aggregate. I'm assuming that Delta is supply
Segmented across the carrier fixed wireless and private areas in 'twenty, one love any more data on that if you could provide it.
But obviously your Tam growth there is much much higher.
In the aggregate.
I'm assuming that delta.
Is supply.
Speaker Change: driven but if there are other factors you know that I guess that's part
Oh, driven but if there are other factors.
But I guess, that's part of the question.
Speaker Change: And more specifically, as you look at your Q4 and, well, your short-term guidance, maybe Q4 in the first half, any chance of quantifying the supply impacts there on both revenue and gross margin. Thanks.
More specifically as you look at your Q4 and well your short term guidance.
Q4 in the first half.
Any chance of quantifying the supply impacts there.
On both revenue and gross margin.
Thanks.
Yeah, hi, thank.
Speaker Change: Okay, I was thinking from Q1 it was, you know, we talked about 38 million. I think that we were, you know, we lost probably up 10 million of revenue to supply chain issues that would have improved our gross margin because we would have had a larger revenue base to spread our fixed costs. And as I said, the fixed costs were
Go ahead Eric.
I think from from from Q1, as we talk about the 30 38 million I think that we are you know.
We lost probably up $10 million of of revenue to supply chain issues that would have improved our gross margin because we would've had a has a.
Larger a larger revenue base to spread our fixed costs and as I said, the the fixed costs were pretty heavy in in in Q1 four in particular in shipping.
Eric Glen: Q1 in particular in shipping. 48 million is where we're looking for in Q2 and that is supply chain restricted as well. We certainly could do significantly more than that if we weren't restricted for a long time.
$48 million is where we're looking for in Q2 that some and that is supply chain restricted as well, we we certainly could do significantly more than that if people have restricted for them for supply chains for supply chain issues Tim.
Yeah, and so looking to the back half of the year. The the private side is is got a very good tailwind now the number of engagements is.
Speaker Change: Yeah, and looking to the back half of the year, the private side has got a very good tailwind now. The number of engagements is up day over day. The number of tier one Fortune 500 or Fortune 50 companies.
It's up.
Day over day, the number of tier one fortune 500, or fortune 50 companies.
Speaker Change: coming into the CAPEX cycle in 5G for the first time is something very notable, and I think we are really well positioned there. So the, you know, if I look at the second half, growth trajectory,
Into the Capex cycle and five G. For the first time is something very notable and I think we're really well positioned there so the.
If I look at the second half growth trajectory, it's converting those private opportunities in that funnel its fixed wireless government stimulus flowing.
Speaker Change: converting those private opportunities in that funnel it's fixed wireless government stimulus flowing more actively than it has before and there is concrete progress on that on some of the bills and the process and the projects we have we've bid for and then our M&O business
More actively than it has before and there is concrete progress on that.
Some of the the bills and the processes and the.
Projects, we have with before and then our <unk> business.
Speaker Change: We will see significant uptick from a couple of the customers we talked about this year as they're in a rollout mode as opposed to a design mode. That said, we have supply constraints on the bigger MNOs in terms of lead times that are such that, you know, we basically have now a six to seven month horizon on some of those products.
We will see significant uptick from a couple of the customers. We talked about this year as they are in a rollout mode as opposed to a design mode.
That said, we have supply constraints on the bigger M. N o's in terms of lead times that are such that we basically have now a six to seven months horizon on on some of those products, which means that the second half does not enjoy much growth.
Speaker Change: which means that the second half does not enjoy much growth just by virtue of the scarcity of supply. We have redesigned seven products.
Just by virtue of the scarcity of supply we have redesigned seven products.
Speaker Change: in the first part of the year and the latter part of last year to design out several of the components that no longer were available or weren't available on a reliable base. And we expect that contribution to begin kicking in in 2Q as well.
In the first part of the year in the latter part of last year to the design out.
Several of the components that no longer were available or weren't available on a reliable base and we expect that contribution to begin kicking in in <unk> as well.
Speaker Change: Got it. And if I could follow up real quickly, just kind of along those lines that you ended up with, which is kind of on the top customer side for calendar 21.
Got it and if I could follow up real quickly just kind of along those lines that you ended up with which is kind of on the top customer side for calendar 'twenty one.
Speaker Change: It's like GEO is about 20% or so, and you mentioned the filing, your top three or 63. Should we assume that's one big Japanese customer and maybe one big U.S.? And if I heard you right there in that last comment, I guess you're probably looking for more growth in 22 versus, you know, from new markets and new customers versus your big kind of established guys.
Looks like Geo was about 20% or so and you mentioned the filing your top three or 63 should we assume that's one big Japanese customer and maybe one big U S and.
If I heard you right there in that last comment I guess, you're probably looking for more growth in 'twenty two versus from new markets and new customers versus your big.
Kind of established guys is that fair to say.
Speaker Change: Halfway correct. Yeah, the top two for sure are contributing less growth, although we are continuing to go full tilt with them on their rollouts, it's just that they're also facing delays from other components and other elements.
Halfway correct, yes.
Top two for sure are contributing less growth. Although we are continuing to go full tilt with them on their rollouts. It's just that they are also facing delays from other components and other elements and that means the whole process moves a little more slowly than we would like.
Speaker Change: And that means the whole process moves a little more slowly than we would like.
Speaker Change: As I mentioned before, we do have two of the customers that weren't in the top three in the first, in the 2021 numbers that have reached the launch phase. And that is going to mean there is a more significant contribution from those two, which are existing customers and deep in the adoption phase.
As I mentioned before we do have two of the customers that werent in the top three in the first in the 2021 numbers that have reached the launch phase.
And that is going to mean, there is a more significant contribution from those two which our existing customers and deep in the adoption phase.
Speaker Change: And then the stuff that I mentioned before is the accelerated growth with new names. We do have.
And then the stuff that I mentioned before is the accelerated growth with new names, we do have.
Speaker Change: and have made, and we're very proud of, the amount of contractual progress we've made with a number of those Fortune 50 companies to allow them to buy and source and use us as a go-to-market, and we made a good investment here.
And I have made and we're very proud of the amount of contractual progress. We've made with a number of those fortune 50 companies to allow them to buy and source and use us as a go to market and we made a good investment here over.
Speaker Change: over the last couple months that haven't shown up in the numbers yet, but will show up in the second half.
Over the last couple of months it hasn't shown up in the in the numbers, yet, but will show up in the second half.
Speaker Change: So you can call them new customers, but they're new customers with whom we have now commercial engagement and the engagement of their sales theme, which is a huge force multiplier in terms of the number of people talking about and selling airspin out to the world.
You can call them, new customers, but they're new customers with whom we have now commercial engagement and.
And the engagement of their sales team, which is a huge force multiplier in terms of the number of people talking about and selling air spin out to the world.
Got it thanks very much.
Okay.
Okay.
Speaker Change: Thank you. Our next questions come from the line of Franco Brande with DA Davidson. Please proceed with your question.
Thank you. Our next question is coming from the line of Graco Granda with D. A Davidson. Please proceed with your questions.
Good morning team.
Davidon: Good morning, team. I wanted to extend my congratulations for Eric on his promotion to Chairman. Congrats, Eric. And then there's been a lot of questions around the delays in 5G deployments, the two myriad of reasons, including some more odd ones like airlines alluding signal interferences and whatnot. But to what extent does this impact the man today versus just being noise for you guys?
I wanted to extend my congratulations first Eric on his promotion to chairman Congrats Eric.
And then you know.
There's been a lot of questions around the delays and types of deployments did.
Two a myriad of reasons, including some more odd ones like airlines alluding signal interference and whatnot.
But to what extent is this impact demand today versus just being noise for you yes.
Speaker Change: Yeah, hi. Thanks for the congrats. Definitely, there is a lot of noise in what you read on things like the airline disputes. In fact,
Yeah, Hi, thanks. Thanks for the congrats are definitely there is a lot of noise in and what's your read on things like the airline disputes in fact.
Speaker Change: That particular spectrum is used worldwide, widely, and there's a chapter and verse on that you can read about on the Internet, and it did sort of die down as an impediment. The biggest impact, though, is site access.
You know that that particular spectrum is used worldwide widely in and Theres, a chapter and verse on that you can read about on the Internet and it did sort of die down as a as an impediment at the biggest impact though.
His site acquisition.
Speaker Change: and spectrum. And excitingly, countries like Germany, like Japan, and the U.S., and now with CBRS, and now France have all liberalized spectrum. And France just announced a couple of weeks ago they're following the German model. And this is so important because what this is
And spectrum and Excitingly countries, like Germany, like Japan, and the U S and now with C. B R. S and now France of all liberalized spectrum and in France, just announced a couple of weeks ago. They're following the German model and this is so important because what this allows the <unk> landscape.
Speaker Change: allows the 5G landscape to do is have more operators, people who don't go and buy a national license for 20 billion dollars, but they buy a regional license, a car manufacturer, who might cover the plant that they have in the German industrial heartland.
To do is have more operators people, who don't go and buy a national license for $20 billion, but they buy a regional license a car manufacturer who might cover the plant that they have.
And in the in Germany, German industrial Heartland, and so getting more spectrum available is an impediment, but we're winning that war a country by country again, Germany, Japan.
Speaker Change: So getting more spectrum available is an impediment, but we're winning that war, country by country. Again, Germany, Japan, US,
U S now France.
Speaker Change: So that means it's now down to the Fortune 50 companies to convince their enterprise customers that this is something they must have and have a lot of conviction on that happen.
So that means it's now down to the fortune 50 companies to convince their enterprise customers that this is something they must have and I have a lot of conviction on that happening.
Speaker Change: Then, the second constraint for mobile operators has been the tower landscape, the high cost of tower rental, and we know the difficulty of permitting new sites. EarthBend brings tremendous advantage to that landscape. We have strand mount products, as an example. I mentioned we put up 20,000 or 25,000 in nine months.
Then the second constraint for mobile operators, it's been the tower land.
Landscape the high cost of tower rental.
And we know the difficulty of permitting new sites are spend brings tremendous advantage to that landscape. We have strand Mount products. As an example, I mentioned, we put up 20000 or 25000 in nine months and an example in <unk> and we have ambitious plans with folks who own over a million miles of overhead cable strand in the U S and that this.
Speaker Change: in an example in 4G and we have ambitious plans with folks who own over a million miles of overhead cable strand in the U.S. And that just makes the total cost of ownership far more compelling than signing something with a power company.
Makes the total cost of ownership far more compelling and signing something with a tower company.
And that.
Speaker Change: is really in our DNA. We design products that fit within very tight geographic, I'm sorry, physical requirements, power consumption requirements. That allows them to go on rooftops, on the side of buildings, on strands. We can put our equipment anywhere. And that's a huge
It was really in our DNA, we designed products that fit within very tight geographic I'm, sorry, a physical requirements power consumption requirements that allows them to go on rooftops on the side of buildings on strands are we can put our equipment anywhere and that's a huge.
Speaker Change: removal of an impediment of a traditional 5G business case, which is how much money do I have to budget for a 30-year lease with a tower.
Removal of an impediment of a traditional five G business case, which is how much money do I have the budget for a 30 year lease with a tower company. So so indeed, there have been delays, but it isn't the noise you might read about with an airport. It's the fundamentals of this business.
Speaker Change: So, so indeed there have been delays. It isn't the noise you might read about with an airport. It's the fundamentals of this business.
Of how do I get physical locations to put up the number of cells and I need and as I mentioned earlier in the script the number of cells is.
Speaker Change: physical locations to put up the number of cells that I need, and as I mentioned earlier in the script, the number of cells is...
Speaker Change: is exponentially more in 5G than in previous generations because it's a higher spectrum that's being used either mid-band or millimeter wave and it's also a higher bandwidth.
Is exponentially more in <unk> than in previous generations, because its a higher spectrum.
Being used either mid band or millimeter wave and it's also a higher bandwidth. So so those are all tailwind for air span and in my mind really tell us that the five G spend cycle is is really still at its infancy because of the easy to do upgrades. The towers are in process, but the harder to do and the.
Speaker Change: So those are all tailwinds for Airspan, and in my mind, really tell us that the 5G spend cycle is really still at its infancy because the easy-to-do upgrades to towers are in process, but the harder-to-do and the build-out of infrastructure for more participants to be in the market, which we're so excited about, is just starting.
The build out of infrastructure for more participants to be in the market, which we're so excited about is just starting.
Speaker Change: Absolutely. Thanks, Eric, for all the insights. And then looking at 4Q, it seems like very old news now, but you guys mentioned 10 million impact to Q1. Can you give us a similar number to what happened in Q4? And then if you had to say a percentage impact just from the shipping costs to the gross margin, what would that be? Thank you.
Absolutely Thanks, Eric for all of their insights.
And then.
Looking at <unk> seems like a very old news now but are you.
You guys mentioned 10 Mellon impact to Q1 can you give us a similar number to what happened in Q4 and then.
If you had to say a percentage impact just from the shipping costs to the gross margin.
What would that be thank you.
Okay. So so.
Speaker Change: Okay, so Q4 we were looking at, we were in the 54 to 56 million range that we were pushing for and we came out at about 50 million.
So Q4, we were looking at we were in the $54 million to $56 million range that we were that we were pushing for and we came out at about 50.
Speaker Change: over 50 million, so just under 10% impact.
Just over 50 million, so just under 10% impact to Q4, I think the redesigns in the backend loading of Q1 gave US gave us a problem in a in Q1.
Speaker Change: I think the redesigns and the back-end loading of Q1 gave us the problem in Q1.
We.
We haven't.
Speaker Change: We haven't – I mean, it's in excess of 5% of – for just our shipping cost, but – sorry, shipping and dex-delighting cost, but we also have a lower amount of revenue where we're spreading out our fixed costs.
In excess of 5% of of.
For just for just our shipping costs.
Sorry shipping and expediting costs, but we also have a lower amount of revenue, where we're spreading out our fixed costs. So it's you know as the revenue grows we will we will see improvements in the in the gross margin due to allocation.
Speaker Change: As the revenue grows, we will see improvements in the gross margin due to allocating lower fixed costs against the higher.
<unk> cost against them.
A higher revenue number but to be very clear on shipping. We had we had two customers with critical deadlines in March and the the landscape of shipping in March became extremely clouded.
Speaker Change: But to be very clear on shipping, we had we had two customers with critical deadlines in March and the landscape of shipping in March became extremely clouded. Even if we weren't producing the product in China, there were dependencies on flight routes. We ended up sending stuff.
Even if we werent producing the product in China. They were dependencies on flight routes, we ended up sending stuff all the way around through the middle east to get into the U S.
Speaker Change: all the way around through the Middle East to get into the U.S.
Speaker Change: And just, you know, we can put our fingers on $700,000, $800,000 of expense that went into two particular customers to keep them happy. And obviously, keeping our customers happy is our number one priority. Many of our customers pay their own freight. So this isn't an endemic problem. This was a situation.
And just so we can put our fingers on 700 $800000 of expense that went into two particular customers to keep them happy and obviously keeping our customers happy is our number one priority.
Many of our customers pay their own freight. So this isn't an endemic problem. This was the situation.
Speaker Change: At that time, and as we, David mentioned earlier, our Q2 is much more front-end loaded, which gives us more time to negotiate with shippers to work on less than four-day air express terms, and so that's another reason we expect this is going to clear.
At that time and as we David mentioned earlier, our Q2 is much more front end loaded which gives us more time to negotiate with shippers to work on.
On less than four day Air Express terms and so that's that's another reason we expect this is going to clear.
Yeah.
Speaker Change: This is really helpful, and I'm sure if you guys could, you guys would have grabbed the products themselves. And then you talked about the success on go go. Yeah, you know, not that the test bed is completed. I was curious to get your take on how long there were a lot for them would take and then perhaps what percentage of it has been completed so far.
This is really helpful and I am sure. If you guys could you guys sort of dropped the products themselves.
And then you talked about the success on Gogo.
No not that the Testbed is completed I was curious to get your take on how long. It there were a lot for them would take and then perhaps what percentage of it has been completed so far.
Glenn let me take that.
Speaker Change: So we're going to be deploying the GOGO network over the course of this year. We've already completed about a little less than a third of the rollout in terms of cell sites. And so the remaining deployments are going to be across the Q2 and drifting into the Q3 timeframe, which sets up the 150 sites that Eric had referred to earlier on in his remarks. And so we're well into that deployment.
So we're gonna be deploying the Gogo network over the course of this year, we've already completed about.
A little less than a third of the rollout in terms of cell sites and so they are the remaining deployments you're gonna be across the Q2 and drifting into the Q3 timeframe.
Which sets up the 150 sites that Erik referred to earlier on in his remarks, and so we're well into that deployment.
Speaker Change: and so far, you know, keeping up with the project.
And.
And and so far you know keeping up keeping up with the project.
That's all very helpful. Thank you guys.
Yeah.
Speaker Change: Thank you. As a reminder, if you would like to ask a question, please press star one on your telephone keypad.
Thank you as a reminder, if you would like to ask a question. Please press star one on your telephone keypad.
Our next questions come from the line of James Maxwell with Toqueville with please proceed with your questions.
Speaker Change: Our next question has come from the line of James Maxpo with Focaville with please proceed with your questions.
James Maxwell: Good morning. Are you able to tell us what the cash balance was ending 331?
Good morning are you able to tell us what the cash balance was ending 331.
James Maxwell: We will disclose that when we do our Q1 results in what will only be a few weeks now with the rest of our
And we will we will disclose that when we do our Q1 results.
And in what will only be a few weeks now.
With the rest of the rest of our Q1.
James Maxwell: What should we think about in terms of the off-back run rates and the EBITDA breakeven level for the business?
Well, what should we think about in terms of the Opex run rate and an EBITDA breakeven level for the business.
Opex run rates I think we're going to be reasonably facts as we as we as we look out for the next four quarters.
James Maxwell: Our OPEX run rate, I think we're going to be reasonably fat as we look out for the next four quarters.
And even if it will be it will be obviously, a calculation related to the revenue profile that we've alluded to and and gross margin improvement.
James Maxwell: And EBITDA will be, obviously, a calculation related to the
James Maxwell: revenue profile that we've alluded to and gross margin improvement.
Okay. Thank you.
Thanks.
Yes.
Speaker Change: Thank you, there are no further questions at this time. I would like to turn the call back over to Eric Stonestrom for any closing comments.
Thank you there are no further questions at this time I would like to turn the call back over to Eric <unk> for any closing comments.
Eric Stone: Okay, thank you, and thank you all for the good questions. If we turn to slide.
Okay. Thank you and thank you all for the good questions. If we turn to slide 17.
Eric Stone: As we wrap up, we would reiterate the huge demand we're all witnessing for connectivity in every aspect of life.
As we wrap up.
We would reiterate the huge demand we're all witnessing for connectivity in every aspect of life.
Eric Stone: This is leading to a tremendous new appetite for data-hungry applications like the Metaverse, which is driving this 5G capex cycle.
This is leading to a tremendous new appetite for data hungry applications like the matters, which.
Which is driving this five G capex cycle.
Eric Stone: We feel we have the right product set and human capital to take full advantage of these tailwinds and look forward to updating you on our progress.
We feel we have the right product set and human capital to take full advantage of these tailwind and look forward to updating you on our progress.
Eric Stone: One last note, we will be participating in broker conferences and one-on-one meetings in the coming months, and we look forward to engaging with investors at these events.
One last note, we will be participating in broker conferences and one on one meetings in the coming months, we look forward to engaging with investors at these events.
Eric Stone: Thanks again for your interest and support. That concludes our call.
Thanks, again for your interest and support.
That concludes our call.
Thank you. This does conclude today's teleconference. We appreciate your participation you may disconnect your lines at this time.
Speaker Change: Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.
The rest of your day.