Q4 2022 ADTRAN Holdings Inc Earnings Call
Okay.
Ladies and gentlemen, thank you for standing by and welcome to add trend holding Inc. Fourth quarter 2022 preliminary earnings release conference call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period to ask a question on the phone lines. Today. Please press star one on your telephone keypad and to remove yourself from the queue that is star one again.
During the course of the conference call and try and Representatives expect to make forward looking statements that reflect management's best judgment based on factors currently known.
However, these statements involve risks and uncertainties, including the continued spread and extent of the impact of the COVID-19 global pandemic.
[noise] ability of component suppliers to align with customer demand.
Accessible development and market acceptance of our products comp.
Competition in the market for such products, the product and channel mix component cost freight and logistic costs manufacturing efficiencies and our.
Our ability to effectively integrate mergers and acquisitions and other risks detailed in our annual report on Form 10-K for the year ended December 31, 2022, and our quarterly report on Form 10-Q for the quarter ending September 30th 2022.
These risks and uncertainties could cause actual results to differ materially from those in the forward looking statements, which may be made during the call.
It's now my pleasure to turn the call over to Tom Stanton Chief Executive Officer of that trend Holdings. Sir. Please go ahead.
Okay.
Thank you Lisa good morning, everyone. We appreciate you joining us for our fourth quarter 2022 earnings Conference call.
With me today is that trend holding CFO , Mike <unk>. Following my opening remarks, Mike will review the quarterly financial performance in detail and then we will take any questions that you may have.
I want to start by highlighting the importance of the milestone our reported last month in our combination with AD the optical networking SC.
The domination and profit and loss transfer agreement or DP LTA was registered this was the final administrative step in operating as one company.
We can now focus our integration efforts to drive synergies and shareholder value.
With that context going forward I will just talk about <unk> as a single integrated company rather than a combination of two different companies.
Our initial motivation for combining with AD that was due to our belief that the combination would make both company stronger and more diversified.
The key components of our combined value proposition were that we would have a more diverse and differentiated portfolio.
A more diverse customer base in both customer type and region and a stronger presence in our focused markets, especially the U S and Europe .
Capitalize on the fiber network and growth opportunities in these regions. The results in Q4 highlight the increased product and customer diversity as a combined company.
We're looking at the quarter I will provide some quarter over quarter growth statistics on a pro forma full quarter basis to reflect what the performance was in Q4 versus Q3 had the advil financials been consolidated for all of Q3.
The financials that Mike will review will compare Q4 quarter totals give me Q4 totals quarter over quarter with a partial contribution from at the beginning July 15th 2022, the closing date and year over year without ads contribution last year.
With that clarification I'll start with optical networking solutions. This category was up 7% quarter over quarter on a full quarter basis the.
The growth in optical networking solutions was especially strong in Europe , driving non U S optical networking revenue up 10% quarter over quarter on a full quarter basis in helping push overall non U S revenues up 15% quarter over quarter on a full quarter basis.
This was a record quarter for revenues and optical networking solutions for either as a standalone or as part of that trend.
We continue to see strong bookings demand in the quarter and I'll note that the success in the area was positively impacted by the by the combined company's efforts to address past due backlog in the quarter.
Revenue from access and aggregation solutions was up 7% quarter over quarter on a full quarter basis, driven by growth in fiber access platforms.
This growth was held back in the quarter due to delays in operations that resulted from introducing redesigned products to address supply chain issues and delays and $63 30 shipments.
Overall revenue from subscriber solutions was down quarter over quarter. Following a record Q3 performance.
Revenue outside the U S was 60% of overall company revenue in the quarter driven by our strength in Europe .
Our success in Europe was paired with continued demand for our fiber broadband solutions with U S. Regional service providers, we had record demand for our solutions in Q4 from U S Regional service providers.
We continue to invest in innovation in all segments of the portfolio and we are seeing broad based demand for our solutions. As a result of these investments we can now step through some of the highlights driving this excitement in our solutions.
I'll start with optical networking solutions that led our growth in the past quarter.
Unlike many vendors in this space, whose success is tied to specific customer segment or regions or our solutions are deployed by a diverse mix of large service providers regional service providers Internet content providers government agencies and large enterprise customers.
These solutions range from multi terabyte transport systems to internally developed optical modules and infrastructure monitoring solutions.
We differentiate through operational simplicity security and tailored solutions that are optimized for our primary use case in the metro edge and private optical networking segments.
This solution diversity customer diversity and solution differentiation provide great balance in a position and positions in this category for sustained growth moving forward.
This success was highlighted by <unk> being the fastest growing optical network vendor in Europe . According to <unk> latest market share report.
We also wanted to layer, 1% three networking transformation award in this category and the category of sustainability with our coherent 100 G transceiver.
Yes.
And our access and aggregation solutions, we formally launched the SPX $63 30, our industry, leading open disaggregated fiber access platform.
This product launch is one of the most anticipated in our portfolio in several years as the <unk> $63 30 sets a new industry benchmarks in density scalability and power efficiency driving broad based demand for this platform from a diverse mix of national and retail service providers.
The release of this platform is timely given the ongoing investment in next generation fiber access networks and focus on energy efficient network infrastructure.
The <unk> 63, 30 will begin shipping for revenue this quarter and we expect it to be a major contributor to our overall growth. This year following orders and project awards from several large scale national operators and numerous regional operators.
<unk> is already the second largest vendor 110 gig fiber access platforms across the North American and EMEA regions combined according to the latest Omnia market share reports and this product launch is set to enhance our position in this market.
And our subscriber solutions category, we have a diverse ongoing spanning excuse me a diverse offering spanning residential business in wholesale services.
On the residential side, we see continued success driven by growth in 100 gig fiber CPE and multi gigabit mesh Wi Fi platforms.
These in home solutions were a meaningful contributor to our revenue in Q4, and we expect demand for these solutions to remain strong as service providers connect more homes with fiber and upgrade the in home connectivity to multi gigabit speeds.
Similar trends are happening in the enterprise and wholesale.
Space, where we see strong demand for our business class routers virtualized edge platforms, multi gig enterprise switches and 10 gig carrier Ethernet termination devices.
And the virtual edge cloud space, we recently closed a largest software deal in the history of our company for this segment underscoring the growth opportunities ahead of us in this area.
This subscriber solutions portfolio provides us with the most comprehensive offering in the industry to connect users to all types of fiber networks.
Our solutions are complemented by comprehensive software and services portfolio that simplified engineering deployment and ongoing operations associated with these fiber networks.
On the software side, we see continued demand for our SaaS applications with over 150 service providers already adopting our latest mosaic one offering and many more expected to begin deploying this platform this year.
As we integrate our broader fiber networking portfolio under a common set of software applications. We expect to see this be an additional driver for growth in our software platforms and corresponding networking platforms.
This highly differentiated portfolio sets us up well for continued success in our key growth markets.
We see increasing demand from operators, especially our existing customers and deploying our full suite of fiber networking solutions.
With our much larger customer base this significantly increases our near term addressable market for these solutions.
Long term public and private investments remained strong with our fiber fiber networks with many of the key funding sources, including the $42 5 billion <unk> project in the U S steel planned in the years ahead.
Initiatives to reduce the dependency on high risk vendors, especially in Europe remains strong and we expect this to be a further growth driver for opportunities in the years ahead.
As a more scaled western supplier with a highly diverse technology portfolio, we expect to benefit from the long term tailwind.
On the supply chain side, the situation improved substantially when compared to a year year over year.
The outlook continues to improve and we expect this to be less of a headwind for the growth for our growth in the near future.
Given these factors, we remain optimistic about our growth potential and driving shareholder value.
With that background I'll turn things over to Mike to provide a review of our financials. Following Mike's remarks, we will answer any questions you may have Mike.
Thank you Tom and good day to all.
I will cover our fourth quarter 2022, preliminary and unaudited results and provide our expectations for the first quarter 2023. Please.
Please note that Q4 2022 results include a full quarter consolidation of the advil financials, which effects year over year and quarter over quarter comparisons.
Please be reminded that Q3 2022 incorporated only a partial quarter with add back beginning July 15th 2022. Since this is the case I will refrain from repeating the consolidation effects when discussing the year over year comparisons of our results.
I will be referencing non-GAAP information with reconciliations to the most directly comparable GAAP financial measures presented in our press release and also certain revenue information by segment and category, which is available on our Investor relations webpage at investors Dot <unk> Dot com.
In addition, we've uploaded an updated investor presentation to the site, which is available for download.
Unless stated otherwise all financials are presented in U S dollars.
AD Trans fourth quarter 2022 revenue came in at $358 $3 million up 132% year over year and up 5% quarter over quarter.
Within the lower half of our guidance range of $355 to $375 million.
Our network solutions segment accounted for 89% of revenues in Q4 2022 compared to 90% in Q4, 'twenty, one and also 90% in Q3 of 2022, our services and support segment contributed 11% of revenues in Q4 'twenty.
Two compared to 10% in the year ago quarter and in the previous quarter as well.
Year over year and quarter over quarter revenue increases were driven by our optical networking solutions category, which comprises 40% of revenues compared to 35% in the previous quarter.
Subscriber solutions and experience contributed 34% of revenues compared to 35% in the year ago quarter and 39% in the previous quarter.
Access and aggregation revenue share was 27% compared to 65% in Q4, 2021 and 26% in Q3 2022.
On a regional basis for year over year fourth quarter domestic revenue grew by 41%.
And international revenue increased by 310%.
International revenues make up 60% of our revenue and domestic revenue contributed 40% of Q4 2022 revenues.
Customer diversity continues to be a focus with 110% of revenue customer for the company during the quarter.
Q4, non-GAAP gross margin was 39, 1%.
Improving by three seven percentage points year over year.
And one percentage point sequentially.
Gross margin was positively impacted by higher software sales product mix and improvement in supply chain expenses with the year over year, partially offset by unfavorable currency developments.
While supply chain constraints lessen during the fourth quarter, we do anticipate challenges and remain focused on managing higher component costs freight expenses and expedite fees in the near term.
Our non-GAAP operating expenses were $118 $6 million, increasing by 123% year over year, and 9% quarter over quarter, which were primarily driven by increased labor costs related to the first full quarter of expenses, partially offset by lower contract services.
Operating expenses were 33% of revenue compared to 34% of revenue in Q4, 2021, and 32% of revenue in Q3 2022.
We remain on track with our synergy plans and expect total savings of $52 million, which will be realized with 43% in 2023 and 57% during 2024.
non-GAAP operating profitability was $21 $5 million, which translates into a non-GAAP operating margin of 6% compared to 1% in Q4 of 2021% and 6% in the previous quarter.
The year over year improvement in operating profitability was driven by higher revenue volume that more favorable gross margins.
<unk> over quarter remained flat with improvements in gross margin is being offset by higher operating expense.
Other income on a non-GAAP basis significantly increased year over year and quarter over quarter.
Merely due to unrealized gains on foreign exchange forward contracts.
We entered into a euro U S dollar hedge arrangement to provide payment security of future euro denominated payment obligations.
The company's non-GAAP tax provision for the fourth quarter of 2022.
Currently expected to be an expense of $15 $9 million or 50% to.
The company's GAAP tax is expected to be a benefit of $57 $5 million or 255%.
The difference between the GAAP and non-GAAP tax rates, primarily driven by changes in our valuation allowance as the company released the majority of its valuation allowance against its domestic deferred tax assets during the fourth quarter.
Closing out our income statement results. The non-GAAP net income was $15 7 million and $9 9 million after adjusting for minority shareholder interest in advance.
This resulted in diluted earnings per share attributable to the company of 12.
Sure.
Following the DP LTA on January 16th 2023, and beyond AD trend will absorb all of adverse profits and losses How's.
However, the net income attributable to common shareholders of AD trend will be reduced by the recurring cash compensation paid to the minority shareholders as part of the DP LTA agreement.
This recurring annual compensation for the minority shares outstanding amounts to 59 euro cents per share.
Turning to the balance sheet and cash flow statement cash and cash equivalents totaled $108 6 million at quarter's end for the quarter operating cash flow was $812000, mainly due to the higher inventory levels and business combination expense.
Yes.
Net trade accounts receivable were $279 4 million.
At quarter end, resulting in a DSO of 72 days compared to 82 days in the prior quarter.
Net inventories were $427 $5 million at the end of the fourth quarter, resulting in turns of two four.
Compared to three one in the third quarter of 2022.
The company continues to carry a higher level of inventory and raw materials to minimize further disruptions given the challenging electronic component market and continued extended lead times trade accounts payable were $237 7 million, resulting in <unk> of 67%.
Compared to 71 days in the previous quarter.
Looking ahead to the first quarter of this year, the continuing effects of the COVID-19 pandemic the ability of component supplies to align with customer demand to book and ship nature of our business the timing of revenue associated with large projects the variability of ordering patterns from our customer base.
As well as fluctuation in currency rates.
And any potential additional required purchase accounting adjustments related to the AD. The merger may cause material differences between our expectations and the actual results.
We continue to focus on the supply side related cost challenges and our merger integration.
We see signs of normalization in the semi conductor supply chain and expect our backlog to moderate and to decrease inventories over the upcoming quarters.
We will continue to focus on cost management and operational efficiency, while investing in key areas to drive growth.
We're confident that our strategic plans and disciplined execution will enable us to deliver strong financial performance and create value for our shareholders.
With that in mind, we expect that our first quarter 2023 revenues.
<unk> will be between $355 million and $375 million.
And we expect a non-GAAP operating margin between 5% and six 5%.
Once again additional financial information is available at AD trends Investor Relations webpage at investors Dot AD trend Dot com.
I'll turn it back over to Tom and we'll take your questions.
Super Thanks, Mike.
Lease at this point, we'd like to open up to any questions people may have.
Thank you the question and answer session will be conducted electronically. If you would like to ask a question that is star one on your telephone keypad and as a reminder to remove yourself from the queue that is star one again.
We will take our first question from Michael Genovese with Rosenblatt Securities.
Hey, guys, it's Andrew King on for Mike. Thanks for taking my question.
First off just not sure if I missed this or not could you break out the revenue contribution from Advair versus train organic.
Yes.
Yet so.
Add to that contribution on a U S dollar basis was $202 million.
Yes.
Got it and then.
Sure if I missed this detail this quarter, but I know last quarter, you had mentioned that on gross margin side, you've seen approximately 350 basis points of impact from supply chain. If you could update that number for this quarter and then if you.
Continue to see the supply chain improvements that you've thought through this quarter, how much of that would you expect to gain back through the year FY2023.
Yes, the first parts a little easier than the second part on that question. So let's start with the easy ones, so compared to the 350 basis points for this past quarter. It was 260 so roughly.
Two six percentage points of impact is still out there. So you see it's going in the right direction. We expect that it will continue to move in that direction, but it's not going away over the near term quarters. So I think there'll be there's going to be a hangover for a while they're just av.
Extra purchase price variation in costs that we have paid to secure components that some of that is remaining on the balance sheet. I think we've said before that we're starting to see freight and logistics costs dropping as more capacity has come online and rates have reduced a bit.
But it's still a bit elevated from where it has been in the past. So I can't tell you exactly what's going to happen in the future, but we do expect it to continue to move in the right direction.
Got it and then if I can just sneak in one more quick one here.
Very solid trend sorry.
Sort of defies the industry this quarter, which is your book to Bill remained around one and your backlog looks like it came up about 2% sequentially. So what do we have to see an improvement in supply chain to see that backdrop log start to get released and come back down to historical levels.
How much of that do you expect to be released over the next year in this next quarter.
Yes, you are correct about the book to Bill So we still have.
Strong order entry coming in.
I think over the next three quarters.
Hopefully, we don't know exactly.
Some of these are down too you are missing one or two components. Many times a one component on a big bill of material a 200 components. So those are getting better and better Unfortunately, those ones, where youre missing one are still probably the most problematic.
So I would expect it to get materially better throughout this year.
We're going to try to.
Really Matt we're managing kind of focuses on longest lead longest things in our <unk>.
Backlog right now and really trying to clear those out.
And then any customer impacting pieces, so that will get materially better through the third quarter I would think.
Understood. Thanks for taking my questions.
Okay.
We will take our next question from Ryan Koontz with Needham.
Alright, thanks for the questions.
Tom I was wonder if you could expand on the strength in Europe . It sounds like <unk> had a great quarter, there and what sort of applications are driving that success with their service provider customers that they highlighted can you also update us on where ad trends.
Progress with that with AD Trans core.
Fiber wins are progressing in Europe with great. Thank you.
We will.
In Europe , I would tell you for the.
Optical solutions piece that was actually pretty much across the board.
Metro networks private networks.
Just broad strength as youre seeing people upgrade their networks now to handle new.
<unk> not only in the access space, but if your corporation or whatever your the amount of information flow is growing dramatically right now so.
There wasn't really one particular highlight I would say it was across the board.
On the.
Access piece, we have on the trend.
Fiber access piece, we have several awards that are in play that we.
Spector to get close.
This quarter actually I think all of the.
The ones that we have talked about as being in the works are at this point through lab.
Trials completed so we will see those pick up really the gating factor there is our ability to supply product.
I had mentioned in my notes that the.
63, 30 got delayed to this quarter.
Many of those customers are waiting on the $63 30, that's our newest best kind of differentiated really great platform that a lot of these awards were premised on so we have to get that out the door and we expect to be shipping that towards the tail end of this quarter.
Super helpful. Thanks, and just a follow up you mentioned a large software one do you have any color on that you can share what type of customer or what type of application.
Yes that was the largest so we have NFC solutions, which are.
Kind of by feature solution that was our largest.
NSV win to date, so that was using the ensemble platform.
Got it.
Business D-mark like a universal CPE type model.
Yes, that's correct.
Got it that's it thanks so much.
And as these nfa's shipping after.
It's been around for a while about yes.
Yes.
Alright, Thanks, Scott Thanks, so much.
We will take our next question from Greg Mckinney with West Park capital.
Yes. Thank you for taking my question.
I was wondering if you can discuss the Huawei replacement.
Cycle, if you will and where are you seeing the greatest amount of activity I assume it's in the UK, but and all.
So how much of.
That was a contributor too.
Revenues in the quarter. Thanks.
Thats a good question and I, probably should have pointed that out on what's going on in Europe with our optical solution set too because a lot of that a lot of that activity is driven by the fact that you have carriers or even enterprises.
That half.
Non trusted vendors in their network that they are having to remove.
The activity you can view it a couple of different ways. If I just look at flat out boarders.
Then you are at U K is the strongest that they were kind of ahead of the curve early on and made a decision a couple of years ago that they needed to migrate away, but almost all of the carriers if not all of the carriers at this point in time are doing something.
With all of the major carriers at least.
I talked about the fact that we had $1 five additional carriers in Europe .
Most if not all of those were in fact in fact I would say all of those were impacted by what they're having to do with their vendor space and that either.
Kicked off this award or accelerated awards.
So it's and that's also happening in the optical solution space as well and I think Thats why we are starting to finally see this activity I shouldn't say finally, but we're seeing this activity really kind of pick up because people are being forced to make decisions.
Thank you for that.
We will take our next question from Paul <unk> with William came with Jackman company.
Thank you for taking my questions.
My first question is residential SaaS I was wondering if you could give us an update on that and also with the.
The Wifi six chip kind of getting freed up do you expect it to maybe give us some idea of how quickly. This thing can grow in 'twenty three.
Yes, so it is a hot area.
I had mentioned that our subscriber solutions were down on a quarter over quarter basis, but we had a really kind of super focus on trying to clean up some of that backlog in Q3 <unk>.
Demand hasn't lightened up a bit on in that product area. Both for <unk> and <unk> talked I think Owen teeth may have actually set a record this quarter that they were very very strong.
On the on the SaaS front I'd also mentioned, we crossed a 150 customers I will tell your carrier customers.
All of those of course have subscribers that are tethered to them.
We are working through the backlog of Onboarding. These customers. So my guess is we're probably of that 150, we're probably about 50% of those are online now or very close to being online that backlog continues to grow our SaaS customer count continues to grow at over 30%.
Kind of on a year over year rate.
I was actually at that rate again this year so.
Good uptake on that and I would say software in general was a positive note I mentioned the ensemble piece.
But just from a revenue perspective, all of that coming in line in.
We're very happy with what we did this quarter.
Okay.
You had $2 million and subscribers not service providers, but in subscribers at the end of September do you have.
An idea of where you were at the end of December .
Yes, it's actually we're over $2 million and when I say that number we were over $2 million were still over $2 million that continues to grow.
I don't know, Mike if we want to give much more color here.
At some point.
Where we can want to break that number out we haven't gotten to that point yet but.
Let me just say, it's well in excess of $2 million.
Okay.
Another question on the middle mile can you talk a little bit about what your strategy is in the states and.
What youre seeing out there and what we might expect this year and next as far as new orders yet.
That's actually been a positive.
No.
The reception in the U S has been very positive.
We have already started.
<unk> already booked deals in fact, we probably have already started shipping deals.
The introduction of the combined company's assets being brought to the U S carriers have pads kicked them into <unk>.
Buying decisions.
We're either ongoing and we were able to secure it or it's kicked off buying decisions.
Most specifically in the RSP space here in the U S. We've seen very good reception and I think we are in the early days of that.
Europe , it's going exactly the way we plan, we have gotten some introductions.
The ad.
Customer base with AD trend equipment, we started really joining.
Joining our forces and the way we're going to customers.
From large carriers without a doubt, it's making an impact on how we are presenting to them what they're asking for.
I think it's.
Really on a customer space I can't think of a single negative.
On the customer side.
Okay.
And if I could one more sneak one more in your German security company.
What business was put inside of that and what is your strategy.
For going after new business, who is your target market and kind of what might we expect.
Revenue wise in that and also will that be broken out.
Going forward.
Mike do you want to cover is the breakout of the revenue.
We don't break it out today if.
If it grows larger we would actually break it out, but it's not reported separately today.
Customers that we're focused on mostly there are.
Our government customers, who have high security requirements most.
Mostly in Europe , but they can actually sell elsewhere as well the products I think you know Paul that are in there all around.
High level encryption and security technologies. So it's things that governments are using for their own private networks to ensure secure communications.
I think you can think about it and just so you can scope it is less than $50 million.
It's in the multi tens of millions.
And.
We fully expect it to grow but.
But it is very focused and its target.
Okay. Thank you that's all I had okay sure.
We will take our next question from Tim Salvaggio with Northland capital markets.
Hey, good morning.
I wanted to get a quick one in on the tax rate, it's been pretty volatile so micro.
Michael <unk> on the expectations for.
Q1 or the year.
And then onto a more substantive question.
Tom You mentioned, you Shouldnt think about any negatives on the customer side.
Maybe we could explore that a little further seems like one of your U S. Based competitors has seen a pretty good size win at Deutsche <unk>, which given the strength that you saw in the quarter with advise soon thats your your largest customer for the quarter.
Or at least in competition.
I Wonder if you could talk about that competitive environment more broadly.
And if I have time for a follow up call.
Yes, let me thanks Scott.
Got it all the way through I'll start with the <unk> I think the other one is actually okay.
Hello.
I will tell you everybody has to have two vendors and why should say most companies have to have two vendors.
I would say with our position within that account both from a.
The relationship side, but really more more specifically from the technology side, where.
Okay.
Where.
Giving the possible scenarios of what could have happened we are.
We are we're happy with where we are.
I think.
I think we're in a good position there. So as you know that used to be a three vendor account.
With us Huawei and Nokia.
That is materially changing and we think we're in a really good position.
So hopefully that answered that question, Mike do you want to sure.
Sure.
Thank you.
That we've had some pretty big volatility on our tax rate.
<unk>.
50% that we ended with in the quarter. There is driven just by a lot of the international taxes. Another comment from the business combination and then with the global intangible low taxed income rolling across that we've had some we've had some increases there now are our non-GAAP .
Right for the year was $21 seven so maybe just slightly higher than we had expected.
Last quarter was really making up for some some benefits that we saw earlier in the year because of the changes that happened in the tax code looking ahead at what we're expecting for 2023, I would say our non-GAAP rate should be in the low to mid twenties person.
Tentage rate and we should have a lot less volatility going forward now that the valuation allowance has been mostly eliminated I think that changes in the valuation allowance caused some.
<unk> and that non-GAAP rate as well.
I think it should settle out a bit into that low 20 ish percentage rate.
Tim to answer your question.
Sure It does and if I could maybe follow up real quick.
And this is just about.
Standalone that churn performance in the quarter procure down double digits sequentially and kind of flattish year over year.
You broke out the subscriber solutions may be driving some of that but.
Either you you talked about strength in U S Rural.
So.
Anything in particular outside of the.
And maybe it is just the new product stuff driving that.
Within the <unk> Standalone numbers.
The biggest the biggest.
Kind of impacts the thing that we didn't expect was.
We launched.
I had mentioned the $63 30, which was supposed to start shipping in Q4.
It is now targeted towards the end of this quarter. So we had a little misstep there.
Both supply and then just getting all of the.
The things that we needed to get done in order to finish up this lab approvals so that.
And that hurt or some and then we also had some redesigns on many of the <unk> 16.
The predecessor to the 63 30 <unk> call it $63 20.
And we had some issues getting those out the door that was the biggest impact to us.
And actually drive the performance that you are talking about.
Those will be $63. One is now up and shipping. So that's kind of passes $63 30, we still have a little bit of work to do.
Sure.
Okay. Thanks very much.
Right.
Alright, I think thats the end of <unk>.
Question session. So I appreciate everybody joining us today, and we look forward to talking to you next.
Quarter, Thanks, very much everyone.
Thank you that does conclude todays presentation. Thank you for your participation and you may now disconnect.
Please wait the conference will begin shortly.
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