Q2 2023 PowerFleet Inc Earnings Call
Good morning, welcome to power fleets second quarter, 2023 conference call.
Joining us for today's presentation is the company's CEO , Steve toe and CFO David Wilson.
Following their remarks, we will open up the call for questions.
Before we begin the call I would like to provide powerful each safe Harbor statement that includes cautions regarding forward looking statements made during this call.
During the call there will be forward looking statements made regarding future events, including power fleets future financial performance.
All statements other than present and historical facts, which include any statements regarding the company's plans for future operations anticipated future financial position anticipated results of operation business strategy competitive position company's expectations regarding opportunities for growth demand.
For the company's product offering and other industry trends are considered forward looking statements.
Such statements include but are not limited to the company's financial expectations for 2023 and beyond.
All such forward looking statements imply the presence of risks uncertainties and contingencies, many of which are beyond the company's control.
The company's actual results performance or achievements may differ materially from those projected or assumed in any forward looking statement.
Factors that could cause actual results to differ materially could include amongst others SEC filings overall economic and business conditions demand for the company's products and services competitive factors emergence of new technologies and the company's cash position the <unk>.
Company does not intend to undertake any duty to update any forward looking statements to reflect future events or circumstances.
Finally, I would like to remind everyone that this call will be made available for replay in the Investor Relations section of the Companys website at Www Dot power fleet Dot com.
Now I would like to turn the call over to power fleet CEO , Mr. Steve toe Sir Please proceed.
Good morning, and thank you for joining us today, it's a pleasure to share our second quarter performance with you.
We've executed extremely well in Q2 and the first half of 2023 was dramatic transformation across the business and we remain ahead of schedule in our strategic plan.
The first half of 2023 is being focused on aggressively implementing the changes required to give the company the foundations for high scale profitable SaaS growth.
Our overriding priority is clear to be able to see P value business centered on high quality sticky recurring SaaS revenue.
While we are still relatively early in our journey strong proof points are now averaging in the shape of our P&L, our mix of revenue and associated service growth rates and 12% for the quarter and 15% for the half on a constant currency basis.
Our core go forward business is currently focused in North America, and Israel, which generates 83% of total services revenue with Europe identified as the key attitude market for geographical expansion in 2022.
Double clicking into these market service revenue in our North America business grew by an impressive 16% in the first half of 2023.
While I was writing business grew by 10% on a constant currency basis.
The recurring services gross margin in our core go forward business in Q2 was an impressive 71%.
These metrics in combination with the strong pipeline, coupled with early strategic customer wins since the commercial release of our unity data intelligent platform strategy are highly encouraging.
Switching gears to macro trends, we continue to see a slowdown in the logistics market segments.
Customers continue to recalibrate that post pandemic needs, while Israel continues to be buffeted by geopolitical events, resulting in temporary new product demand and foreign currency headwinds.
Despite the macro headwinds we are confident in our growth prospects, particularly with our unity data platform, our safety <unk> industrial solutions and connected car offerings.
Extensively clean low margin hardware centric sales pipeline and reduced hardware only business revenue significantly compared to the prior year.
Our strategy is to focus on high quality and high margin recurring software sales deals.
I, even challenging exercise, we are undertaking to prioritize mission critical SaaS opportunities.
While transitioning to SaaS sales, especially with new logo customers revenue realization may take slightly longer. However, we have largely achieved that goal of shifting towards higher quality revenue, leading us to anticipate sequential topline growth in the second half.
Recent sales wins with the <unk> companies like probably group enterprises, DB Schenker, Madonna, United Natural Foods with industries, North America, and bridged, our Mexico have boosted our confidence for the second half of this year and 2022.
Our total gross margin is showing good progress on both the quarterly and half yearly basis versus last year.
Supported by the impressive 71% gross margin and service revenues our core go forward territories that I mentioned earlier.
We delivered a $2 million improvement in gross profit for the half year. Despite the impact of our controlled pivotal strategy from hardware centric revenues. The SaaS revenues. This is a highly encouraging back to <unk>.
Our future value creation thesis.
In terms of transformation the vast majority of that tough decisioning that highly challenging activities are now complete and we look forward in the second half of 2023 to <unk> the growth engine and putting our foot on the accelerator as we move towards 2024.
The integration is moving North Sea is running ahead of schedule on both the cost and operation side.
From a cost standpoint, we have transitioned that senior leadership and Bruce as we executed on the necessary cost reduction initiatives across our broader business to meet our commitment to ensuring that the moving das acquisition is adjusted EBITDA neutral on a run rate basis exiting the third quarter.
Outside of our core business, we have good traction with our initiatives to find the right home for a low margin low growth subscale business units in Argentina, Brazil, and South Africa.
We expect to share a favorable resolution of this initiative on our third quarter call.
Before I dive deeper into our operational progress and outlook.
Turn the call over to David to walk through our numbers in more detail David.
Thanks, Steve and good morning, everyone to begin with I will provide an update on our key strategic priorities that I called out on our prior call, which will provide helpful context to digest, our second quarter financial performance.
Probably number one is to accelerate our strategic transformation.
Within the limits of our current balance sheet.
Acquisition and integration of <unk> is the primary project with consuming a significant portion of our extrusion bandwidth in the second and third quarters of 2023.
Reminder, the acquisition provided multiple benefits, including $8 $7 million in liquidity, a talented engineering team community complimentary high performance technology and expanded presence in the EMEA region.
On our last call, we committed to mitigating the impact of moving the business by driving down the EBITDA impacts to breakeven before the end of Q3.
We have successfully executed our $3 million Opex challenge complemented by an extra $1 million in cost reductions.
I am pleased to announce that we have taken all necessary steps to achieve the upside positive $4 million.
Even with these cost scheduled to be eliminated from run rate expense by mid September .
As expected the acquisition was the source of significant headwinds in Q2 with an EBITDA burn of $1 2 million plus.
Plus an additional 40 to $50000 in transaction and restructuring costs.
Probably number two is to improve the underlying operating leverage of our business by implementing a common scalable ERP platform across all geographies.
As I noted on the Q1 call rolling out and execute across our core businesses is a cornerstone in meeting expectation, we expect an additional $10 million of run rate cost savings through the course of 2020.
I am pleased to report the ERP project is proceeding according to plan with Rollouts in Mexico scheduled for this month in the U S expected to policy quickly.
Success in this project for LIFO, creating tools for peaceful migration processes.
First for U S rollout, serving as a precursor for migrating Israel to net fleet by year end.
Details will be shared on our third quarter call.
Now on to our financial performance for the quarter, which reflects the aggressive steps we are proactively taking to transform the business and the EBITA investments necessary to integrate new results.
Total revenue for the quarter ended June 30, 'twenty, three with $32 1 million compared to $34 6 million last year with robust growth in service revenue from our strategically important core markets offset by a planned decline in hardware product revenue.
High value services revenues totaled $21 million up, 6% and 12% on an absolute and constant currency basis, respectively.
Revenue mix continues to improve with service revenue starting at 66% of total revenue up from 57% in the prior year.
The decline in product revenue reflects our strategic shift towards becoming a SaaS software business focusing on higher margin strategic ventures.
This transition contributed to a gross margin expansion to 50% in Q2 'twenty three from 47% in the prior year driven by the increased high margin service revenue.
Our operating expenses increased by $1 3 million to $19 2 million compared to $17 $8 million in the same year ago period with increase solely attributable to the acquisition of <unk>.
Net loss attributed to common stockholders totaled $4 3 million or <unk> 12 per basic share.
Adjusted EBITDA was $647000.
Pro forma for EBITDA loss, removing darts of $1 2 million adjusted EBITDA was $1 8 million up $400000 or <unk>, 31% sequentially.
Now turning to our results for the first six months of 2023.
Total revenue was $64 9 million compared to $67 8 million last year with continued robust growth in service revenue from our strategically important core market again offset by a planned decline in hardware product revenue.
Our high value services revenue totaled $41 5 million up 8%.
15% on an absolute and constant currency basis, respectively with continued improvement in mix with service revenue accounted for 64% of total revenues up from 57% in the prior year.
Gross profit margin expanded to 53% from 45, 2% in the prior year period, driven by an improved mix of high margin services revenue versus product revenue.
Our operating expenses increased slightly to $37 7 million.
Compared to $36 million.
In the same year ago period, with the increase attributable to the acquisition of moving dots, which added $2 million of incremental opex for the first half of 2023.
Net loss attributed to common stockholders inclusive of a $7 $5 million gain on bargain purchase of moving dots totaled $790000 or <unk> <unk> per basic and diluted share compared to net loss to common stockholders of $5 5 million or.
<unk> 15 cents per basic and diluted share in the same year ago period.
Adjusted EBITDA was $2 million compared to $2 7 million in the same period last year.
Cash flow from operations for the half year was a positive $1 3 million a $4 million improvement from the same period last year.
During the quarter, we recommenced paying the preferred dividend in cash versus pick and our balance sheet remained strong at quarter end with $22 million of cash cash equivalents and our working capital position of $38 3 million.
One final item to cover we understand the impact the equity preferred instruments Hasnt. Our current trading performance. We are focused on proactively addressing this issue and are making good progress on finding options to successfully resolve it by year end.
That concludes my remarks.
Thanks, David.
As we articulated on our last call. Our 2023 operating plan focuses on four key strategic objectives, we are laser focused on delivering.
Objective number one is optimizing our opex base and operating structure to enhance profitability.
As discussed through rigorous cost reduction management, we successfully reduced operating expenses by an additional $4 million annually in the last five months, allowing us to onboard moving das engineering capacity.
It may be easy to say executing this Brian change is a challenging task.
I'm immensely proud of the team's exceptional skills and unwavering commitment, which enabled us to swiftly bring onboard in moving the industry, leading capabilities to the insurance safety and sustainability solution markets.
Additionally, we have rapidly expanded our talent pool in critical areas, such as data science, AI cloud architecture and data integration services.
This initiative has also positively impacted our underlying EBITDA performance in Q2 and.
And we expect it to support further EBITDA expansion as we drive growth in the second half of the year.
Additionally, Amit term seismic shift projects, which include hardware rationalization and integrated global supply chain, our common ERP and shared service centers are progressing well and on schedule.
Strategic initiatives are expected resulted in an incremental $10 million of annualized EBITDA with tangible results beginning in early 2024.
Objective number two is centered around driving robust organic growth in key regions fueling high quality recurring revenue expansion.
As compelling proof of our efforts we've achieved strong SaaS sales momentum in the U S and Mexico.
Recurring revenue for North America grew by an impressive 16% in the first half of 2023 compared to the same period last year.
Our industrial vertical remains very strong and we have some great news to share in terms of new logo wins in the vertical in Q2, driven by a collision avoidance advanced pedestrian safety solutions.
Powerfully to secure the following significant partnerships in Q2 <unk>.
DB Schenker, a global transportation and logistics provider to us powerfully safety solution, replacing a key competitor.
United Natural foods, a leading health and speciality food distributor selected pathway for safety and compliance solutions.
Worth industries, North America Alesia in industrial distribution optical power fleets applications to address access control and compliance needs.
<unk>, calling in materials and products manufacturer chose pathways pedestrian proximity detection for safety improvement.
<unk> a prominent pharmaceutical company selected pathway pretty strong it security and comprehensive capabilities to guest access control and compliance challenges.
In Q2, we also secured notable unity platform focused sales sales in the U S and Mexico.
These deals not only validates our strategy and mission critical technology platform to highlight our improved SaaS sales execution.
Pri group Enterprises PGE.
He is a prime example of the holistic value unit delivers PGE operates across various industries with 35000 vehicles and trailers initial.
Initially signing up to 5000 units subscriptions in June PGE showcases <unk> power and value through four key points.
First land and expand.
<unk> is already utilized unity to manage risks in our leasing and rental division with plans to expand the capability to other parts of their fleet.
Secondly device agnostic ingestion Unisys capability allows integration with third party devices, and Oems, enabling complete visibility and harmonize data across all vehicles.
Thirdly integrated data hub unity serves as an intelligent enterprise SAS solution integrating <unk> operations into maintenance and analysis platforms to a single pane of glass.
And finally white label Fleet management.
PGA is collaborating with power fleet to offer White label Enterprise application suite for their customers built on pathway unity.
While this is a detailed example, I thought it was extremely important to clearly demonstrate the power of the software platform that we built and the unique value proposition it provides to the market.
Other examples of new unity partnerships include Green power, a leading caterpillar data in the U S, which expanded their relationship with power fleet to improve equipment maintenance and customer service and bridged our Mexico subsidiary of the world's largest tire and rubber manufacturer, which also expanded their relationship with power fleet to monitor all.
Third party transportation suppliers, utilizing the unity platform to enhance visibility and productivity capabilities.
We're experiencing a notable increase in inbound interest in the U S. In fact, doubling over the past six months <unk> solutions contributing to a stronger pipeline perhaps to 2023.
For instance, our strategic contract with a leading U S. Soda Buffalo is close to Finalization with an impressive total contract value of nearly $5 million.
Advanced negotiations are underway with a major U S manufacturer of agricultural machinery aiming to introduce our second generation pedestrian proximity detection solution valued at <unk> of $2 million.
As I alluded to on the last call. We have now secured a geographical expansion deal in the connected car space with a leading customer deploying power fleet solution across seven 5000 vehicles in Q4, I'm asking to a substantial 6 million dollar PCB contract.
In the <unk> market in Mexico, we continued to make significant process also expecting three major wins in half two 2023 for our unity platform and related products.
Our third strategic objective. This year is delivering highly advanced enterprise software modules to the market all built on the unity platform.
We launched our second advanced enterprise application sustainability at the end of June .
This module empowers businesses worldwide to drive green initiatives by modernizing and aligning their fleets with corporate environmental social and governance goals.
As an integral part of our unity fleet intelligence platform. The sustainability module offers a range of capabilities designed to minimize carbon footprint, and hence maintenance and fuel efficiency comply with government mandates and reduce operational costs, while accelerating growth.
Key capabilities of the sustainability data powered applications include visibility.
Visibility into the tons of Cotwo <unk> produced and saved by our customers fleet.
Real time identification of high and low emissions vehicles, enabling customers to reduce <unk> to timely maintenance or transition to electric vehicles.
Eco, scoring and tracking emissions, increasing behaviors such as idling for each driver.
Providing insights to improve driving efficiency and incentivize positive behaviors.
Budgeting and planning leveraging historical data of vehicle efficiency, and eco scoring to predict fuel and energy usage.
In response to government initiatives rising fuel costs and consumer expectations more companies are prioritizing ESG and transitioning to <unk>.
We see this trend reflected in our existing customer base as well as our prospects.
With sustainability, we continue to support our customers in their journey towards a greener and more efficient future.
Okay.
Objective number four is expanding our channels and routes to market to drive new growth opportunities.
Following our acquisition of moving dose we are building a center of gravity in Europe and have recently appointed <unk> as our SVP sales for Europe .
<unk> has a wealth of experience and an impressive track record of SaaS sales growth delivery, which I personally witnessed across two businesses. We worked together in the European telemetry sites.
Our initial emphasis for the European market will be on leveraging our global accounts and our unique capabilities in the industrial vertical.
Secondly building on the success of our industrial business in the U S. We are expanding our distribution channel for industrial solutions in Mexico, both directly and indirectly through the channel.
We anticipate a robust performance in the second half in Mexico from this new channel.
Furthermore, we are looking forward to announcing a major white label agreement in Q3, with one of North America's largest material handling equipment and solution providers.
This agreement will enable us to offer our safety productivity and optimization technologies to their extensive customer base.
In summary, our core SaaS and profitability indicators for our go forward business are increasingly positive providing confidence in achieving our long term strategic value creation objectives.
Q2 marked a significant milestone as we completed the heavy lift of several transformation activities, allowing us to focus on tuning SaaS growth engine in the upcoming quarters.
We believe that all the heavy lifting items. We have now completed are the foundation for greater earnings potential and more compelling business model and a lower cost of capital for our shareholders.
In addition, we are confident that these trends will continue to drive greater investor interest and powerfully and support financing initiatives.
That concludes our prepared remarks.
Now I'll turn it back over to the operator for Q&A.
Operator.
At this time, we will be conducting a question and answer session. If you would like to ask a question. Please press star one on your telephone keypad.
A confirmation tone will indicate your line is in the question queue.
You May press star two if he would like to remove your question from the queue.
For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys.
One moment, please while we poll for questions.
Your first question for today is coming from Jason Schmidt at Lake Street capital markets.
Hey, guys. This is Max on for Jason.
Tom the subscriber count up 9% year over year I was wondering if you guys could break that out between existing customers new customers. Thank you.
Yes, obviously.
The significant growth from new more so than it has been historically, but in terms of providing that level of transparency, that's not something we'll be doing at this point.
Okay and then.
Looking out at the North American segment in Israel, you guys keep first half growth rates of 16, and 10% I was wondering if you could share that growth for Q2.
Expectations going into 2020.
Yes, so the 16% was.
For North America, 10%, Israel on a constant currency basis.
We did see an acceleration in growth in Q2, so in terms of actually breaking it out we're not breaking it out but to give you a sense in terms of just how that is trending.
That should give you good insight in terms of the trend.
And I think <unk>, we expect those trends to continue.
It's very solid growth and I think both from our customer base and internally.
We really made the shift narratives that transitioned to SaaS.
We have very strong growth prospects through Q3, and Q4 and then into 2024.
Alright, guys Thats it for me thank you.
Thank you.
Your next question is coming from Gary Prest piano at Barrington Research.
Good morning, Steve and David.
Lot to unpack here.
First of all.
As I read your press release, you talked about moving dots is still going to be a drag on EBITDA in Q3, but you should be.
EBITDA neutral for all of Q4 is that correct.
That's correct Gary.
And just to put some color on that as we said on the last call. We were taking substantial actions in our business to cover those actions have been completed and we actually went through it with data from three to 4 million annualized.
And those savings will just take a little bit of time to flow through as we.
Obviously, you take the cost out through Q2 and Q3 so.
Yes, Youre right from Q4 onwards will be EBITDA.
September so Italy, okay. Thank you so in terms of.
The unity platform you have two modules out right now.
Is that correct.
Revenue discussed correct and what wasn't.
What was the one in Q1.
That was the safety module.
Obviously, you're hearing a lot in terms of our wins in the safety space.
The dominating our wind in terms of customer drivers to do some sort of safety in the first quarter and sustainability in the second quarter.
Okay, and then what's the cadence for the rest of the year.
Yes, yes.
Yes, so first of all we're getting a lot of traction with the device agnostic ingestion and also with the integration into third party applications.
We've pivoted some.
Resource and expense into really kind of scaling those because of the level of demand on both so that's <unk>.
Priority <unk>.
Number one and that will be followed later in the year with more.
Modularity around advanced fuel and also compliance.
Okay.
Okay.
So.
As I look at what you reported here, which is nice that you've been able to break out everything.
In terms of.
Yes.
Our core markets.
Number.
You still have not you still have.
These countries that you're in you have not.
Sold them or jettison them yet right.
You are planning to do that in Q3 as our recall from your narrative.
That is correct. So we expect to give an update on the next call.
Standard update on the next call. If you look at our core margin sorry alcohol.
Core territories, which is obviously North America, which is Mexico and the U S plus Israel and then at 2024 kind of added segment. It is.
In Europe there.
And we are.
Currently in terms of SaaS revenues at 16%.
Growth year on year for North America, 10% for Israel on a constant currency basis, our services gross margin for that core business is at 71% and overall gross margins at 53%. So if you think about where we are down to center our.
Efforts investments and focus than those of the kind of metrics that we should be looking out for the go forward business.
Okay.
So.
And then in terms of integrating moving dots you said, you've gotten the senior management.
<unk>.
What are those things are you doing there.
On the cost side.
In terms of integration, that's going to help you get to EBITDA breakeven.
And so all the actions are complete.
And that was a realigning in terms of our development resources, we had a number of contractors around the globe and we kind of.
Exiting those guys out and using the <unk>.
And moving those resources for that we've also put three moving docs resources into senior leadership positions and made some transition there and ultimately then we've driven other efficiencies across across the business in terms of how we were running our European organization previously where we've now got people in country, which has led us to the fact of NAV.
4 million annualized.
Hosting the call.
Executed upon the cost obviously, you have to flow out and we need to realize that but everything is being done in five months, which is where I referenced I'm extremely proud of the effort and the scale of our teams to be able to do that in such a short space of time.
Okay, and then just lastly, I mean, you had been reporting your total shares outstanding with the effect of the RB I guess convert and this quarter you haven't.
Is there a reason for that.
And what would be the shares outstanding with that.
Convert exercise.
Yes, Gary let me get back to you on that so I'm not surprised with the history just given my tenure with the company.
How to connect with you on that offline.
All I would say Gary Theres not read into it. So nothing has happened which has led to any changing in our philosophy or in our reporting.
Now the one thing that did happen.
Because we were paying the average dividend and pik versus cash I know that does have an impact in terms of the EPS count.
So I think we have been sort of full sensitive we were taken were won with the pic. So we're paying in cash.
And so that may be the issue and again happy to connect with you offline.
Yes, I think its about 5 million shares or something like that and then lastly is it possible I mean, it was great that you gave subscriber counts for the quarter.
Would it be possible to get what the subscriber counts were.
In Q1, and the year over year increase.
Yes, we can get that to you Gary the year over year increase was 9%.
The sequential.
For Q1 on the subscriber accounts, that's what because.
Wanted to start doing like an <unk> number and stuff like that and that is really helpful sort of a subscriber.
Number for Q1, plus the year over year increase would be much appreciated.
Yes, we will fix that for you.
Okay. Thank you.
Thanks.
Your next question for today is coming from Scott Searle at Ross and km.
Hey, good morning, Thanks for taking my questions nice to see the growth on the services side of the equation Hey, maybe the quickly just jump in on the cost side a couple of clarifications.
David are there any onetime charges that are in there, particularly on the cost of goods sold on the hardware front seemed a little depressed.
I know, it's not an area of focus necessarily going forward, but just what should that look like as it starts to normalize if in fact, it does and then as it relates to moving towards moving to breakeven in the fourth quarter just wanted clarification.
Is that really in reference to the cost cutting efforts that you have ongoing or Steve are you, making a specific reference to the insurance vertical picking up.
Okay. So I'll answer the last one first and then David can take the financial ones. So this is around the cost exercise. So ultimately as you know a couple of main drivers for US what was the revenue that came with moving the update was the talent to bring in 30, plus highly skilled engineers to drive unity and <unk>.
Drive our insurance propositions, plus give us a beachhead in Europe . So in order to accommodate that within our balance sheet. We've made those.
And thats, the $4 million that we referenced.
Yes, and in terms of product margin Scott.
Theres no one time, so one times isn't really the major driver here, but what we are seeing is we're seeing pressure in Israel. So we're in the sort of position whereby a bom costs are in U S. Dollars. So the bulk of the costs that go into products are in U S dollars, just given the political situation there given the macro situation there.
We're in a situation where to maintain market share. It is very challenging to pass those increased costs on to the end user.
We think the most important thing to do for long term value is to maintain share. So in essence, we're getting squeezed from a margin standpoint, and as I said sequentially.
The reduction in margins was concentrated in Israel.
Got you very helpful.
And if I could follow up the $10 million in incremental cost savings it sounds like largely focused around some of the ERP integrations that you have ongoing it sounds like Thats, a little bit ahead of schedule and wonder if you could provide a little bit of color on that relative to your last comments.
Yes. It is.
Is absolutely crucial.
If you look at just the relative spend that we have for example on the G&A side of things. It is high and that is reflective of.
I'd say systems that work against us as opposed to for us.
So we are absolutely driving that in terms of the timeframe I would say, it's not inconsistent with what we shared on the last call that said it is aggressive but we went to pride ourselves on doing the hard things whether during the mountain time, so we're driving towards that so the aim would be to finish across all key markets by the end of this year.
Consistent with last time.
All the work to be done, but we have the right people doing that work in the right level of focus.
In terms of the $10 million costs. The ERP, specifically, we will start seeing the benefits. During 2024, so we will be working towards that but there's other sources of savings to which I think Steve will walk you through yes. So just additive to that one thing we didn't mention we can.
Get everything packed into into the.
The chat was.
<unk> just completed a.
Deals with ion X in flextronics to add source at contract manufacturing to give us far more efficiency in the way, we manufacture and distribute.
Our.
Our goods around the world and that is ahead of schedule. So we will see some of that start to come a little earlier plus in terms of some of our shared centers shared service center work in Mexico, We started aggressively moving.
Particularly because we are getting some price pressure in certain geographies.
And therefore, we've accelerated some of that as well.
Okay very helpful. And then maybe shifting to the pipeline and the opportunity it sounds like Theres a lot going on there in terms of building that TCG I'm not sure. If I heard a number you gave a couple of examples but was there a <unk> number in the quarter and maybe a <unk> pipeline number I think last quarter, you talked about it growing 47% I wonder if.
If theres an update on that front and if you could kind of highlight for us as well some of the <unk>, where they're trending obviously I think theyre going up but when you start talking about safety.
Safety sustainability, what is that due to the blended mix of the <unk> of new business that you're winning and as we think about 2024 services grew 16%. So far year to date you are talking about accelerating as we go into 2024, how should we be thinking about services growth in 'twenty four.
Okay.
In terms of the pipes it was up $40 million during the quarter net net $40 million during the quarter in terms of quantify pipe.
Okay.
In terms of our crews and we are seeing as we're doing the unity deals at 15% to 20% plus range that we've talked about before Scott and I think overall once we get into <unk>.
Totally focused on our core markets then for 2020 for that 15% range plus.
For our <unk> services growth is something that we feel is.
Heidi achievable plus we'll be layering in more growth from the European territory as well.
Which again the way that we're attacking those markets is ultimately with higher value higher quality hardware to software revenues not the commoditized revenues that we've had in the hardware channel as previously, which obviously allows us to take up on the service side rather than on the hardware side.
Ultimately you can see a real shift in our services mix, which is all part of that strategy. If we layer on top of that we are winning significant new logo business.
Bringing on the unity platform with incremental fees.
In the different elements that we talked about whether thats the device agnostic OEM integration side, whether that's the third party application integration side, plus the modularity, which gives us the ability to have.
More advanced versions of the standard software. This is all offer expansion within our customer base. So we feel very very confident about that the proof points are coming across that strategy and that's why we feel.
Really satisfied with having done the transformation stuff early and fast and hard we're now coming out of the phase that we talked about we came and said on the call. This six months would be a lot of ins and outs in a lot of transition and change now in Quebec tuning. The engine now it's about really bringing to bear.
The overall value that we create for our customers in our numbers and our shareholders.
Great. Thanks, so much ill get back in the queue.
Thanks Scott.
Your next question is a follow up question coming from Gary Press Latino.
Yes, I just wanted to get back to the sales pipeline. You said, you added $40 million does that sequentially or year over year.
That is a sequential numbers so net pi grew by $40 million in the quarter.
On the TCP bandwidth.
You were at 125, so year to date, it's about 165 that pipe.
It'll be more than that again the number we referred to last time was the increase in pipe and so that was an increase in pipe number versus the total pipe number.
Okay.
Okay. Thank you.
We have reached the end of the question and answer session and I will now turn the call over to Steve for closing remarks.
So just wanted to thank everybody for joining us today.
I think we're making significant progress and we very much try to have a very transparent view of the last six to 12 months and we know that that is complex and trying to understand and unpack everything that we're doing.
It's hard for you guys, it's even harder for us in terms of making sure we keep the business moving forward.
Im very very happy with the progress that we've made to thank you for your attention. We look forward to speaking to you next time keep safe keep well have a great day.
Okay.
Thank you for joining us today for our presentation you may now disconnect.
Got it.