Q3 2022 OneSpan Inc Earnings Call
Yeah.
Thank you for your patients that'd be one of the key three 2022 one son earnings conference call will begin in one minute time.
[music].
Hello, everyone and welcome to the Q3 2022 one spot earnings conference call. My name is no idea and I'll be coordinating the call today, if you would like to ask a question at the end of the presentation. Please press star followed by one on your telephone keypad I will now hand over to your H J Maxx at Vice President of Investor Relations.
To begin Zhou. Please go ahead.
Thank you operator, Hello, everyone and thank you for joining the <unk> third quarter 2022 earnings Conference call. This call is being webcast and can be accessed on the Investor Relations section of <unk> website at investors Dot one dot com.
Joining me on the call today is Matt Moynahan, our Chief Executive Officer, and Jorge Martell, who joined as our new Chief Financial Officer in early September .
This afternoon after market close once been issued a press release announcing results for our third quarter 2022 to access a copy of the press release and other Investor information. Please visit our website.
Following our prepared comments today, we will open the call for questions.
Please note that statements made during this conference call that relate to future plans events or performance, including the outlook for full year 2022, our forward looking statements. These.
These statements use words, such as believes anticipates plans expects projects and similar words and these statements involve risks and uncertainties and are based on current assumptions.
Consequently, actual results could differ materially from these expectations expressed in these forward looking statements.
I direct your attention to today's press release, and the company's Form 10-K, and Form 10-Q filings with the U S Securities and Exchange Commission for a discussion of such risks and uncertainties.
Also note that certain financial measures that may be discussed on this call are expressed on a non-GAAP basis and have been adjusted from a related GAAP financial measure we.
We have provided an explanation for and reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures in the earnings press release.
In addition, please note that the date of this conference call is November one 2020 to any forward looking statements and related assumptions are made as of this date.
As required by law, we undertake no obligation to update these statements as a result of new information or future events or for any other reason.
I will now turn the call over to Matt.
Thank you Joe Hello, everyone welcome to our third quarter earnings call I'm.
I'm pleased to begin today's call by welcoming Jorge Martell to the one span team as our new Chief Financial Officer, Jorge He's a well rounded and operationally focused CFO with strong experience in global Finance Hey.
He joined us from extreme reach a global leader in creative logistics with an end to end cloud based technology platform, where he was instrumental in the execution of the company's organic and inorganic global growth strategy.
He is another Great addition to our transformational leadership team as we focus our strategic plan to drive increased growth and profitability over the coming years.
Now turning to our third quarter financial highlights.
We had a strong quarter overall, including record bookings and digital agreements driven by several customers committing to longer term contracts given the enterprise class quality of our solution.
As a result total company bookings were at the highest level in eight years.
<unk> high value high assurance B to B and B to C transactions remains a high priority for our customers even in a challenging macroeconomic environment.
Booking strength was broad based across North America, and most of Europe , though we did see some pockets in Europe , and Asia, where sales cycles lightened.
Total revenue in the quarter grew 9% year over year to $57 million, notwithstanding approximately $4 5 million of foreign currency headwinds adjusted for constant currency revenue grew 18%.
Annual recurring revenue grew 14%, excluding the FX impact of approximately $3 million.
<unk> grew 17% in line with our full year 2022 guidance range. In addition to FX AOR was impacted by timing of contract renewals and certain customers adjusting their purchase volumes to reflect post pandemic normalized levels.
We were profitable on an adjusted EBITDA basis, which benefited from operating efficiencies and ongoing cost saving initiatives as compared to prior quarters.
Next I want to briefly discuss two important seven figure AOR esignature contract wins during the quarter.
Both were competitive enterprise expansion deals with existing digital agreement customers, which resulted in significant increases in ACB PCB and contract duration.
The first one was with a leader in cloud banking software. This customer increased its contract length with us from one to three years and it's PCB by nearly four times. The second one was with a large insurance and wealth management firm that increase its contract length from three years to five years and is TCP by nearly three times.
Both of these large contracts highlight the strength and reliability of our enterprise grade E signature solution and demonstrate the land and expand paradigm, we are emphasizing internally.
And our security solutions segment demand for mobile security and server solutions continued to be strong driven by ongoing escalation in mobile fraud attacks did you pass bookings were also strong at their highest level in three years as customers placed orders earlier than typical to compensate for increased lead times related to electronic component shortages.
We are also pleased that our mobile security suite, one to 2020 to SC Award for Best Mobile security solution during the quarter.
Now I will spend a few minutes on the progress we are making on our strategic transformation plan.
As we've mentioned before a key part of our transformation has been the continuous strengthening of our executive leadership team to bring scale experience to the company.
I am pleased to tell you that with the recent additions of Jorge CFO its duty Bhargava as our first chief customer experience officer. This important milestone is largely complete.
I continue to hold the dual role of CEO and Chief revenue officer, as we transform the company training to enable our sales team to sell all of our solutions and add to our talent base, we anticipate filling the chief revenue officer role by the end of the year.
Since our Investor day in mid May we increased our direct sales force by approximately 20% and believe we are on track to double the team by the end of 2023.
Although the labor market remains challenging we have found success highly experienced and highly qualified individuals many of whom come from cyber security and digital agreements companies.
The meeting with evaluating and personally approving every sales carinate be higher and I can tell you. Our message is resonating as candidates are universally excited about our market positioning and growth strategy.
Not only we've been hard at work ramping our sales and marketing efforts. During Q3, we made solid progress unifying our go to market strategy to enable the sales team to sell our entire solutions portfolio across our five product pillars verify authenticate interact transact in store.
In addition, the realignment and go to market focus around our one stand 1000 program, which prioritizes growth at our largest 1000 enterprise and target accounts is nearly complete and.
And we launched multiple orchestrated account based sales and marketing campaigns for both our digital agreements and security solutions segments.
As I've mentioned in past quarters, New logo acquisition and demand generation continue to be key priorities for the company.
We continue to make investments in our sales and marketing engine to increase the pace of new customer acquisition.
We also recently launched virtual room as part of our plan to provide new innovative solutions to customers that will be launching our next generation cloud connected DIGIPASS device in the near future.
As a reminder, virtual room as a white labeled solution that enables companies to engage with their customers to provide high touch digital customer assistance as well as execute agreements in transactions and a secure face to face virtual environment.
Virtual room is gaining interest from our target customers to enable secure use cases like wealth management private banking and capital markets.
Our go forward strategy is resonating with customers and employees around the globe.
We're adding new enterprise class solutions to our portfolio and we're increasing our sales force and expanding our go to market capabilities to take advantage of the opportunities we see ahead.
Our vision is that the world of digital agreement processes will evolve to require security throughout the entire transaction lifecycle.
Adjusted the point about the indication.
As the basis for our one spanned transaction cloud platform strategy. We will continue to update you as we introduce new solutions and make progress on our strategic plan.
Now I'll turn the call over to Jorge to take you through our third quarter financials.
Okay.
Thank you, Matt and good afternoon, everybody I'm really excited to be a part of one spent under new management team and look forward to helping drive growth as we implement our strategic plan I hope to meet all of you face to face in the near future.
I am pleased that we reported a strong quarter from our top and bottom line largely driven by improved operational discipline and execution in the business.
<unk> grew 14% year over year to $136 million.
Specifically to subscription contracts grew 25% to 101 million and accounted for approximately 75% of total <unk>.
Dollar based net expansion or D. B N E, which we define as the year over year growth in Iraq from existing customers was 109%.
Maybe and he was impacted by effects longer sales cycles, you started international regions.
I mean related to contract renewals and some customers right size their volumes to reflect post pandemic levels.
Revenue grew 9% $57 1 million led by 25% growth in subscription revenue to $22 3 million and 11% growth in DIGIPASS tokens to $19 8 million.
We also experienced a 1% growth in maintenance revenue.
These revenue increases were partially offset as a result of our security software license transition from perpetual to term, which is included in professional services and other revenue.
Gross margin was 67% compared to the prior quarter and compared to 70% in the third quarter of last year and I'll provide additional color by segment in a couple of minutes.
GAAP operating loss in the third quarter was $5 6 million GAAP operating expenses included a $3 8 million impairment charge related to our decision to sunset noncore solutions and $2 7 million of nonrecurring items related to our restructuring plan.
Operating expenses benefited from our cost reduction plans increase R&D software capitalization costs and by approximately 3 million from changes in FX as compared to last year.
Regarding our cost reduction plan last quarter, we mentioned the phase one was substantially complete with annualized savings of 11.8 million near the high end of that 10 to 12 million called for in the plan.
We made progress on phase two of the plan during the third quarter restructuring charges were approximately $2 7 million and annualized savings increased by <unk> 3 million to approximately $9 million in total.
As a reminder, phase two of the plan calls for total cash charges related to severance and benefit costs associated with headcount reductions of approximately 10 to 17 million during the period covered in the last three quarters of 2022 for the year ending 2025.
It is also expected to result in approximately $20 million to $25 million in annualized cost savings.
Q3, adjusted EBITDA was $4 5 million or 2.8 million higher than in the same period of last year.
Adjusted EBITDA margin was 8% compared to 3% last year.
The year over year increase in adjusted EBITDA was largely driven by higher revenue cost reduction initiatives capitalized software costs and lower than anticipated head count additions due to a challenging labor market.
GAAP net loss per share was <unk> 18 cents in the third quarter of 2022 compared to two cents in the third quarter of 2021.
non-GAAP earnings per share in the third quarter of 2022, which excludes long term incentive compensation amortization nonrecurring items, including the impairment of intangible assets restructuring charges and the impact of tax adjustments was three <unk>.
Consistent with the third quarter of last year.
I'll now discuss our digital agreements segment quarterly results they.
Did you like agreements Ah agree with 20% to 46 million led by 24% growth in subscription <unk> to $41 million.
Q3 revenue grew 20 per signed it to $12 2 million, including 25% growth in subscription revenue to $10 3 million.
Similar to last quarter, the vast majority of subscription revenue recognized in the quarter was ratable with the sequential increase influenced by the timing of contract start dates.
Gross margin was 80% compared to 72% last year.
Higher gross margin was largely a result of increased scale and efficiencies combined with a onetime credit from a cloud service provider, resulting in approximately a six point benefit.
Operating income in Q3 was $2 2 million as compared to point 1 million last year.
Increased revenue and gross margin were the primary drivers of the improved performance.
Minder, our transformation plan is still in its early stages and we plan to invest for growth in this segment input into hiring of additional talent to drive top line growth through increased sales and product development.
Turning to our security solution segment quarterly results.
AOR grew 11% to $90 million led by 26% growth in subscription <unk> to 61 million.
It's Christian revenue grew at 25% to 11 9 million driven primarily by expansion contrast from existing customers for on premise mobile security and service solutions.
Total revenue for this segment grew 7% to $44 9 million with growth in mobile security service solutions, and DIGIPASS tokens, partially offset by expected decreases in legacy deal flow and the perpetual software based licenses.
We continue to focus on driving subscription revenue growth. We also continue to see a healthy demand for DIGIPASS tokens.
Last quarter, we noted that supply chain challenges could impact quarterly DIGIPASS revenue by up to 2 million in the second half of this year.
Well, we continue to manage through these challenges, we expect electronic component shortages to delay shipments will start in DIGIPASS skus from Q4 to the first half of 'twenty to 'twenty three in the amount of four to four and a half million dollars.
Security solutions gross margin was 64% compared to 69% in the same period last year.
Factors impacting gross margin included an increase in electronic component prices product mix and an increase in shipping expenses.
Operating income for this segment was $5 7 million and operating margin was 13% as compared to $10 7 million and 25% last year.
The primary differences from last year can be attributed to lower gross margin and the $3 8 million impairment charge discussed earlier.
Turning to our balance sheet, we ended up the third quarter of 2022 with 94 million in cash cash equivalents and short term investments compared to 98 million at the end of 2020, one and at the end of last quarter.
We used $2 4 million of cashing operations during the quarter, primarily related to changes in net working capital and we have no long term debt.
Geographically our revenue mix by region in the third quarter of 2022 was very consistent with the prior quarter, 45% came from EMEA, 36% from the Americas and 19% from Asia Pacific. This compares to 42%, 34% and 24 person.
Sent from the St regions in the third quarter of last year, respectively.
And with that I'll turn it back to you Matt.
Thank you Ori, we estimate revenue in the first nine months of 2022 would have been $9 million higher and our revenue growth rate would have been six points higher at 11% had currency exchange rates been constant compared to the year ago period.
Based on current exchange rates, we expect additional FX pressure in the fourth quarter.
I also want to point out that we made several important portfolio management decisions recently in line with our strategic plan to focus our efforts on our most relevant solutions as we enter the first year of our strategic plan beginning January 1st.
The sunsetting of certain assets, including deal flow will contribute to revenue and there are headwinds over the coming quarters, but also enable us to reallocate resources and focus our efforts on our highest growth opportunities.
For the full year 2022, we expect the following.
Total revenue to meet or exceed full year 2021 revenue despite FX headwinds.
There are to be in the range of 12% to 13%, which is near the bottom of our previous guidance range of 16% to 18% when excluding an estimated FX impact of 3% to 4%.
And considering the downstream impact to our business from strategic portfolio changes in the macroeconomic environment.
And adjusted EBITDA to be in the range of positive 1 million to $3 million as compared to our prior guidance of negative 5 million to $7 million.
In closing, we believe we have momentum in our strategy and our teams as we head into fiscal year 2023, we've been hard at work over the past six months to put in place. The foundation of our three year plan. This plan includes increased revenue predictability and a more balanced contribution across product lines business segments and geographies over time.
I am proud of our team and the progress we've made to date, we look forward to updating you again next quarter.
With that Jorge and I will be happy to take your questions operator.
Okay.
Thanks.
To ask a question today. Please press star followed by the number one.
If you Chase with a question please press star.
I thought it might change.
To ask a question please ensure you're staying even meet with lately.
And our first question today.
Please go ahead your line is open.
Okay, Great Yep. Thanks for thanks for taking the questions.
I just had a few here maybe starting off high level.
How do you feel about your pipeline and.
[noise] ability you have on demand today versus six months ago.
Alright, I'll take this one I feel actually increasingly good at all.
Can you hear me okay.
I can hear you yes.
Okay, Alright, thank you sorry, I feel increasingly good with the visibility we have and the operational rigor taking hold really in every part of our business with without without stop.
Obviously, a dual visibility as C E O N E. R O that I'm very pleased with the teams and the process behind our ability to get visibility number one and then two multi quarter visibility going forward.
As you know keep focus and priority for us has been demand generation and so we continue to focus on that and new logo acquisition is one of our top priorities, which in turn obviously drives new pipeline our execution on our existing customers has been improving and you do see an increasing portion of our pipeline coming from the installed base customers.
As our sales team is unified now and has the ability to sell the entire portfolio that said getting the flywheel spending on the new logo acquisition, obviously will take multiple quarters to get that right.
Okay. That's that's helpful. And then I mean, we're still working on some of the moving parts of the model. So hopefully this questions. Okay.
Can you just kind of help me understand you had a pretty big revenue beat in comparison it looks like <unk> was.
Little bit light.
Theres the guide down even on constant currency basis.
So can you help us square those items what was there some extra term license revenue or you no longer contract duration or just how should we think about the.
The sustainability of that revenue upside you posted in Q3 because of that.
The headline numbers are pretty good.
Yeah.
Yeah. So I can take the high level Horrid then you know if there's anything to add please do obviously in revenue we do have the mixed component coming from.
On premise subscription software and the revenue recognition related with that as well as our perpetual hardware business, okay, but despite despite the the supply chain issues. We are seeing strong demand for the hardware products. So those two pieces are.
Almost a buffer if you will on the on the revenue side of things and as we all know can be lumpy from time to time, given the nature of our business, but that works in favor of the revenue line <unk>. In this particular case was impacted by a couple of known loss contracts.
Were in place, but were in effect in Q3, so we felt a little bit of a dampening from that we did experience some churn in our SMB space as we pivot to the enterprise.
And and those were two of the primary drivers for that are we.
You also talked about a little bit of a dampening effect on the ability to cross sell coming from Sunset products.
Those portfolio decisions that we spoke about over the past couple of quarters.
Now in effect and that did have a slight dampening effect on terror as well given our inability to go cross sell and up sell and avoid products. So those are the three primary drivers that would give you the difference between the AOR topline performance topline performance in there.
Okay.
Understood. Okay. Thank you very much.
Yeah.
Thank you thank you and our next.
Question.
Mr. <unk>. Please go ahead your line is open.
Yeah. Thanks for taking my questions and congratulations on the good progress you appear to be making.
Imagining that as sales cycles.
We're getting a little bit longer in some regions can you just elaborate on that what you're seeing there and.
So if you think that's going to be assessing other religious us now lets you go forward.
Sure just at a high level. If you look at our portfolio I'd say the lengthening sales cycles are more associated with the digital agreement side than the security software side in fact, we're seeing good demand.
For the tokens, we have obviously had a difficult time meeting that demand with supply chain constraints.
Security software products continue to do well given that there are largely tied to online banking.
And.
But the indication in Dundee verification of online banking and users and so that's a very that's a positive for us. The digital agreement business is really think of it as a mix between internal use cases.
With you know things like N D as in an internal documentation and business processes and external use cases that are typically used with external customer engagements to think of it as mortgage lending refinance we also have a healthy.
A healthy business with being integrated into platforms, given our private label capability the internal.
Projects from time to time, depending on customer we have seen some lengthened sales cycles as <unk> look to reduce the top priorities inside of companies given the macroeconomic environment.
On the external use cases that are customer facing we have seen some downstream impacts of transaction volumes lessening, which might impact you know a larger upsell or purchase that renewal or contract expansion midyear. So think of it as a tale of two cities internal with regard to the internal.
<unk> measure up to the to a reduced water line as far as the corporate priorities in the macroeconomic environment and then the extra Wan use cases being tied to transactions like mortgages to refinance and so that's just introduced some of them some of them a pause.
Our customer base, particularly mortgage mortgage related insurance related verticals.
Okay. Thank you and then in terms of some of that.
Finding yourself, Tim you've been pretty aggressive Nicky.
How fast do you think there's a big comp predictive.
How long is that planning cycle when you are.
Yeah that is a that was a great question and something we're hard at work at which is a global enablement, we enabled North America in Q2.
I was over in Europe personally for the European Enablement session and we will do APAC in Q4, and we have our sales kick off with a high percentage of content up enablement in January . So this is an ongoing process.
We are tracking to plan or slightly behind hiring on the sales force, but we believe we're tracking to plan to double the sales force by the end of next year and so as I discussed when we rolled out the plan in may the three.
Significant variables for us to go drive over performance in the plan are getting the sales team productive time to ramp.
Quota attainment, the quota levels themselves and deal size and so I feel good with their name on efforts that have been taking place, but we have to go see those sellers and actions as we enter into FY 'twenty three it's all very new right now, but I feel comfortable with the rate and pace of the enablement and now we need our top sellers to go out there and do it.
Great job for us.
And how do you see them.
What's the kind of churn and how that's changed in recent months.
We had a couple of contracts that were known churn and that manifested itself. This this quarter and that was one of the areas of of our contribution to the dampening effect on there are we are new essentially to the SMB space from a cloud infrastructure standpoint.
And we did experience some churn in the U S of that segment small business. Our focus has been on historically on the enterprise and and that's where another dampening effect took place in the SMB.
And chronic but we did have those two one off.
Situations manifest themselves in Q3.
No no major trend no major change to the trend line.
Okay, and just one last one.
Outside.
What's driving the upside in your adjusted EBITDA guidance versus the previous guidance.
Or do you want speak to that at least one yeah I can tell you what I can say dislocate hear me okay.
Yes, yes.
Okay.
I think there's a couple of factors here. One is you know our disciplined financial discipline that we've been executing over the past few months.
That has impacted obviously the operation of some cost discipline on capitalized software expenses. This is one for sure are the other portion of your total head count related as some of the restructuring initiatives that we had been talking about you're starting to see that impact that benefit roll through sequentially as well.
And then there's a little upside as well with.
Hiring a lifestyle, so I would say with respect to certain areas certain pockets of.
The different departments.
I think those are the three three largest ones.
Yeah, I can comment on.
Okay. Thank you that was all for me.
Thank you.
Thank you and the next question Rudy Caisson Zhao of D. A Davidson. Please go ahead your line is open.
Hey, Thanks for taking my questions I want to go back to <unk> question first just on the revenue upside in the quarter.
Is there any finer point you can put on.
The term license mix in the quarter were either of those two large esignature renewals that you called out term license it's.
It's just still a.
Tough model to grasp with with subscription and digital agreements up 18% quarter over quarter in the maintenance and support was up sequentially to so how much of that was driven by license.
Yeah, we had a we had a couple of significant contracts that closed at the end of Q2 and as you know really the way the subscription model slow they didn't really have much of an impact in Q2. So I think that's another element, where we had a.
Two contracts closed at the end of Q2 that manifest themselves in Q3 from a top line perspective, but there's nothing no major departures other than you know the only comment I can't really make is that we will experience lumpiness from time to time, given the product mix that we have at the moment, which still has a heavy on premise component on the security software side.
And and on the digital agreement side, we still have that large deal phenomenon as we'd give it to the enterprise where they have an over weighted impact on any given quarter. So I don't anticipate that could change over the next two to three quarters until we get the flywheel spending on the new logo acquisition.
Okay and then.
On the dollar based net expansion rate.
9% down seven points from 116% last quarter going by the definition of that figure gross churn shouldn't be impacted in that number so a seven point decline.
Over quarter again is there just any finer points you could put on why such a pretty significant drop off in that metric.
Yeah.
I want to take that or multiple let me speak to the mis speak to one of the dampers, but you mentioned Rudi.
As the sum of the sunsetting decisions some of the sunset decisions on the portfolio management.
He did sunset deal flow, we did sunset risk analytics, and we did sunset. The on premise version of our digital agreements are all three of those products had pipeline associated with them are de minimis in the big scheme of things, but in order of single digit to mid single digits of millions of pipeline that was in play and.
Obviously when customers here of an end of life decision that doesn't affect the purchase decision understandably. So many of those conversations have converted into discussions around other products, but those products were not as generally available for cross selling into the installed base that we had which obviously is a higher percentage of banking customers and at this particular time.
That was one of the meaningful reasons that impacted us the decline quarter over quarter.
Okay, and then just lastly for me it looks like you didn't buyback any stock in the quarter. After you spent $5 7 million buying back stock in Q2, just what was the thought process behind that decision, especially if you consider where the stock was trading down in the eight to $9 range in September why not buyback any stock in the <unk>.
Yeah.
Yeah at a high level, we continue to evaluate that and obviously, we do believe the stocks at an attractive level. We took a pause as we put a fine point, obviously as you know we rolled out the new strategy to the.
The investment community in May and had been very hard at work building out.
Corporate development strategy to support that including M&A and we felt it was prudent to take a pause to make sure that we had all of our corporate allocation.
Our sources and uses aligned before going further on that but certainly we do believe the stocks at a very attractive valuation and theirs.
Always.
So really forced to re enter the market at current levels.
So that's a continuous discussion with the board.
Got it that's it for me thanks for taking the questions.
Thank you Rudy.
Thank you and as a reminder, if you would like to ask a question today. Please press star followed by the number one no telephone keypads.
And our next question Nick.
<unk> of Craig Hallum. Nick. Please go ahead your line is open.
Hi, This is Nick on for Chad Bennett, Thanks for taking our questions. So as we think about the three year CAGR targets, given and me I guess, given how much has changed in the macro and with FX and and now the updated our guidance for this year are you thinking about the linearity of the.
The three year target CAGR any differently.
At the moment, we are not the big factor here given our size is really the ramping up the sales and marketing efforts in there for that engine I do feel very good about the enterprise class nature of our products and when we do land enterprise customers. They behave like enterprises would both in terms of deal size.
And the contract length, and so right now no change to our guidance I feel very comfortable with where we're at but obviously the first half of next year is incredibly important for us to see the productivity of our selling community and the deal sizes as we reward oriented company to their upper after the pyramid. So no change the guidance right now.
Got it and then maybe if you could expand more on the upcoming launch of the cloud connected did you pass token.
Any more color you could give on that offering and if that may change the revenue rec as recognition of hardware sales are at a recurring component to that business.
It will be launched with a ratable recognition model associated with it. So when we do launch the cloud connected device it will be pure AOR in the traditional sense. It's a service it's not a piece of hardware anymore.
I'm very much looking forward to getting this device into the market.
Historically as many of you know hardware was sold by a separate sales team.
In a separate sales motion to a portion of our installed base with a unified go to market. We do intend on taking this cloud connected device.
Everything.
Firm belief is that the high assurance security for transactions that require it whether it be a document or a banking transaction made.
May be able to take advantage of this capability you know certainly the digital agreements process, the virtual room product, which we just relaunched as well as our traditional banking core.
We haven't.
We do plan on making a announcement soon on that product and given the supply chain element on the uptake with it.
Honestly it would be a multi quarter journey for us as we go and engage our sellers on what is a new business model, but one that we're seeing a very favorable response from our installed base customers.
But we havent.
We haven't talked much further than that and we don't get product line guidance on this so happy to take you offline and talk about some of the dynamics, but you'll.
You'll see you'll see some you'll see more information coming on that soon.
Got it thanks for taking our questions.
Thank you.
Thank you we have no further questions I'll hand back to Matt for any closing remarks.
I'd like to thank everyone for joining for this call. We appreciate you going along on this journey with US and we look forward to updating you again in one quarter's time. Thank you for your time today.
Thank you. This concludes today's call. Thank you for joining you may now disconnect your lines.
Yeah.
Yeah.
Uh huh.
Okay.
[music].
Yeah.
Okay.
Okay.
Okay.