Q2 2022 Starry Group Holdings Inc Earnings Call
Second quarter 'twenty two results. If you have not copies are available on our Investor Relations website.
<unk>, we begin I would note that some of our comments today may be forward looking statements as such they are subject to risks risks and uncertainties described in starts earnings press release, and SEC filings and results may differ materially. Additionally.
Additionally, during our call today, we will reference certain non-GAAP financial measures that we believe provide useful information for our investors reconciliations of non-GAAP financial measures where appropriate to the corresponding GAAP measures can be found in the company's earnings release and other filings with the SEC with that I'll turn the call over to Jim.
Thank you Ben.
Thank you everyone for joining this it's been a busy earnings season, and we are almost at the end of it so let's jump in.
I want to lead with some highlights first our execution, we had our best quarter to date with more than 9700 net new customer additions, we performed better than almost every other fixed provider in the country and I cannot overstate how strong this performance was especially given our scale and capital constraints.
We have a laser focus on customer experience and value, which is a good place to be in the current climate.
And this is an important one.
Earlier today, we released an analysis that shows we quickly achieved cohort level profitability across our buildings launched in 2020 and first quarter of 2021 within three or four quarters. After launch. This is a really constructive operational building block towards the profitability across the company just to say this.
One more time, our 2020 in first quarter 'twenty, one 'twenty one building cohorts gets profitable in under 12 months, which I think is remarkable.
And third we are thrilled to announce our newest market Las Vegas, Nevada, which we are actively building and plan to launch in the third quarter.
Before I dig into substance I'm going to give an update on our funding situation. As you know we went public in March 29, 2020, raising total net proceeds of about $155 million.
Given the market conditions. When we went public we raised approximately half of what we had initially expected to raise in the offering. Since then we've been open about the reality that we need to we require more capital to get to breakeven.
We talked about is in the first quarter call. When I explained that we had some runway and multiple pathways and we were exploring a combination of debt equity and other financing vehicles today I want to give a update on where we stand in the process is not yet concluded, but we have made significant progress on several fronts.
First we.
We set up a committed equity facility, where with a financial partner that lets us raise up to $100 million.
And capital before fees. This is a low cost way to raise incremental funding exclusively at our discretion.
Second we are in advanced discussions with multiple parties about potential additional investment.
Can't go into specifics now, but I caution that nothing has yet to complete and may not ultimately occur, but I look forward to reaching agreement in the short term and that can provide us the capital to get to breakeven.
Ultimately on this topic I am extremely confident on our model and our model and our differentiated economics in the customer and the customer demand for our product and a strong record of sustained successful execution history has shown that good companies find funding support and even in difficult times in my opinion with a great company and expect to resolve this funding gap shortly.
Stay tuned.
Moving on to the next topic I want to walk briefly about them I want to talk briefly about the macro environment generally I think broadband performed well and soft market conditions, given that it's an essential service and I think within the industry, we are incredibly well positioned because.
Broadband is not discretionary no one wants to give up their connection to the internet.
<unk> value proposition is simple better faster cheaper, we focus on providing customers a really great service at a fair price with no nonsense.
Also we had a prepaid business and have minimal to no bad debt and collection exposure.
And we have a very specific focus we have we have a density based model focused mostly on <unk> today and a significant focused on underserved communities subsidized by the federal government.
This is not to minimize concerns of the current environment.
We believe we can be we can continue to be a growth company despite macro headwinds.
With just about everyone now reported it looks like the market for in home broadband services remains healthy overall with and it's a massive industry is still growing at about 3% to 4% of subscribers compared to prior year in my view. The story here. The interesting story here is the share shift that we're seeing cable clearly lost share in the quarter fixed wireless game.
Dramatically fiber to <unk> and DSO continues to bleed as you would expect the takeaway from this result. These results beta started strength there is a flight to better value plans to standalone broadband over expensive bundles and to services that put customers first instead of taking that for granted.
And I think the share shift away from cable will continue as more competitors emerge with fiber and fixed wireless, especially in suburban and rural areas. It is worth pointing out that the urban service is very different in story as the only provider coming in at any scale in this segment.
This is great news for <unk> is we don't need a big market share to succeed we have the potential to breakeven at around 4% of penetration of our home service level, because we have a differentiated technology stack in the cost of the last mile.
Also we continued to expand our network this quarter, our home services grew by 20% over year over year to $5 7 million housing units and we have deployed to about 10 10, and we deployed about 10000 new units per month in the second quarter, bringing our total deployment to roughly 400000 activated units.
Looking at these numbers in other way, we have only deployed about roughly 7% of our service area to date. So we have a lot of runway left for the immediate future.
Usage in our network remains robust during the second quarter. Our average usage was 432 gigabytes per month with the top 5% consuming about more than one terabyte.
More customers and increased usage typically slows down our network, but we continue to deliver speeds above our advertised levels as we build out and densify. Our network. We are confident that the combination of our licensed millimeter wave spectrum in our network architecture will be able to continue to meet customer demand.
I want to take some time to discuss and analysis for the of the operational performance of buildings launched in 2020.
And the first quarter of 2021 that we released this morning. This presentation is on our Investor Relations Web site, which you should review inflow, but I'll summarize it briefly here.
For the purpose of this analysis I want to provide a very simple visual of our business almost how I think about it myself.
Install transmitters and towers and tall buildings than we worked with property management company and real estate companies to gain access to <unk> in the coverage area. We then activate MD use using radios on the roof of the buildings and then start signing up customers in those buildings. Once we hit our penetration targets in a building. It is important to keep the penetration is stable and growing.
Until we hit the full utilization of the transmission site on the tower.
We did this analysis that extracts the buildings that we launch in a given period and shows how quickly. They turn profitable. This is how we run the business and drive our capital allocation.
The analysis looks at all the buildings activated in each quarter of 2020, and the first quarter of 2021 by dividing them into cohorts based on the quarter in which they were launched by.
Looking at this cohort by looking at how the cohorts develop and grow over time, you can see our profitability on a granular basis something that is not obvious based on our current growth trajectory.
And what it shows is that we quickly generate revenue launch buildings and become profitable across all cohorts in three to four quarters.
All of the cohorts of buildings launched in 2020 in the first quarter of 2021, our consistently growing revenue as penetration within the cohorts of buildings increases our average MDU penetration across our entire network as of last quarter is 16% 30 days after launch 24% or more.
One year after launch and 30% or more after 33 years after launch.
There is a tremendous demand for our product our oldest cohort in the analysis of the first quarter of 2020 grew revenues at 25% year over year in <unk> 2002, and two even eight quarters post launch now turning to profitability. Our analysis shows that all the cohorts turn profitable within three.
Or four quarters. Despite the fact that each cohort has a unique mix in makeup of buildings, but time to profitability with similar and the time to profitability has decreased when compared to <unk> 2020, cohort, which I think is great.
Core profitability also continues to improve after breakeven and the margins for our 2020 cohorts continue to scale into the 40 plus percent range. This rapid turned to profitability is due to our operating model. We have relatively low fixed cost, which is supported by our continued focus on reducing our unit economics over time.
As highlighted in the analysis, we saw an 18% decline in our cost of world class of hardware over the last two years and a 70% decline in hardware costs, where multistem for MDU building in the same timeframe. We absorbed these costs fixed costs relatively quickly and operated largely variable cost operating model going forward.
Third.
This cohort analysis should give investors a unique insight and confidence in <unk> business model as it shows how well we perform and deployed buildings in our base over the last two to three years.
With that let me turn it over to Alex <unk>, Our Chief operating officer to go through the operational details for the quarter.
Thanks, Jeff and Hello, everyone.
We announced our second quarter operational results a few weeks back so I'll recap at a high level and talk about ACP and our Las Vegas launch.
So let's jump in.
I'll start at the customer level and buildup to addressable homes.
Our customer relationships increased by over 9700 net adds in the quarter to end at nearly 81000.
Up 69% year over year.
We saw growth in customer relationships in each of our six markets during the quarter.
With continued strength in the MDU category.
Our deployment sales marketing install and customer service engines are running very smoothly. We're.
We're extremely proud of our team and confident about our continued execution in subsequent quarters.
Serviceable homes increased by 20% year over year to $5 7 million homes.
This network growth is from continuing to expand in our existing markets.
The addressable homes, which we define as households, and a total market boundary remained at $9 7 million units in the sixth live markets as we didn't launch any new markets in the quarter.
We also made great progress with story connect our digital equity program that now reaches more than 77000.
<unk> of public and private affordable housing.
That increased by 14000 households, since last quarter.
<unk> with the inclusion of the Jersey City housing authority.
The affordable connectivity program is an important part of our business and extremely core to our mission as a company.
With these customers, we see below company average move out rates.
Higher penetration rates in the buildings, where we offer this service and we are paid in full by the federal government through the ACP.
We really like this business its emission we truly believe in.
It's focused on communities that really need better service offerings and.
And our low cost structure means we can successfully execute at these price points.
And then the last two quarters.
We successfully transitioned qualifying customers from the emergency broadband benefit into ACP, while continuing to grow enrollment in the program.
We intend to continue to pursue all available ACP growth opportunities in coordination with our program partners.
After the quarter closed, we announced Las Vegas, as our seventh market we.
Expect the market to go live in the third quarter of this year.
Our expansion strategy focuses on balancing capital allocation across existing and new markets to maximize the efficiency of deployed capital in areas that lead the best customer performance.
By launching a new market.
Add significantly to the serviceable household universe, while strategically focusing the network build on household density.
The combination of continued penetration within networks and launching a metered number of new networks maximizes yield from our serviceable network and drives our growth plan.
We selected Las Vegas, because of its attractive demographics. It is a young diverse and growing market.
Dominated by cable and telco duopoly, we've had success with this formula before.
We also selected Las Vegas, because we believe we can make a real difference in serving households that lack access to quality broadband at a value price.
Nevada ranked 30 <unk> in terms of connectivity and we want to improve that ranking.
We are pleased with the network build thus far.
Working with our construction partner Quanta.
To build out the coverage network.
Which we expect to cover approximately 500000 homes in Las Vegas, and the surrounding area at launch using our 24 gigahertz spectrum.
So it's full speed ahead on all fronts in Las Vegas progress on ACP and ongoing execution on the operating front.
Now I'll turn things over to <unk> to go through the financial results.
Thank you Alex and good morning, everyone.
Today I will go through the financial highlights of the quarter and will touch on our guidance as well.
Let me start by saying how pleased I am that these results. They show that studies value proposition is resonating with customers has been starting to deliver industry, leading growth and customer relationships.
Now onto the financials.
Revenue of $7 $8 million increased 52% year over year.
Given by an increase in net customer relationships. This demonstrates the obvious correlation between a record customer growth and the revenue that didnt guidance.
Let me provide a little more color as it relates to the IP will be realized now that will be realized this quarter was $33 96, and we continue to see no impact on demand for <unk> services at prices, which remained below competitors.
As mentioned last quarter, we offered our customers a sleep easier that sign up instead of using teaser rates or other anti consumer tactics. We don't recognize any revenue during the free trial periods and because of the length of trial periods ranging between seven days to two months depending on the cost.
Subscribers added later in the quarter may contribute little to the revenue base for the quarter being reported in.
In other words, the combination of our peso belt and our accounting for trial periods can depress the art will be realized in the quarter. Despite consistent planned pricing.
We have also seen a change in mix as ACP customers now comprise more than 10% of total customers, which is a significant increase from our ABB level last year.
As Alex mentioned before these are attractive customers that the market is largely ignored and the economics makes sense to us given our industry leading cost structure. We will continue to pursue ACB customer as an avenue of growth going forward.
In the long term, we expect the art will be realized to flatten out and increase as we see more growth in the overall mix with higher price plans based on either personalization at higher speeds are SMB service launch.
Other impact to revenue separately from our core operating activities is the government subsidy revenue, which we will receive to the rural digital opportunity Fund Argos.
We are aware that the FCC staff has completed its review of our long form applications and it's awaiting a final decision.
We are confident it will be approved but we have not yet received any regulatory revenue under the program.
This impacts the ratable portion that we can recognize and we will update you once the FCC finish its review process.
Now, let's flip to the cost side.
Cost of revenues was $27 million up 56% year over year due to network expansion and a higher depreciation expense related to our deployed equipment as well as an increase in head count expenses and Netflix service costs noncash DNA was 46% of GAAP.
Cost of revenue, we continue to see positive signs of leverage in this expense as.
As the business scales and the per unit cost of hardware continues to decline.
SG&A expense was $25 1 million and increased by 57% year over year due to higher head count and corporate service functions.
G&A expense includes Sac, which naturally growth with an increase in customer relationships.
Expenses continued to grow at a similar rate than our revenue growth.
R&D expense was $7 $8 million and increased by 21% year over year due to head count costs to support the product development for our network as a reminder, we invest in R&D.
As the tool to drive down unit costs over time, so we realized the impact of these investments through future deployments we.
Debate that R&D expenses will grow at a reduced rate in the future quarters as we are well staffed for the current product roadmap that study has in place.
Net loss was $36 3 million compared to a net loss of $38 6 million in the second quarter of 'twenty. One the net margin improved by nearly 300 percentage points year over year.
The adjusted EBITDA loss.
Increased to $33 9 million as we invested in our network systems and staff to support growth in the current and future quarters, but I want to highlight that the adjusted EBITDA margin improved by 25 percentage points year over year.
Another sign of operating leverage in our business.
Capex, which includes cap labor was $28 million up 4% year over year as we invested in our network and customer expansion as well as initiated the network build out in Las Vegas.
Now on to the guidance.
We continue to expect customer relationships to be greater than 100000 at the end of fiscal year 'twenty two.
Reflecting growth of greater than 58% year over year.
This guidance remains unchanged from the guidance provided in our first quarter earnings call.
In addition, as discussed the FCC is in the final stages of its review of Argos long form application and we are confident it will be granted in the near term.
We have included approximately seven months of out of regulatory revenue in our 'twenty two guidance provided on the first quarter earnings call earlier this year and we will provide an update on this once we have additional clarity on timing of that revenue.
In conclusion as you can see we reported very strong results this quarter highlighted by industry, leading customer growth.
The rapid financial growth and strong operating leverage as we continue to build scale in our business.
We are confident that we can maintain our current business momentum and we look forward to sharing the results of our continued success with you every quarter.
Now Chad, Alex and I are ready to take your questions.
Operator, we're ready for Q&A.
As a reminder, if you would like to ask a question. Please press star one on your telephone keypad oil prices start to withdraw your question.
First question today comes from Brett Feldman at Goldman Sachs. Please go ahead.
Yes, just to if you don't mind.
You had mentioned that the strength of the subscriber growth that you put up this quarter came despite being what has historically been a seasonally slow period. It does look like we seen seasonality across the sector.
The cable company suggested that maybe the third quarter was starting off particularly fast. So I was hoping maybe you can give us a little bit of a real time update in terms of what youre seeing particularly as you're getting closer to the back to school period, which I would assume is probably going to be a tailwind for you guys and then just on the capital raise it's good to see do you have a little bit more flexibility in terms of being able to take down.
And equity if you want obviously it would be fairly dilutive. If you were to go ahead and pull all of that down. So we will certainly wait to see what you are able to announce I think the bigger question. We get is what are you hoping to accomplish being a capital raise it sounded like from your prepared remarks, the goal would be to pull in enough capital to actually get to breakeven and I am one.
Wondering if that's something you would expect to be able to do under the business plan you had outlined before or if there is some opportunity to maybe modify what youre outlays would be going forward. So you could breakeven perhaps sooner. Thank you.
Yes.
Thanks, Brad.
<unk>.
You're absolutely right typically sort of second quarter tends to be the level of softness.
Seasonality move ins move outs.
I think there are a couple of dimensions to that number one we're seeing occupancy as rates rise and be high compared to sort of what I would call. The 2000 2021 Covid period, but I think despite that what we are seeing is there is.
And we're not prepared yet to sort of fully.
Talk about the mix on customers in terms of.
Actual switchers that are coming in but in story I think historically, if you look at it the switch of percentage tends to be a majority of our customers greater than 50% coming in and I expect that that trend to continue along with the back to school plus renewal of leases in these areas with high occupancy so we feel pretty good about.
Going forward the rest of the day.
Q3 Q4.
From that point, so that's number one.
I think you're absolutely right Brett.
We put this in place as a flexible component at our discretion, we intend to be very judicious.
The use of this thing and yes, you are correct.
The goal is to get sufficient capital in and I think as we have gotten.
A little bit more.
Centered around.
Focus.
Big way on breakeven.
That number I think if you go back to where we had originally in Q1 and even to our pipe process talked about the need for the company was somewhere in the $3 40 to $3 70 ish range total we ended up at 150 ballpark. So.
You're really looking at a gap of 200 and Thats what were really triangulating in solving on as a first step assuming we do that I would imagine us to continue to execute on our plan and I think we're not prepared today to talk about future plans in 'twenty three 'twenty four from a guidance perspective.
But looking at what we are seeing.
There is an opportunity to continue to be very disciplined about deploying the capital towards the breakeven line and maintaining a very healthy growth rate that gets us there because as you can imagine in this business right. You can you can growth at a much slower rate.
But the path to profitability requires you to have a certain amount of customer base to absorb the fixed costs in the business and that varies by market, but again.
I think where you're seeing us be a little bit more disciplined judicious is driving a better return on the existing markets, where we have existing operations and metering out smart newer markets till we get to that point, but given the fact that the Tam in our cities. It's so massive there is no reason not to exploit that opportunity.
To the fullest extent without changing course.
Great. Thank you.
Operator next question please.
Our next question comes from Craig Moffett from Moffett Nathanson. Please go ahead.
Alright, thank you.
Couple of questions. If I could first I just want to make sure.
I fully understand the cantor our financing.
Curt you said in your remarks that it was.
Up to $100 million, but if I understand the 5%.
A limit on the common shares at your current price that would be about $30 million and I just want to make sure I'm understanding that correctly.
And then.
Second if you could just give us an update on.
The cost trajectory of the comment.
And how you are what your latest thinking is with respect to single family homes and smaller MDU and then finally, an update also on Youre thinking.
About licensing your technology internationally potentially the path to sort of I suppose.
Somewhat more painlessly raise capital if necessary.
So let me take the question about the E block I think the way to think about it is first DVR continuing to pursue other avenues for a capital raise.
This is certainly something that we will access very judiciously from a.
Usage point of view it allows us the ability to raise.
The way that the deal is structured is at most through this you can read up to 19, 9% of shares outstanding of the company. So we will be well below that limit.
With this capital raise and like I said the plan is not to use this in any aggressive fashion. We do have other discussions that are ongoing to.
Based on the capital Craig I would probably just.
Accentuate that in a little bit weird.
The focus for us as long term capital partners, we feel very good about the progress we've made.
And really with multiple parties that fit that long term capital partner profile.
And so this is what I will call.
An extra more than the final solution more than anything else.
On your question around cost curves of comments, our next generation we will be.
I don't want to give a specific date, but.
Later this year.
Really high performance two dimensions of that number one effective range increases because we have been successfully jacking up our transmit power on that return channel side. So that allows us to exploit the Tam even more effectively off of our current network.
So if you recall right. We've historically been in the one three to $1 six kilometer range and the goal of this next generation device at a probably about 2025% cost reduction is to be able to drive that higher as well from a power perspective.
So a bunch of engineering, but looks really good.
We expect to be able to showcase that later this year.
Which will as you correctly point out unlock the smaller multifamily premises, we have been starting to do what I will call. Alex can correct me if I'm wrong, we're touching now 20 ish apartment buildings and greater on in some cases in certain markets turn and greater as well as you guys.
You folks have seen us do we have a disciplined approach towards learn iterate and then.
Accelerated.
And so with that we are we think the small medium.
Family of multifamily is a right market for us.
As you will.
Experiencing tremendous sort of take rates in New York, Boston L, a where those densities.
Single family, we have constrained today largely to Columbus, mainly because.
And it's purely a.
Question on capital allocation from our site, which is there is so much time on the multifamily side, where we have network build so first priority first order of business get as many customers and get that get that utilization up as much as you can and as you continue to drive cost reductions then focus.
And single family. So as you see in Columbus, and yes, you will see in Vegas, we will have the opportunity to be able to serve single families as well, but in the core markets that we're in just the opportunity set on the multifamily down to two or three apartments, just so great that it makes no logical sense to go after single family.
And then licensing as well yes.
Sorry, I forgot the last question so licensing dimension Craig.
Engaged in about three to four conversations that are progressing internationally.
<unk>.
I'm optimistic we'll have a more firmer update at some point over the next 60 90 days, but there seems to be a real demand in the emerging markets is probably the best way to.
Characterize it comb.
Combination of Asia, and Latin America, where people are viewing this as a really cost effective way to drive broadband connectivity.
In addition to that we've been having multitude of conversation on the wholesale side within domestic applications as well I will not go into any more detail as they get a little bit more flushed out but think of it as a.
<unk>.
Adding.
Taking additional capacity from the <unk> network, which as we've talked about in the past.
Any of our sites today are running low and 30% to 40 Gigabits per second high end 80, Gigabits per second so even as we get to.
10, 15% of passing from a take rate perspective, there is a ton of excess capacity. So there seems to be emerging demand on that dimension as well.
That's helpful. Operator next question.
Thank you. Our next question comes from Michael Rollins from Citi. Please go ahead.
Thanks, and good morning.
Two topics first on the art to Fred can.
Can you provide just.
Some additional context of what's happening in terms of that RFP performance relative to the pricing of the rate plans it sounds like.
ACP.
Getting over 10% May also be.
A contributor to what's happening in <unk>, but if you can just kind of maybe take us through a little bit of a journey of.
What this is going to look like over time, and then secondly, I was looking at the cohort analysis.
That you provided in slides.
It looks like about 35%.
Of the revenue is in the cohorts I guess five of them that we'll disclose.
Only 4% of the cost of service is in those cohorts and I was just curious if you could unpack a little bit more of what might be the cost of service for example, what might be in the cohorts what might not be in the cohorts.
And.
How that plays out over time, just given the percentage of cost differentials versus like the revenue picture. Thank you.
Hi, Mike.
Briefly on the RP sites, so really.
That's the majority of the fluctuation you will see this fluctuation on what I'll call realized are approved from quarter to quarter from us and that is largely a function of so lets play this out for a second right. So let's assume that we're offering averaged out.
Four weeks of free.
Incentive to sign up for story, so any customer that's really signed up in June hasnt contributed any revenue or any customer that really signed up towards the end of may hasnt been contributed any revenue, but as a proportion of net adds.
Those are big months for us as a result of that Youre seeing a pull down of that gives a spectrum over the plan the customer signing up for it. So that's one.
And that is the majority of the fluctuation that you see yes, youre correct that we ACP will impact that it is difficult to today's completely parse that out and say, it's 30, because a portion of those ACP customers actually end up taking an upgrade to the $50 plan as well and paying the net differential of 20.
<unk> to us.
So my long term sort of view is as we continue to grow at this aggressive pace you will on a quarter to quarter, you will see that fluctuation and we monitor internally what happens two or three quarters on a trailing basis across different markets and across areas, where the proportion of net adds to the base of that market is lower.
And I can tell you that that number tends to be.
$15, 20% higher 30% higher depending on as you mature out of those cohorts.
So let me just give you a little bit color on what's in and what's out of those expense items.
I think that the expenses are.
A little bit higher relative to the revenue in terms of exclusion and the reason for that is a large chunk of those expenses are going to be at.
Corporate level, so things like R&D and large part of the <unk>.
Site related expenses, which are related to office et cetera, our corporate G&A. These were all expenses that are at a corporate level and our.
Excluded from the allocations to the individual cohorts when we looked at the cohort level of revenue we try to match up for all the subscribers that we have within that cohort all the expenses on the Opex that is related to servicing those customers are deploying them. So it's a very it's a.
A very simple way of getting to the.
The incremental margin that you will get out of that cohort level and thats. The build that we've given you and Mike wants to probably addition to that I would probably point on.
<unk> can correct me, if I'm wrong, but we took a very conservative view and we said so let's assume you built up tower.
On day, one and you have three buildings underneath it in that quarter for example, and we allocated all of the cost of that tower on those three buildings as opposed to saying we are going to save some proration for rate later on and as those in the subsequent quarters, let's assume you moved from three buildings to 15 buildings that quarter.
Opex for that tower has been allocated across all of those fifteens, but thats why you see a big negative the first quarter, because we're hitting everything that the cost structure has to adjust those limited number of buildings, but as you can imagine we continue to sell into that territory over time and continue to not only add building, but at customers over time.
That's right and the other piece I'd point out is <unk>.
We did not include any of the ACB on ABB revenues, because we get that lump sum payments from the various government entities and it was very hard for us to go back and correlate exactly to the subscribers within certain buildings in the future. When we shared additional analysis around this we will get that color.
To a certain extent some of the revenue, especially given that ABB is now 10% of our mix. Some of that revenue is understated in this cohort analysis again, we took the view coming out of the gate, let's be conservative take out things that we couldnt have a direct attribution from the customers credit card lump all the costs into any relevant building in.
That area and not save any future allocations I think the methodologies laid out in the presentation, Mike as well, but happy to have further questions on that if necessary.
Great and just one other.
Apologize if this is disclosed somewhere in the materials, what's the ending cell site number for the quarter for the whole company.
So we don't really disclose the ending satisfied number but.
I think in the past we have said it is more than 250 and there will be continued to grow our network I think a good proxy for where we are from a network point of view is the color that we gave you on our balance sheet and also the.
DNA right because the depreciation expense is a good proxy for the expansion of the network.
If we were to spitball at kind of in the 100 range.
Alright, and what range.
<unk> hundred range 300, thank you so much for the details thanks.
Okay.
Operator next question please.
Our next question is from Dan Mcdonald from Oppenheimer. Please go ahead.
Hi, everyone. Thanks for your time.
Here on behalf of her in two questions if I may.
First things cable clearly appears to be weakening as you touched on before perhaps even quicker than many of us expected.
What kind of response have you seen or expect to see from cable and in order to compete with fixed wireless and my second of all are.
Are you seeing any impact from the current macro environment.
Sort of a follow up to that are there any issues.
Supply chain. Thanks.
I'll do a rhetorical thing I guess on the cable response side of the start and I think the core question for the Investor base would be.
Ken Cave will be a viable business at a $40 $50 price point and I think that's sort of the crux of the issue here is technology fundamentally as deflationary and as the only reason in a deflationary environment, which is driven by technology, you would expect high prices, where there is a structural imbalance in the market and I think what's really.
Investors and others are beginning hopefully beginning to see is the technological impact of Reed.
Eliminating that structural entry point in providing competitive response and I think that's what you're beginning to see play out I think our experience on the competitive response tends to be bundling as opposed to competing on price.
Sure.
Thats right and it tends to be sort of offering higher speed tiered plans of similar pricing that we don't see price lowering because it would mean restructuring the rate base for the entire subscriber base. So that tends to be the dynamic we experienced and I think as we have disclosed in the past we are like 900, a quarter percentage of 95.
10% or whatever the number is ballpark of the Boston market. So it's not like we're an isolated overbuild our inlet fourth streets in Topeka, Kansas right. This is a completely different way of sort of thinking about it so to either youre willing to completely rethink your cost structure and reprice, the product or you're basically saying.
Look there is a way for me to make it up.
<unk> margin add bundling add other features and products and lose some share and I think thats what were dynamics that we're seeing play out and I think that plays and FW is.
Favorite quite dramatically.
Your question on the supply chain I think last year was a.
Very difficult year, and I think we redesigned pretty much every product in our product line to eliminate difficult components.
Anecdotally and I don't really have any hard data to suggest that either.
Hard view into this anecdotally our view is that seems to be easing off.
It may be a combination of the product redesigns that we've done and.
And eliminating the difficult volume components or in general easing up of some of those supply chain concerns on our side.
And then third with the macro.
I'm, sorry would you repeat the question on the third side third question.
Yes.
Yes, just in general.
Any impact from <unk>.
The macro environment, whether it's inflationary.
Etc.
Yes.
In general we have not seen and I think you can look at on year on year.
Labor utilization rates and labor numbers are not that different.
Fortunate that way I think for a certain set of knowledge workers I will say that number has.
Escalated, but our total base is small enough that I don't think it has a material impact on the business.
I'm sure there is some impact.
Higher fuel prices, but our fleets tend to be relatively small at this point, so not a material impact and those things keeping a close eye on this.
Labour supply chain combination, but we have not always in fact, we've not seen that impact over the last I would say.
10 to 12 months.
In any material way.
Got it thanks, so much.
Operator are there any other questions online.
At this time, we have no other questions in the queue.
Okay, I'll hand, it back to Curt for.
Closing remarks, if you haven't.
Well, thank you everyone.
Probably just end up closing with.
Probably two or three themes number one.
Operationally and I fully.
<unk>.
When you look at this company is executing on all cylinders at this point with I look at this as a very unique opportunity where there are very few companies in my view with that can continue to what theyre doing and have a near infinite runway, assuming we find all of the right capital partners, which I'm confident we will.
Number one number two I think our thesis which was.
There will be incumbent they will continue to raise prices and create an opportunity for us I'm just going to pick a number between 50 and $75 for a great product mix opportunity and is continuously as we personalize the experience for these consumers will continue I'm very confident we'll continue to take share in these things.
The early moves that we made in consolidating supply chain driving yields of our equipment higher paying great dividends for us in terms of cost control.
It's just been a.
Tough journey, but a journey that is showing its results in terms of the.
Fundamental execution and customer response customer acceptance of us.
Great. Thanks, everyone and we'll see next quarter or speak to you before then.
Thank you everyone.
Okay.
This.
Today's conference call. Thank you all for joining you may now disconnect your lines.