Q3 2022 Velodyne Lidar Inc Earnings Call
Welcome to the <unk> Lidar third quarter 2022 financial results Conference call.
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I would now like to turn the conference over to Mr. Jordan Darrow.
Investor Relations. Please go ahead.
Thank you operator, good afternoon, everyone and thank you for joining US with me on the call today are Dr. Ted Tewksbury, Valentine's, Chief Executive Officer, and Mark <unk>, Chief Financial Officer on today's call, we will discuss <unk> third quarter financial results and provide an outlook for the fourth quarter shortly after them.
Market closed today <unk> issued a press release announcing its third quarter financial results.
Well done also published an investor presentation, reflecting our recent performance you may access these documents in the Investor Relations section of Teledyne Lidar Dot com.
Today's discussion includes forward looking statements. Please refer to our press release and SEC filings, including our most recent 10-K and 10-Q for a discussion of factors that could cause the company's actual results to differ materially from these forward looking statements.
All forward looking statements in this discussion are based on information available to the company as of the date hereof.
Company undertakes no obligation to update or revise any forward looking statements, whether as a result of new information future events or otherwise except as required by law. Please also note our results and projections discussed on this call may include non-GAAP metrics management provides non-GAAP metrics because it uses them for budget planning purposes and for making.
Operational and financial decisions and believes that providing these non-GAAP financial measures as a supplement to GAAP financial measures will help investors evaluate <unk> core operating and financial performance and business trends consistent with how management evaluates such performance and trends. In addition management believes these measures facilitate comparisons with the core operating.
Our financial results and business trends of competitors and other companies a full description and reconciliation of these non-GAAP measures versus GAAP is included in the company's press release issued today.
Now I'd like to turn the call over to Dr. Ted Tewksbury Teng. Please go ahead.
Thanks, Jordan and thank you all for joining us.
Yesterday, we announced our plan to merge with Alastair an all stock merger of equals transaction.
And that is expected to drive significant value creation for <unk>, our customers and our shareholders.
Please refer to our joint conference call and press release for details.
Today's call will focus on <unk> Q3 financial results and Q4 outlook.
Q&A session today, we will be restricted developed <unk> results and to exclude discussion of the proposed merger.
In the third quarter <unk> delivered another solid quarter as we experienced continued strong demand and made significant progress on initiatives to improve our gross margin and lower our cost structure.
In addition, we added new multiyear customer agreements and announced the acquisition of Blues City, which further bolsters, our software and AI capabilities.
In the third quarter billings of $12 5 million.
Were above our guidance range of 10 million to $12 million.
Revenue of $9 6 million was within the guidance range of 8% to $11 million.
As discussed in prior quarters, the difference between billings and revenue is due to noncash contra revenue related to the Amazon warrant accounting.
As I noted earlier demand for <unk> products remains strong and continues to exceed supply.
Looking at the supply side, our team has made significant progress towards overcoming component shortages over the past few quarters.
In the fourth quarter, we will begin shipping our puck and ultra <unk> sensors within alternative field programmable gate array or FPGA to address this bottleneck.
And additional design improvements as planned for production in early 2023, which should put the biggest source of constrained supply behind us and reduce the cost of our sensors, thereby providing an opportunity to expand our product gross margins.
I will now provide an update on <unk> recent business results share the status of our companywide transformation and discuss our outlook for Q4.
Mark will then review the financial results in greater detail.
This month marks my one year anniversary at validated.
When I started I discussed <unk> goal to transform into a leading supplier of AI powered lidar solutions, while accelerating the path to profitability.
I outlined four strategic pillars to achieve this goal.
We have made enormous progress in all four of these areas over the past year.
I'd like to take a moment to look at each pillar and summarize the significant advancements made during the third quarter in particular.
The first pillar is to drive sales of existing products into the early autonomous markets, including industrial robotics and intelligent infrastructure.
These markets comprised 85% of our Q3 sales up from 53% last quarter.
According to industry research firm Yodlee, the available market for Lidar and industrial and robotics is expected to grow from $1 8 billion in 2021 to $2 6 billion in 2027.
Since our last call, we have announced several new multi year agreements that illustrate our value proposition in these markets.
We signed an agreement with Stanley Robotics in France to provide our puck and Valerie <unk> hundred lidar sensors for their automated valet parking solution.
This innovative service uses autonomous mobile robots to help car parks increased the number of vehicles that can be stored while improving customer experience.
Our sensors met the stringent performance specifications Stanley robotics required.
<unk>, our ability to serve the unique and rigorous product requirements for their programs.
Yeah Mohan Motors selected validating for Eva autonomy.
<unk> venture in Japan between Yamaha Motor and tier four incorporated.
Ive auto EBIT <unk> autonomous goods transport service provides logistical support for factories to improve their efficiency and safety.
We have already begun shipping <unk> sensors to support the launch of <unk> service.
We also signed a new multi year agreement with our longtime partner disciplined Stockholm based provider of airborne mapping and portable solutions for major European energy distributors.
The agreement further strengthens our long term relationship with vitamin, including a three year supply agreement for both <unk> and ultra <unk> sensors for which shipping has already begun.
These and other customer engagements. So that <unk> has established itself as a go to supplier of Lidar solutions worldwide that delivered the range accuracy and resolution needed to navigate complex indoor and outdoor industrial and factory environments.
Moving on to the smart infrastructure market Yoplait estimates this market will be the third largest total addressable lidar market by 2027.
Right behind a desk and topography.
Smart infrastructure is forecasted to grow from $108 million in 2021 to $1 1 billion in 2027 reps.
Representing a 51% compound annual growth rate the second largest for the lidar industry.
To accelerate our growth in smart infrastructure in October we acquired Canadian AI software company Blue City in an all stock deal.
Hello, Diamond Blue City have had a longstanding and successful partnership and this acquisition was the natural next step.
Okay.
The addition of Blues city expands our expertise and intelligence infrastructure traffic systems and software.
Our intelligent infrastructure solution.
S combines blue cities proprietary AI software with valid items Lidar sensors to monitor networks and generate real time traffic data and analytics.
This full stack solution integrating software and hardware is a major differentiator and key value proposition for our customers and the smart infrastructure space.
Iis is now deployed in 82 pilot installations around the globe and continues to expand.
We discussed some of these design wins in previous earnings calls, including those in Helsinki, Finland, and Ruesselsheim, Germany.
Our second pillar is the development of low cost sensors to drive mass adoption of Lidar and automotive and other price sensitive applications.
Our next generation directional and rotational sensor platforms remain on track for customer sampling next year.
Proprietary new architectures will enable these devices to achieve low price points, while expanding gross margins.
We look forward to providing more detail on these new products on future calls as they are introduced.
Our third pillar is to expand software to enable complete AI powered digital solutions that make it easy for our customers to deploy <unk> lidar in any application.
In Q3, we continued to develop and expand Vela Miller and software product line, which will include well, let go to make it easy for customers to manage sensors settings generate point clouds and calibrate one of more lidar sensors in minutes right out of the box.
Develop perception to translate <unk> point cloud data into actionable information, enabling autonomous systems to not only see but understand their surroundings.
And biller solutions, providing end to end hardware and software for a wide variety of vertical market applications.
Iis for traffic systems, Isabella <unk> first application specific solution.
The acquisition of Blues City will accelerate the development of new <unk> solutions for other vertical markets by replicating the successful Iis model.
We have several new <unk> solutions and development, which we expect to be announced in 2023.
Customers will be able to access Vela software offerings through Vela portal and online hub, providing easy and secure account management software downloads cloud services for Lidar based perception tasks and more.
Finally, our fourth pillar is to lead in high volume low cost manufacturing operational excellence and quality.
Our gross margin improvement plan is well underway and we expect to realize further progress.
The three main levers in this plan are the manufacturing transition to Thailand, the design of low cost sensors and the development of full stack solutions that include software.
I am pleased to announce that we are on schedule with our strategy to consolidate all production at our contract manufacturer in Thailand.
The transfer is expected to deliver significant improvements across our operations lower our overall cost structure and accelerate our gross margin improvement and time to profitability.
While we have made progress on our outsourcing plan and alleviating or supply chain issues in the third quarter, we recorded significant charges from excess and obsolete inventory.
It says on purchase commitments and expenses from canceled supplier contracts.
These charges totaled approximately $8 million.
Mark will provide additional details later in the call on the charges.
We have also made changes to our operations team leadership, which we believe will allow us to further improve our operating performance and expedite our transition and cost reduction efforts.
In addition to these initiatives to improve gross margins, we made excellent progress on our cost reduction plans discussed last quarter.
We have implemented measures to reduce expenses by streamlining our product portfolio and operations as well as improving our processes.
Since March 31, we have reduced our operating expenses by $10 million per quarter, or 28% by rationalizing head count and cutting spending in other areas.
We are making these reductions while continuing to invest in innovative new products to better serve our customers.
Going forward, we are continuing to look for opportunities to enhance efficiencies and believe we can further improve our expense base over the next few quarters.
While we have more to do the foundation is firmly in place and we expect to see better financial results in the future, including resumption of revenue growth increased gross margins and improved bottom line performance.
Before handing the call to Mark I want to offer some commentary around our guidance for the fourth quarter.
We entered the fourth quarter with strong demand across the entire business, adding more long term customer agreements on multiple continents that reflect the global acceptance of <unk> solutions.
Billings are expected to be between 13 million and $15 million.
And revenue to be between 12 million and $14 million.
Our gross margin improvement initiatives will continue as we move more manufacturing to our partner in Thailand.
In addition, there will be more actions taken around our cost containment measures that should deliver further progress in our operating expense structure.
Outside of these improvement initiatives yesterday, we announced the planned merger with <unk>, which we believe is an exciting opportunity to accelerate the adoption of lidar in fast growing global markets, while strengthening our financial position.
The all stock merger of equals is expected to drive significant value creation for <unk>, our customers business partners and shareholders.
Ousters CEO Angus Pekala will serve as CEO and I will serve as executive chairman of the board.
As one combined company, we are setting the stage to become a leading lidar provider with global scale and deep history of technological innovation, our strong balance sheet and a world class commercial organization.
Together, we can offer robust product offerings, including Verticalizing software to serve a broader set of customers and to address an ever increasing number of use cases.
We expect the proposed merger to unlock significant synergies, creating a company with the scale and resources to deliver industry, leading solutions for customers and society, while accelerating time to profitability and enhancing value for shareholders.
With the merger transaction expected to close in the first half of 2023, we will continue to execute on <unk> growth strategies and advance our pillars for success.
With that I would like to hand, the call over to Mark for a review of our financial results.
Mark. Please go ahead.
Thank you Ted and good afternoon, everyone.
As a reminder, within my remarks, I will discuss non-GAAP metrics.
Full description and reconciliation of these non-GAAP measures versus GAAP is included in the company's press release issued today on our website and our filings with the Securities and Exchange Commission.
Now moving onto the results.
Total revenue was $9 6 million and included a $2 8 million impact from the Amazon warrant accounting.
This compares with total revenue of $11 5 million in the prior quarter, which included a <unk> 9 million impact from the Amazon warrants.
Product revenue was $7 4 million, which included the $2 $8 million Amazon warrant impact. This compares with product revenue of $9 7 million in the second quarter of 2022, which included a $1 million impact.
License and services revenue was $2 2 million compared with $1 9 million in the prior quarter.
Billings, which represents the dollar value of products and services provided during the current period or in voice to the customer was $12 5 million flat with the second quarter and above our prior guidance.
GAAP gross loss was $10 9 million. This compares with a GAAP gross loss of $7 1 million in the second quarter of 2022.
Third quarter gross loss was negatively impacted by $7 million in charges, including a $4 $6 million charge related to a product transition.
Inventory reserves and commitment loss charges.
And $2 4 million from terminated contract costs.
As Ted noted, we have taken actions to improve our future performance.
non-GAAP gross loss was $3 3 million. This compares with a non-GAAP gross loss of $4 2 million in the second quarter of 2022.
non-GAAP operating expenses were $31 4 million compared with $37 5 million in the second quarter of 2022.
non-GAAP operating expenses were $25 1 million compared with $31 8 million in the second quarter of 2022.
The reduction reflects the implementation of the ongoing cost containment measures.
GAAP net loss was $41 6 million or <unk> 19 per share, which compares with a GAAP net loss of $44 3 million or 22 per share in the second quarter non-GAAP net loss was $27 6 million or <unk> 13 per share. This compares with a non-GAAP net loss of $35 7 million or <unk>.
<unk> per share in the second quarter.
The improvement was primarily due to the lower level of operating expenses.
Moving on to the balance sheet.
We ended the quarter with approximately $220 million in cash and investments. This compares with $229 million at the end of last quarter. As we noted in our last call one of our priorities is reducing our total cash burn we are making good progress on this priority and believe there are further opportunities to further lower cash usage.
At the same time, we will continue to invest in our growth initiatives to maintain our strong position in the lidar market.
Finally regarding the proposed all stock merger with <unk>, we look forward to providing more information about our combined company strategy. Following the merger closing, which is currently expected to occur in the first half of 2023 for.
For more information on the proposed merger. Please review the filed 8-K and other SEC filings and the joint conference call, which you can access at <unk> Dot com.
I'd now like to turn the call back over to Ted.
Thank you Mark Q.
Q3 was another quarter of progress on our company wide transformation.
We improved the supply chain inked, new customer agreements reduced costs and significantly improved our bottom line.
These advancements positioned <unk> to grow revenue improve margins reduce cash usage and accelerate our path to breakeven.
<unk> mission is to use our smart lidar technologies to advance the efficiency productivity safety and sustainability of a world in motion.
With over 75000, validating lidar sensors shipped to date, we are leading the way and making our communities safer our supply chain more efficient and our planet greener.
In closing I want to thank our many stakeholders for their continued support and most of all a big Thank you to the Valentine team for all their hard work to achieve our goals.
I'm proud of our continued progress and excited about <unk> future.
Before we open the call to questions I, just want to remind everyone that we will only be addressing questions in connection with <unk> on a standalone basis exclusive of the proposed merger with <unk>, which remains subject to completion.
With that operator would you. Please open the Q&A polling process.
We will now begin the question and answer session.
To ask a question you May press Star then one on your telephone keypad.
If youre using a speakerphone.
These pickups for headset.
Keith.
Withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
Our first question comes from Colin Rusch with Oppenheimer. Please go ahead.
Thanks, So much guidance could you just give us a sense of how the billings how much of that.
Our revenue is coming from existing customers and how much is coming from your customers.
I would say roughly.
80% to 90% is from existing customers.
Okay. So you can see.
Turning to grow the customer base as well.
Absolutely.
But as you saw with new multi year agreements, we continue to add new customers at <unk>.
Fast pace.
Excellent and then in terms of the maturity of the supply chain, obviously, there's an awful lot going on especially as you're going through some evolution of the platform, but I'm curious how prepared the supply chain is right now to really scale. It with you and if there's any particular components that are sticking point right now yes. Great question, we just made enormous progress.
And improving our supply chain and I'm pleased to say that we are nearing the end of this long dark tunnel, we've been in and we're close to coming out the other end.
Early 2023, but as I mentioned in the prepared remarks, we're already shipping.
First.
The new improved version of our <unk> and ultra <unk>, using new FPGA and that as you recall. It was the first phase of a two phase program. So.
That new Park will last us through Q4, and Q1, and then we will taper in.
<unk>.
Long term solution, which will use a xilinx FPGA and once that's completed we will finally.
Hopefully fingers crossed be through this.
The constrained supply situation.
Perfect. Thanks, guys.
Thank you thanks Paul.
Our next question comes from Nick Doyle with Needham. Please go ahead.
Hi, This is Nick on for Rajeev. Thanks for letting me ask a question.
Asking about Alastair, but not a not a hope.
Hopefully you can give me some just.
Some details on the competitive differentiation, so I know they use a little bit different technology and just wondering how.
You guys are thinking about any kind of synergy or <unk>.
Difference in the product lineup.
Yeah, Great question. So the technologies are different.
We used 905 nanometer laser.
I'm a flight technology.
I think you're all familiar with our technology, we use our proprietary advantages what we call the MLA the micro light our array and we have a proprietary.
<unk>.
<unk>.
Transmit receive optical sub assembly technology.
What <unk> has and I'm, not saying anything that isn't already out there in public is a.
As stat, and VIX oil based technology, which is mono monolithic all integrated on a chip, which is great from a cost perspective, and the technologies are very complementary in the kinds of applications that that they can address so together I feel that.
We have a very compelling combined technology to pursue the kind of markets that are that were jointly.
Will jointly pursue.
Got it.
And wondering if you can give us any more detail on all the press releases this quarter in terms of all the new customers there.
<unk> mine is a current customer, but like you quantified one of them is a three year deal maybe the other ones are they similar in size.
Scale in any more detail would be great.
Yes, sure so dividend is.
Our customer and distributor that we've worked with for many years.
The application here is airborne mapping of power lines.
So they want to be able to.
Also determined whether there's vegetation encroaching on power lines. So.
This will improve.
Improve the energy distribution network in Europe and other.
The other.
Regions.
What they liked about <unk> technology is most customers do as a high performance ease of integration.
Very low power for long operation time, and portability and those kinds of environments. So that's that's an exciting opportunity for us.
I talked about the Eve auto service in the prepared remarks, and basically just to elaborate a little bit more on that this is an automated conveyance service. So these are small electric vehicles that are being rolled out by this joint development between Yamaha motor in tier four and these will.
<unk> navigate factories autonomously, both indoor and outdoor and Lidar is essential in these kinds of applications to provide the safety and these kinds of warehouse environments and factories, where youre going to have these automated <unk>.
Vehicles autonomous vehicles co working with with human workers and so obviously safety is a paramount.
The importance there.
And then the auto service also layers on top of that fleet management services mapping services and so forth. So we think thats going to be a very good growth opportunity for us.
You also talked about Stanley robotics, which is automated.
Thomas vehicles for <unk>.
Car parks to help move cars in and out of parking spaces safely.
And efficiently. So obviously with the number of car parks worldwide that that could be a very exciting opportunity for us.
And then I should probably also mentioned the blues city acquisition, which was.
A really exciting development during the quarter.
We've worked very closely with blues city for many years. They of course have been our partner in developing AI software.
We sell together with our lidar as a solution to municipalities to do traffic monitoring at intersection and develop analytics to improve road safety and efficiency, especially for vulnerable road users such as cyclists and pedestrians and so forth. This.
This technology helps cities planned for smarter Greener transportation systems. There are also outside of intersections. Many other applications, where we can take that same technology and deploy it for parking applications retail casinos stadiums.
The Sky is the limit on the applications of this technology.
<unk>.
It positions us as being really a leader in intelligent traffic systems again, not just the sensors, but also the full stack software and analytics.
Traffic actuation.
Wincing traffic lights.
In order to improve traffic flow reduce congestion reduce fuel usage and keep people safe. So that's the first part of the value proposition for Blues City, but then the second part is being able to take that same successful model that we've used with iis, our intelligent traffic system and then.
Redeploy that for some of these other applications other vertical markets that I, just talked about so really a lot of opportunity and new applications.
Across our markets occurred in Q3.
Yeah.
Alright, operator, please go to the next caller.
Our next question comes from Senate.
<unk> with J P. Morgan. Please go ahead.
Hi, Thanks for taking my questions I guess on the first one on billings you clearly had strong billings in the quarter, you're guiding to billings.
For the fourth quarter, Chris, but I'm, just wondering when you're talking to your customers. What are you shooting in relation to sort of the response to the macro and as you think about sort of the nature of the projects do you have.
Sort of welcome.
Vehicles.
Well dmitry vehicles or infrastructure.
Projects, how are you thinking about sort of where you might see more sort of hesitation from customers and continue to invest in those projects as we sort of head into next year Richard.
So I think from a macro perspective, and then I have a quick follow up thank you.
Sure Great Great question and it really the answer depends on the market. So.
Let's start with automotive so automotive really breaks down into two sub segments, you've got level, four and level five <unk>, including Robo taxis autonomous shuttles and so forth and then you've got a das.
So we have a very strong position with <unk> with our parks are ultra <unk>, and particularly with our alpha prime or 128 laser device, which is really a best in class category leader.
For Avs and we've talked about that on past calls we continued to see strong demand for that product.
However.
We've continued to see the.
Volume rollout of Avs, whether it's robo taxis or autonomous shuttles continuing to push out to the right. So most of the demand that we have there is for early deployments pilot deployments and so forth and so that those shipments on a quarterly basis tend to be very lumpy.
We haven't really hit production, yet and I think production is still going to be pretty far out in the future.
Probably towards the middle or back half of the decade.
As far as <unk> is concerned as we've talked about in prior calls really the gating.
Obstacle to volume deployments there is price prices.
Lidar for <unk>, plus <unk> eight ads needs to come down to sub $500 levels for 300 to 400 being kind of a sweet spot and Thats why we don't have those products today in fact, nobody in the industry has those products today and that's why our second pillar is focused very.
<unk> on developing those low cost technologies.
So that the Adas Adas is really going to start to take off once we can introduce those next generation products, which will be ready for when those ramps arrives.
It's for those reasons for the delays in the.
Automotive market that we have really chosen to focus on what we called the early autonomy markets, which is industrial robotics, and intelligent infrastructure, including intelligent traffic systems those markets exist today, and we are shipping into them as we speak.
So in those markets, we continue to see very strong demand from our customers and that accounted for the strong $12 5 million billings, we saw in Q3 as well as the 13% to $15 million of billings that we will see in Q4, and we expect that to continue to grow.
Okay.
And then finally within industrial robotics infrastructure Youre, not seeing any hesitation from customers just given the macro in terms of.
Future activity, you're sort of billings.
Engagement with the customer than billings as well and then just for my follow up I'll ask it right which is.
As we think about sort of not asking a question about the multitude of excel, but as you start to prepare for it and we look at your portfolio. How are you sort of intending to talk to your question was about.
Product portfolio et cetera, particularly in relation to being the most comfortable about the product the data choosing Judy will be part of our combined portfolio in the future.
Similar sort of question, but in relation to the outsource manufacturing, Thailand with separate and it does it fit into the overall plans.
Okay.
The run off of the combined company.
Okay.
Let me start with the billings question.
We're seeing.
Strong demand across the board.
As I mentioned, we're going to have but we are guiding to 12 13 to 15 million in Q4.
I should mention that we're seeing more demand, we're still seeing more demand than we can supply.
I indicated in the prepared remarks that we're making tremendous progress in overcoming some of the supply chain constraints, but we are still seeing much more demand than we can supply. So we went into Q4 with very strong backlog.
So I'm very optimistic about future billings growth as far as the merger I'd, rather not get into details regarding the.
We're going to combine.
The product Roadmaps, where supply chains and so forth.
That whole discussion is going to have to await the closing of the deal which will hopefully happen in the first quarter by March may may get prolonged into the second quarter, but will come.
Come back to you at that stage and provide more detail on your questions around customers and supply chain.
Suffice it to say that Theres, a lot of complementarity between our customers and our markets, which should which should ease that process.
Yeah.
We have time for one more question, which comes from Mark Delaney with Goldman Sachs. Please go ahead.
Yes. Good afternoon. Thank you very much for taking the questions first was on the gross margin outlook longer term you mentioned a number of steps. The company is taking to try and improve the gross margin, particularly what you mentioned was consolidated manufacturing with our first partner in Thailand.
When you think about the margin impact of these steps.
How much margin improvement when fully complete do you think this will drive and how long do you think it'll take before that separately.
Well I'll give you the 30000 foot answer and then Mark can provide some details.
There is a couple of things that we're doing right now that will have a near term impact one is as the supply chain constraints.
Start to alleviate.
The price of components goes down those scarce components goes down so that will have an immediate impact just over the next.
Yes.
Net following weeks or months, and then a little longer term maybe over the next quarter or so we'll start to see the impact of the transfer to Thailand.
Which will bring down product cost and then the other two namely product design improvements to reduce the Bom cost that one is going to be a longer term one one year to 18 months before we start to see the impact and then <unk>.
Fourth we've got solutions, which includes software and that of course enables us to.
To raise our asps and that also tends to be more of a longer term.
Contributor.
On the order of a year or two years Mark I'll, let you.
Yes, and Mark obviously, it's one of the things that we are focused on probably more.
Permanently over the last over the last few months, which is kind of our gross margin strategy I mean for <unk>. The key thing for US really has been the implementation of these plans as Ted mentioned and as we discussed in our preliminary remarks, when we look directionally. Our goal is to continue to make significant progress on the gross margin side.
We're very excited about the fact that we've been able to increase our guidance for the fourth quarter in terms of our billings now for between 13% and $15 million. In addition, with the activities that Ted mentioned, we do believe that we will continue to make progress.
And improving our gross margins.
Obviously on a GAAP basis, we did see some.
Some significant headwinds this quarter, but allow that's behind us and we're looking forward to continuing the process of putting together a very very detailed and specific plans on how to improve our gross margins specifically and in the fourth quarter and also going into 2023.
This concludes the question and answer session I would like to turn the conference back over to management for closing remarks.
Alright. Thank you all for joining US today, we look forward to speaking you in the weeks to come and have a good afternoon.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
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