Q3 2023 Stem Inc Earnings Call

Thank you for standing by this is the conference operator welcome to the stem third quarter 2023 earnings Conference call. As a reminder, all participants are in listen only mode. The conference is being recorded after the presentation, there will be an opportunity to ask questions.

Speaker 1: Thank you for standing by. This is the conference operator. Welcome to the STEM third quarter 2023 earnings conference call. As a reminder, all participants are in listen only mode. The conference is being recorded. After the presentation, there will be an opportunity to ask questions. To join the question queue, you may press star then one on your telephone keypad.

To join the question queue. You May Press Star then one on your telephone keypad should you need assistance during the conference call you May signal, an operator by pressing star Zero I would now like to turn the conference over to Mr. Ted Durbin head of Investor Relations for stem.

Please go ahead.

Speaker 2: Thank you, operator. This is Ted Durbin, head of investor relations at STEM. Welcome to our third quarter 2023 earnings call. Before we begin, please note that some of the statements we will be making today are forward-looking. These matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. We therefore refer you to our latest 10Q and our other SEC filings.

Thank you operator, this is Ted Durbin head of Investor Relations and welcome to our third quarter 2023 earnings call before we begin. Please note that some of the statements we will be making today are forward looking these matters involve risks and uncertainties that could cause our results to differ materially from those projected in these statements. We therefore.

For you to our latest 10-Q and our other SEC filings.

Speaker 2: Our comments today also include non-GAAP financial measures. Additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our earnings release. We will be using a slide for the next couple of slides.

Comments today also include non-GAAP financial measures additional details and reconciliations to the most directly comparable GAAP financial measures can be found in our earnings release, we will be using a slide presentation today.

Speaker 2: Our earnings release and presentation are in the investor relations section of our website at www.stem.com

Our earnings release and presentation on the Investor Relations section of our website at Www Dot Dot com.

Speaker 2: John Carrington, our CEO , and Bill Bush, CFO , will start the call today with prepared remarks. Mike Carlson, COO and Prakash Patel, Chief Strategy Officer, will also be available for the question and answer portion of the call. And now I will turn the call over to John . Thank you, Ted. Good afternoon and thank you all for joining us today. Beginning with slide three, our agenda will cover five items. Our third quarter results, technology leadership, and product announcements, and our commercial traction. Bill will then discuss our finance.

John Harrington, our CEO and Bill Bush CFO will start the call today with prepared remarks, My Carlson P O L and protects Patel Chief strategy Officer will also be available for the question and answer portion of the call and now I will turn the call over to John. Thank you Chad Good afternoon, and thank you all for joining US today, beginning with slide three our agenda will come.

Five items, our third quarter results technology leadership and product announcements and our commercial traction.

Bill will then discuss our financial results.

Speaker 3: Now let's turn to slide four on our third quarter 2023 results and highlights. In the third quarter we recorded 134 million dollars in revenue up 34% versus third quarter 2022.

Now, let's turn to slide four on our third quarter, 20th screens III results and highlights in the third quarter, we recorded a $134 million in revenue up 34% versus third quarter 2022.

Speaker 3: Revenue this quarter was negatively impacted by non-recurring adjustments that Bill will discuss later in the call.

Revenue this quarter was negatively impacted by nonrecurring adjustments that bill will discuss later on the call. We set a record for bookings of $676 million. The three X bookings growth performance drove our contracted annual recurring revenue or car up 43% versus the third quarter of <unk>.

Speaker 3: We set a record for bookings of $676 million. The 3x bookings growth performance drove our contracted annual recurring revenue, or CAR, up 43% versus the third quarter of 2022, and up 17% sequentially.

22, and up 17% sequentially.

Speaker 3: Adjusted EBITDA came in near breakeven at negative $900,000 versus negative $13 million in the same quarter last year. Adjusted EBITDA reflects an adjustment to exclude an exceptional reduction in revenue.

Adjusted EBIT came in near breakeven at negative $900000 versus negative $13 million in the same quarter last year adjusted EBITDA reflects an adjustment to exclude an exceptional reduction in revenue.

Speaker 3: With strong revenue growth, solid margins, and continued cost control, our path to profitability continues to improve.

With strong revenue growth solid margins and continued cost control our path to profitability continues to improve.

Speaker 3: We continue to expect achievement of positive adjusted EBITDA in the second half of this year, a goal we committed to during our investor and analyst day in 2022.

We continue to expect achievement of positive adjusted EBITDA in the second half of this year. Our goal we committed to during our Investor and analyst day in 2022 today.

Speaker 3: Today, we announced an exciting new agreement with SB Energy. We will offer software and services for up to 10 gigawatt hours of storage deployments across North America. This partnership underscores our focus on growing service revenue. At the core of our value proposition to gigawatt scale developers like SB Energy is our AI-driven technology, Athena, which continues to receive third party recognition for its differentiation and value.

Today, we announced an exciting new agreement with S. P energy, we will offer software and services for up to 10 gigawatt hours of storage deployments across North America. This partnership underscores our focus on growing service revenue at the core of our value proposition to gigawatt scale developers like S be energy.

She is our AI driven technology, Athena, which continues to receive third party recognition for its differentiation and value.

Speaker 3: Finally, we're announcing that we expect to achieve full year adjusted EBITDA positive in 2024 without the need to issue additional equity. This is a key milestone as we move to free cash flow generation and will outline more specifics in our full year earnings call in February .

Finally, we're announcing that we expect to achieve full year adjusted EBIT positive in 2024 without the need to issue additional equity. This is a key milestone as we move to free cash flow generation and will outline more specifics and our full year earnings call in February.

Please turn to slide five in.

Speaker 3: In Q3 2023, we far exceeded our guidance for contracted bookings, coming in nearly 2x our guidance and the highest quarter in company history at $676 million. The booking strength was largely driven by our entry into the bulk power system scale of the front-of-the-meter storage business this year, particularly in the municipal and cooperative customer segment.

In Q3, 2023, we far exceeded our guidance for contracted bookings coming in early two X our guidance and the highest quarter in company history at $676 million. The booking strength was largely driven by our entry into the bulk power system scale of the front of the meter store.

<unk> business this year, particularly in the municipal and cooperative customer segment.

Speaker 3: Industry analysts expect US public power and co-ops will represent over 20% of future storage deployments, and we are well positioned to serve this market.

Industry analysts expect U S public power and co ops will represent over 20% of future storage deployments and we are well positioned to serve this market.

Speaker 3: Our solar backlog also grew significantly, up 41 percent year over year. For both businesses, we are driving consistent, strong, gross margins, a testament to the differentiation of our solution.

Our solar backlog also grew significantly up 41% year over year for both businesses. We are driving consistent strong gross margins a testament to the differentiation of our solutions, we saw a 32% increase in storage this quarter to five gigawatt hours, we have nearly.

Speaker 3: We saw a 32% increase in storage AUM this quarter to five gigawatt hours. We have nearly doubled our storage AUM in the past year, a remarkable achievement by the team and another measurable differentiation of the STEM solution. Solar AUM also had the third consecutive quarter of healthy growth with new customer additions, more than offsetting the rolloff of some of our legacy low margin contracts.

Doubled our storage AUM in the past year, a remarkable achievement by the team and another measurable differentiation of the stem solution solar Au am also had the third consecutive quarter of healthy growth with new customer additions more than offsetting the roll off of some of our legacy law.

Margin contracts.

This execution resulted in strong car growth up nearly $13 million in a single quarter. Additionally, we are raising our car guidance for this year.

Speaker 3: This execution resulted in strong car growth, up nearly 13 million in a single quarter. Additionally, we are raising our car guidance for this year.

Speaker 3: In market demand remains very strong. Falling equipment prices for both solar and storage are improving project economics for our part.

End market demand remains very strong following equipment prices for both solar and storage are improving project economics for our partners.

Speaker 3: The recent clarity on some key tax incentives also remains a major tailwind for the industry. Overall, we have seen several industry analysts come out on a key debate in our sector regarding the impact of higher interest rates.

The recent clarity on some key tax incentives also remains a major tailwind for the industry. Overall, we have seen several industry analysts come out on a key debate in our sector regarding the impact of higher interest rates and from our perspective, we can confirm their assessment that project returns are generally.

Speaker 3: And from our perspective, we can confirm their assessment that project returns are generally higher despite the increase in interest rates. We sent data from Level 10 Energy PPA Price Tracker validates 100% plus increase in power purchase agreement prices from 2020 through 2023.

Higher despite the increase in interest rates, we expect data from level churn energy PPA price tracker validates, 100% plus increase in power purchase agreement prices from 'twenty 'twenty through 'twenty two 'twenty three.

Speaker 3: Demand continues to be robust and the focus by developers and asset owners is on finding ways to accelerate project timelines.

Demand continues to be robust and the focus by developers and asset owners is on finding ways to accelerate project timelines are successful project track record paired with our industry, leading software and services is particularly well suited for this market environment.

Speaker 3: Our successful project track record paired with our industry leading software and services is particularly well suited for this market environment.

Speaker 3: As a reminder, we do not have any direct interest rate exposure by virtue of our fixed rate debt, which have maturities into 2028 and 2030.

As a reminder, we do not have any direct interest rate exposure by virtue of our fixed rate debt, which have maturities into 2028 and 2030.

Speaker 3: Please turn to slide six, highlighting our technology leadership. We are pleased to be recognized once again by a third party for our technology leadership, earning the Sustainability Product of the Year Award from the Business Intelligence.

Let's turn to slide six highlights our technology leadership, we are pleased to be recognized once again by a third party or our technology leadership, earning the sustainability product of the year Award from the business Intelligence group.

Speaker 3: These awards highlight products designed to help companies improve their sustainability objectives.

These awards highlight products designed to help companies improve their sustainability objectives on.

Speaker 3: On the commercial side, our technology solutions continue to resonate with customers in multiple markets. In New York, specifically the Bronx, we helped nine-dot-energy bring the first energy storage system into service. We are co-optimizing multiple value streams for our customers in New York and building on the Coincident Peak Prediction Expertise. We developed for other markets.

On the commercial side, our technology solutions continue to resonate with customers in multiple markets in New York, specifically the Bronx, We helped nine got energy, bringing the first energy storage system into service, we're co optimizing multiple value streams for our customers in New York and.

Building on the coincident peak prediction expertise, we developed for other markets.

Speaker 3: This is another example of our ability to rapidly scale Athena at low incremental costs as we enter new marks.

This is another example of our ability to rapidly scale Athena at low incremental costs as we enter new markets between nine dot and some of our other partners. We expect to have over 700 megawatt hours under Athena control and the New York market over the coming years. Additionally.

Speaker 3: Between Nine Dot and some of our other partners, we expect to have over 700 megawatt hours under Athena control in the New York market over the coming years. Additionally, Athena is supporting Nine Dot Energy with customers including Starbucks, who is the anchor subscriber to the Pelham Gardens project monetizing sustainable energy credits in New York. The system is operational and currently generating energy credits.

Dana is supporting nine dock energy with customers, including Starbucks, who is the anchor subscriber to the Pelham Garden's project monetizing sustainable energy credits in New York The system is operational and currently generating energy credits.

Speaker 3: In our solar asset performance management offering, we introduced a new application, Event Manager, which helps our customers resolve downtime issues on their assets. In the last year alone, we have onboarded over one gigawatt of assets to Event Manager.

In our solar asset performance management offering we introduced a new application event manager, which helps our customers resolve downtime issues on their assets in the last year alone. We have on boarded over one gigawatt of assets to event manager in ERCOT. Our data science team has been refining their forecasting and.

Speaker 3: Intercont, our data science team has been refining their forecasting and optimization algorithms, including what we believe is one of the leading day ahead and real-time price forecasting engines in the market.

<unk> algorithms, including what we believe is one of the leading day ahead and real time price forecasting engines in the market based on our modeling we believe power bidder can offer a 10% to 40% uplift in revenue for assets in Texas versus competitive offerings in that market.

Speaker 3: Based on our modeling, we believe Powerbidder can offer a 10 to 40 percent uplift in revenue for assets in Texas versus competitive offerings in that market.

Speaker 3: Please turn to slide seven. With the launch of PowerBitter Pro, we are introducing a new software tool for energy professionals to manage their clean energy assets.

Please turn to slide seven.

With the launch of power bidder Pro we are introducing a new software tool for energy professionals to manage their clean energy assets.

Speaker 3: product targets asset owners, traders, and power purchase agreement off takers. A segment of customers, we believe, are underserved by current offerings in the March.

Product targets asset owners traders and power purchase agreement off takers a segment of customers. We believe are underserved by current offerings in the market.

Speaker 3: PowerBitter Pro empowers these customers with active asset control. Our customers can take charge of the spoke trading strategies, tailored risk management tools, and use our forecasts or input their own market forecast. We have seen strong initial customer interest for this offering with multiple gigawatt hours in the pipe.

Our better pro empowers these customers with active asset control our customers can take charge of the spoke trading strategies.

<unk> risk management tools and use our forecasts or input their own market forecast, we have seen strong initial customer interest for this offering with multiple gigawatt hours in the pipeline.

Moving to slide eight today, we are excited to announce a significant technology and commercial alliance with Softbank energy.

Speaker 3: Moving to slide 8. Today we're excited to announce a significant technology and commercial alliance with Soft Banking.

Speaker 3: This partnership is an example of our focus on growing high margin software and service revenue.

This partnership is an example of our focus on growing high margin software and service revenue under.

Speaker 3: Under the terms of the agreement, we will offer our modular ESS solution and related software services to SB Energy across their 10 gigawatt hour plus project development pipeline in North America. SB Energy is one of the leading utility scale renewable developers, and we are proud to partner with them to advance their vision of generating 24-7 renewable energy at gigawatt scale.

Under the terms of the agreement we will offer our modular E. S. S solution and related software services to S. P energy across their 10 gigawatt hour plus project development pipeline in North America S. P. Energy is one of the leading utility scale renewable developers and we are proud to partner.

With them to advance their vision of generating 24, seven renewable energy a gigawatt scale.

Speaker 3: In addition, we are collaborating to integrate our industry leading Athena AI into the SPE digital platform. This will include the development of additional applications, such as control and optimization of long-guration energy stories.

In addition, we are collaborating to integrate our industry, leading Athena AI into the S. P. E. Digital platform. This will include the development of additional applications, such as control and optimization of long duration energy storage.

Speaker 3: Importantly, we view this partnership as a template for additional engagement with asset owners, project developers, and energy trading firms to drive a programmatic approach for growing high margin service revenue.

Importantly, we view this partnership as a template for additional engagement with asset owners project developers and energy trading firms to drive a programmatic approach for growing high margin service revenue.

On to slide nine.

Speaker 3: On to slide 9. How do you highlight of last quarter, the municipal utility and electrical co-operative segment represents an attractive market for staff?

You highlighted last quarter the municipal utility in electrical cooperatives segment represents an attractive market for step.

Speaker 3: In particular, these entities are very focused on enhancing the reliability of their power networks and are seeking to drive decarbonization and greater engagement with their members and in custody.

In particular these entities are very focused on enhancing the reliability of their power networks and are seeking to drive de carbonization and greater engagement with their members and in customers in late 2022, we leveraged our winning playbook of investing early in an attractive market, where we can.

Speaker 3: In late 2022, we leveraged our winning playbook of investing early in an attractive market where we can drive differentiation through our unique software and service capability.

Drive differentiation through our unique software and service capabilities.

Speaker 3: We accomplish this by onboarding key stakeholders in the muni and co-op market with preferential access to STEM's deep supply chain relationship.

We accomplished this by Onboarding key stakeholders, and the Muni and co op market with preferential access to stems deep supply chain relationships.

Speaker 3: Bill will discuss the financial details of these arrangements, but at a high level, this engagement has resulted in nearly $1 billion of contracted bookings in the last 12 months with our position in the market going from zero to over 15% market share based on expected deployments in 2024.

Bill will discuss the financial details of these arrangements, but at a high level. This engagement has resulted in nearly a $1 billion of contracted bookings in the last 12 months with our position in the market going from zero to over 15% market share based on expected deployments in 2024.

Speaker 3: U.S. public power and co-op markets expected to represent over 20% of all future energies, storage deployments, and is forecast to represent the fastest growing segment of the FPM market through the end of the decade. We expect to continue our leading momentum in this exciting segment with engagement on multiple gigawatts of bulk power system projects.

U S public power and co op market is expected to represent over 20% of all future energy storage deployments and is forecast to represent the fastest growing segment of the F. T M market through the end of this decade, we expect to continue our leading momentum in this exciting segment with engagement on multiple gig.

Lots of bulk power system projects stay tuned to more wins here and now I'll turn the call over to Bill.

Speaker 3: Stay tuned to more wins here and now I'll turn the call over to Bill.

Speaker 4: Thanks, John . Starting on page 11 with our results for the third quarter of 2023. As John mentioned, to gain a foothold in the bulk power of the system market, we offered certain strategic partners preferential access to STEM's supply chain network. In certain cases, we offered a guarantee that the value of the purchase hardware would not decline for a certain period of time after purchase. Generally six.

Thanks, John starting on page 11, with our results for the third quarter of 2023, as John mentioned to gain a foothold in the bulk power system market, we offered certain strategic partners' preferential access systems supply chain network.

Certain cases, we offer to guarantee that the value of the purchase hardware would not decline for a certain period of time after purchase generally six months additional details on these arrangements are provided in our earnings release and Form 10-Q filed by the company.

Speaker 4: Additional details on these arrangements are provided in our earnings release and Form 10Q filed by the company.

Speaker 4: The company accounts for such guarantees as variable consideration and updates estimates of variable consideration each quarter for facts or circumstances that have changed from the time the initial estimate and as a result, the company recorded a revenue reduction of $37.4 million during this three and nine month period and its September 30th, 2023.

The company accounts for such guarantees as variable consideration and updated its estimates are variable consideration each quarter for facts or circumstances change at that time. The initial estimate as a result, the company recorded a revenue reduction of 37 $4 million during the three and nine month period ended September 30.

2023.

Speaker 4: The company does not intend to provide such guarantees and customer contracts going forward and does not expect the future revenue reduction if any, with regard to the guarantee is outstanding as of September 30th, 2023, will be material.

The company does not intend to provide such guarantees and customer contracts going forward and does not expect that the future revenue reduction if any with regard to the guarantees outstanding as of September 32023 will be material.

Speaker 4: In short, this was an exceptional offering that has allowed us to enter and quickly build a leadership position in an attractive market segment, where we have executed almost a billion dollars of contracted bookings in the last 12 months.

In short this was an exceptional offering that has allowed us to enter and quickly build our leadership position in an attractive market segment, where we have executed almost $1 billion of contracted bookings in the last 12 months.

Speaker 4: And now onto the financial results. Revenue was negatively impacted this quarter by the $37.4 million reduction in revenue I just referenced. Adjusted evita and non-gap gross margin had been adjusted to exclude the impact of such revenue reduction.

And now onto the financial results revenue was negatively impacted this quarter by the $37 $4 million reduction in revenue I, just referenced adjusted EBITDA and non-GAAP gross margin have been adjusted.

To exclude the impact of such revenue reduction.

Speaker 4: Adjusted EBITDA was negative $900,000 in Q3, keeping us on track to achieve our goal of being adjusted EBITDA positive in the second half of this year. Achieving adjusted EBITDA positive is a critical profitability milestone for us and we remain laser focused on this goal. We continue to drive operating leverage with strict cross controls and optimization strategies.

Adjusted EBITDA was negative $900000 in Q3, keeping us on track to achieve our goal of being adjusted EBITDA positive in the second half of this year.

Cheating adjusted EBITDA positive is a critical profitability milestone press, we remain laser focused on this goal.

We continue to drive operating leverage with strict cost controls and optimization strategies. We continue to stay disciplined on operating expenses and reaffirm the cash opex as a percentage of revenue for 2023 will be less than 25%.

Speaker 4: We continue to stay disciplined on operating expenses and reaffirm the cash op-ax as a percentage of revenue for 2023 will be less than 25%. Turning out is like 12.

Turning now to slide 12 for a look at our operating metrics.

Speaker 4: Backlog increased 125% year over year, and increased 35% on a sequential basis to 1.8 billion. The largest driver of the backlog increase was a record 676 million of bookings in the quarter. End market customer demand remains strong, catalyzed by the continuing clarification of the inflation reduction act, and an improved supply chain and hardware price environment.

Backlog increased to 125% year over year and increased 35% on a sequential basis to $1 8 billion. The largest driver of the backlog increase was a record $676 million of bookings in the quarter end market customer demand remains strong catalyzed by the continuing clarification of the inflation.

That should act in an improved supply chain and hardware price environment.

Speaker 4: Our AUM on the storage side of the business crew from 3.8 gigawatt hours in the second quarter of 2023 to five gigawatt hours in the third quarter.

Our AUM on the storage side of the business grew from $3 eight gigawatt hours in the second quarter of 2023 to five gigawatt hours in the third quarter.

Speaker 4: That's a significant 32% increase driven by our strong commercial movement and customer demand for STEM solutions.

That's a significant 32% increase driven by our strong commercial movement and customer demand for stem solutions.

Speaker 4: Operating AUM on the solar asset performance monitoring side of the business ended the quarter at 26.3 gigawatts Up 300 megawatts or approximately 1% our third quarter of sequential growth

Our operating a M on the solar asset performance monitoring side of the business ended the quarter at 26.3, Gigawatts up 300 megawatts or approximately 1% our third quarter sequential growth.

Speaker 4: The solar industry continues to show signs of recovery, evidenced by growing AUM and the backlog growth of 41% a year over here. Turning now to slide 13.

The solar industry continues to show signs of recovery evidenced by grabbing a M and the backlog growth of 41% year over year.

Turning now to slide 13, and our 'twenty two 'twenty three guidance.

Speaker 4: Full-year revenue guidance has been adjusted downward dollar-for-dollar solely as a result of the $37.4 million reduction in revenue. We expect a trend toward the lower end of our full-year non-gap gross margin guidance.

Full year revenue guidance has been adjusted downward dollar for dollar solely as a result of the $37 $4 million reduction in revenue, we expect to trend towards the lower end of our full year non-GAAP gross margin guidance.

Speaker 4: We are raising fiscal year 2023 car guidance by 9% at the midpoint. A steady increase in car positions as well to grow high margin software and services revenue in 2024 and beyond. In addition, we expect continuing strong growth and service revenue driven by expected commissioning of systems and a result of partnerships such as the one we announced today with SB avenue K?te, the

We are raising fiscal year 2023 car guidance by nine 4% at the midpoint, a steady increase in car positions us well to grow high margin software and services revenue in 2024 and beyond. In addition, we expect continuing strong growth in service revenue driven by expected commissioning of systems and a result of partnerships such as the wider.

We announced today with SB energy.

Speaker 4: We are tightening the range for full year adjusted EBITDA guidance to negative 25 million to negative 15 million. We still expect to achieve our goal of being adjusted EBITDA positive in a second half of 2023. We define that as the sum of the third and fourth quarters being adjusted EBITDA positive. So with the third quarter in the books, we have confidence that we will be adjusted EBITDA positive in the fourth quarter of this year.

We are tightening the range for full year, adjusted EBITDA guidance to negative 25 million to negative $15 million, we still expect to achieve our goal of being adjusted EBITDA positive in the second half of 2023, we define that as some of the third and fourth quarters being adjusted EBITDA positive so with the third quarter in the books, we have confidence that we.

It will be adjusted EBITDA positive in the fourth quarter of this year.

Speaker 4: We continue to expect to exit the year with more than $150 million in cash and cash equivalents on the balance.

We continue to expect to exit the year with more than $150 million in cash and cash equivalents on the balance sheet.

Speaker 4: As previously stated, we expect to achieve full year positive adjusted done 2024. We see this goal as a key achievement in our corporate maturation.

As previously stated we expect to achieve full year positive adjusted EBITDA in 2024, we see this goal as a key achievement in our corporate maturation.

Speaker 4: We will provide more details on our 2024 guidance on our fourth quarter and full year earnings call in February 2024. With that, let me turn the call back over to Joan for some closing remarks.

We will provide more details on our 2020 for guidance on our fourth quarter and full year earnings call in February 2024, with that let me turn the call back over to John for some closing remarks.

Speaker 3: Thanks Bill, wrapping up on slide 14 with our key taker list.

Thanks, Bill wrapping up on slide 14, with our key takeaways.

Speaker 3: Third quarter momentum driven by strong in market demand, resulting in record bookings growth, significant storage backlog, AUM and car growth, solid solar asset management growth and execution. Our software and services DL execution underscored by the SBE agreement. Athena continues to add additional value for solar and storage customers with new products in multiple markets.

Third quarter momentum driven by strong end market demand, resulting in record bookings growth significant storage backlog.

And car growth solid solar asset management growth and execution, our software and services deal execution underscored by the SPE agreement Athena continues to add additional value for solar and storage customers with new products in multiple markets.

Speaker 3: And the Munich Co-op momentum continues with $1 billion in contracted bookings in the last 12 months.

And the Muni co op momentum continues with $1 billion in contracted bookings in the last 12 months, we reiterate our expectation to achieve adjusted EBITDA positive in the second half of 2023 and finally, we're excited about the tremendous opportunity in front of us with the expectation that we.

Speaker 3: We reiterate our expectation to achieve adjusted EBITDA positive in the second half of 2023. And finally, we're excited about the tremendous opportunity in front of us with the expectation that we will achieve full year adjusted EBITDA positive in 2024 and beyond. With that, I want to thank our key stakeholders, employees, customers, channel partners, suppliers, and shareholders.

We will achieve full year adjusted EBIT positive in 'twenty, 'twenty, four and beyond with that I want to thank our key stakeholders employees customers channel partners suppliers and shareholders and now operator, let's open the line for questions. Please.

Speaker 3: And now, operator, let's open the line for questions, please.

Thank you.

I will begin the question and answer session to join the question queue. You May Press Star then one on your telephone keypad, you will hear a tone acknowledging your request if youre using a speakerphone. Please pick up your handset before pressing any keys to withdraw your question. Please press Star then two.

Speaker 1: To join the question to you, you may press star then one on your telephone keypad. You will hear it.

Speaker 1: If you are using a speaker phone, please pick up your handset before pressing any keys. To withdraw your question, please press star then 2.

The first question comes from Brian Lee with Goldman Sachs. Please go ahead.

Please go ahead.

Speaker 1: We will come back to Brannlee. The next question comes from Thomas Poise with TD Cohen.

Please.

I'll come back to Brian Lee <unk>. The next question comes from Thomas Boyce with TD Cohen.

Please go ahead great.

Speaker 2: I appreciate you taking the questions. Maybe just a quick one on the customer contract guarantee. I just want to make sure that I understand how it's structured. I know this is something we saw in the first quarter of this year as well. Originally, I thought that revenue adjustments could be made all the way up until the first quarter of next year. So is there a floor in place that in that structure that we've already reached, or just given the declines in the with the Incarnament pricing market?

Yes, I appreciate you taking the questions maybe just a quick one on the customer contracts guarantee I just want to make sure that I understand how it's structured and it was something we saw in the first quarter of this year as well originally I thought the revenue adjustments could be made all the way up until the first quarter of next year. So is there a floor in place.

And that structure that we've already reached.

Just given the declines in the lithium carbonate pricing market or did you have left to kind of recognize the maximum amount of exposure. This quarter, just wanted to kind of make sure I understand why there shouldn't be any material changes accuracy. The 30th September. Thanks.

Speaker 2: Or did you elect to kind of recognize an accident and around the exposure this quarter? Just wanna make sure I understand why there shouldn't be any material changes after state of 30th of September .

Speaker 4: Yeah, Mrs. Bill Fush, thanks for that question. So the contract that you were referencing is actually somewhat different than what we adjusted for this quarter.

Yes. This is bill Bush. Thanks for that question. So there the contract that you're referencing is actually somewhat different than what we adjusted for this quarter. In fact is that that contract is as you mentioned tied to the price of lithium. These contracts were not so there are significant.

Speaker 4: In fact, that contract is, as you mentioned, tied to the Prince of Lithium. These contracts were not.

Speaker 4: And so there are significant differences between those. These effectively had a remarketing right associated with them, which we've now taken what we believe to be the full downside risk associated with them. So we don't expect any material change after this transaction. And in fact, we expect to be able to move on from these contracts in our totality within the first quarter of 2024.

Just between those these effectively had a re marketing rate associated with them, which we've now taken what we believe to be the full.

Full downside risk associated with them. So we don't expect any material change. After this transaction and in fact, we expect to be able to move on from these contracts in their totality within the first quarter of 2024.

Got it.

Speaker 5: appreciate the clarity there. And then maybe, I obviously enjoyed kind of going through the PowerBitter Pro demo at RE Plus that was earlier this year. Maybe you could just talk a little bit more about how the customer response has been this far, you know, what the timing expectation is for the PowerBitter Pro. And then...

I appreciate the clarity there and then maybe.

I haven't seen enjoyed kind of going through the the power better pro demo at already plus the earlier this year.

Can you just talk a little bit more about how the customer response has been thus far.

The timing expectation is for for the power, but a pro and then.

Speaker 5: What's the go-to market or deployment strategies? Is this gonna be something that you're primarily in focus on with new customers or is there something in place as a way to go back to existing power better users and kind of convert them over to?

What's the go to market and deployment strategies is going to be something that you're primarily going to focus on with new customers or is there something in place as a way to go back to existing power better users and kind of convert them over to tomorrow.

Speaker 3: So thanks for the question Mike Carlson. As far as where we're at, the initial response, we launched it in September . We had great response at the show at RE Plus. And then, correspondingly, a number of specific opportunities as we put it in front of customers.

Yeah. So thanks for the question Mike Carlson.

As far as where we're at the initial response, we launched it.

In September we had great response at the show with our E plus and then correspondingly a number of specific opportunities as we put it in front of customers.

Speaker 6: At a high level of response we got is exactly what they're looking for and not able to find in other opportunities they consider. We got.

At a high level. The response, we got is exactly what theyre looking for and not able to find in other opportunities.

Centered.

We've got.

Speaker 6: Proposes out in the field some which early indication are that

Proposals out in the field, some which are early indications are that.

Speaker 6: They're going to move forward beginning the second quarter of 24.

They're going to move forward beginning of second quarter of 'twenty four.

Speaker 6: So we'll have product release at the end of this year. Production expected in the first half of next year.

So we will have product release at the end of this year production.

Expected in the first half of next year as.

Speaker 6: As far as our go-to-market strategy with it, obviously we've got an existing customer base.

As far as our go to market strategy with that obviously, we've got an existing customer base.

Speaker 6: That is considering expanding their own capabilities beyond our service offerings that we would then continue to add the bitter pro solution to. And then obviously a whole new market that doesn't want to look at our.

Is considering expanding their own capabilities beyond our service offerings that we would then continue to I had a bitter pro solution to and then obviously a whole new market that doesn't want to look at our.

Speaker 6: Manage services, they've got their own trading desk, their own risk management, and this is opening up that opportunity to bring them into our job.

Managed services, they've got their own trading desk or on risk management and this is opening up that opportunity to bring them into our.

Portfolio customer base, because you want to talk about the bulk power so yeah and.

Speaker 4: Because you want to talk about the both parts. Yeah. And one thing I'd add, this is Pakech Patel, is that this offering is very well suited for...

One thing I would add this is per cash could tell us is that this offering is very well suited for <unk>.

Speaker 4: Gigalock scale, what we call bulk power system in the front of the meter segment. And because these customers or asset owners are typically more sophisticated, have a need for greater control as you're dispatching very large systems into the power grid.

A large scale, what we call bulk power system.

In the front of the meter segment.

Because these customers or asset owners.

Are typically more sophisticated have a need for greater control as you dispatching very large systems into the power grid.

Speaker 4: And a lot of the functionality involves the spoke training strategies enabling greater control that are risk management. So it really compounds with some of the things that John talked about earlier in the moment that we're having with new needs co-op and broadly at the larger FPM scale.

And a lot of the functionality involved bespoke trading strategies, enabling greater control better risk management. So it it really compounds with some of the things that John talked about earlier and the momentum, we're having with Muni co ops and broadly at the larger Ftm's scale.

Speaker 5: Excellent, and I appreciate the color there. If I could just sneak one more angle on the same vein for the 10 to 14% potential uplift that was referenced on slide six, was that for the plane vanilla power bitter or that the pro version?

Excellent I appreciate the color there if I could just sneak one more interest on the same vein.

For.

The 10% to 14% potential uplift that was referenced on slide six was that for the plain vanilla power better or is that the pro version I just wanted to know.

Speaker 4: Now that's the core Athena optimization engine, so that's across either offering. It's really our ability to optimize these assets, but the PowerBitter Pro, what that allows is customers to further tweak certain risk metrics or their views of forward energy forecasts and the like, but it's available to everyone.

Yeah, that's the core Athena optimization engine, so that's across either.

Offering it's really our ability to optimize these assets.

The power better pro what that allows the customers to further tweak certain risk metrics or their views at Ford energy forecast and the like but it's available to everyone.

Got it thanks again I appreciate it.

Yeah.

The next question comes from Brian Lee with Goldman Sachs. Please go ahead.

Speaker 1: comes from Brian Lee with Goldman Sachs.

Speaker 7: Hey guys, thanks for including me in the question queue here. I had a couple...

Hey, guys. Thanks for including me in the question queue here had a couple.

Speaker 7: Maybe the first one just on the announcement this afternoon, SP power, the 10 giga lot, excuse me, pipeline sounds pretty robust, especially in the context of what they've done to date as well as what you've deployed to date. Can you give us a sense of

Maybe the first one.

Just on the the announcement this afternoon SD power.

One gigawatt.

Excuse me pipeline sounds pretty robust, especially in the context of what they've done to date as well as what you've deployed to date can.

Can you give us a sense of.

Speaker 7: I guess the near term or medium term impact of that relationship kind of how quickly do you think you can get volume deployments with them and also maybe sizing kind of the magnitude of the opportunity. I would imagine the entire 10 gigawatts is convertible but how are you thinking about it when you're framing the opportunity?

I guess, the the near term or medium term impact of that relationship kind of how quickly do you think you can get volume deployments with with them.

And also maybe sizing kind of the magnitude of the opportunity Yeah, I would imagine the entire 10 gigawatts.

Is convertible, but how are you thinking about it when you're framing the opportunity.

Thanks, Brian John Carrington here, and we're really excited about it I think youre talking about a top five developer.

Speaker 3: Thanks, Brian . John Carrington here. And we're really excited about it. I think you're talking about a top five developer.

Speaker 3: Also some developer that has an extensive and growing pipeline. I would say that our view is this is the first of many of these kind of multi gigawatt pipelines that we intend to collaborate on with our services and software strategy. And again, it also be intended to include our modular ESS solution. On the timing side,

Also some a developer that has an extensive and growing pipeline.

Would say that our view is this is the first of many of these kind of multi gigawatt pipelines that we intend to.

Along with our services and software strategy and again. It also we intend to include a modular solution on the timing side.

Speaker 3: You know, look, I would say these are becoming much larger projects, which do tend to take longer. So we would expect that this pipeline in particular is a multi-year pipeline. I like the fact that it is multi-year because we'll do others like this. And it just...

Look I would say these are becoming much larger projects, which do tend to take longer. So we would expect that.

Pipeline in particular is a multiyear pipeline I like the fact that it is multi year, because we'll do others like this and it just shows the continued strength, we believe in our services and software offerings. So there'll be more of these as we go forward, but I you know again I think it's a it's a multiyear deal we just signed.

Speaker 3: shows the continued strength we believe in our services and software offering. So there will be more of these as we go forward. But I, you know, again, I think it's a multiyear deal. We just signed this and so we're now kind of looking at the pipeline and assessing both the timing and what we can provide and where. But it's a really exciting.

This and so we're now kind of looking at the pipeline and assessing both the timing and what we can provide and where but it's a really exciting.

Speaker 3: Announcement for us, we've had a lot of discussion on software services only.

<unk> announced the for US we've got a lot of discussion around software services only and here is a very significant or that I view, specifically on that objective you talked about really since our analyst day.

Speaker 3: And here is a very significant announcement by you, specifically on that objective that we talked about, Billy since our aim.

Speaker 7: you know that's that's great color i guess um... you know you had a uh... a huge bookings quarter here so kudos to you on that maybe some follow-ups uh... did uh... it doesn't sound like it based on the timing of you know you just i need to feel that did sp power factor into uh... those bookings at all if not when you expected see first bookings from that new relationship and then you know given the the sort of record bookings here

Yeah, No. That's that's great color I guess, you had a huge bookings quarter here. So kudos to you on that maybe just some follow ups did it doesn't sound like it based on the timing of you know you're just signing this deal but did SP power factor in Q those bookings at all if not when do.

Do you expect you'd see first bookings from that new relationship and then you know given the sort of record bookings here.

Speaker 7: Were there any of these multi-giglock framework type customers that you haven't been able to announce yet that actually are in the bookings already, but just haven't been in the press?

Were there any of these multi gigawatt framework type customers that you haven't been able to announce yet that actually are in the bookings already but I just haven't been in the press.

Speaker 4: Yeah, so Brian , thanks for the question. First part of that is that the bookings that we recorded or referenced this quarter don't include any bookings from SoftBank Energy. In general, those are longer-lead

Yes, so Brian Thanks for the question first part of that is that the bookings that we recorded referenced this quarter don't include any bookings from Softbank energy in general those are longer lead projects and we will start seeing bookings.

Speaker 4: projects and we'll start seeing bookings in 2024 for those and then revenue there after but these are large PICO 100 plus size, 100 megawatt hour size plus projects. So they're going to be a lot bigger than an average. As far as the other aspects of your question, I think that when we're, I mean, and really what stopping energy is, I think it's a...

In 2024 for those and then revenue thereafter, but these are large peso one 100 plus size probably on a megawatt hour size plus projects, so theyre going to be a lot bigger than an average.

As far as the other aspects of your question I think that when we when we're.

And really what's I think energy is a.

I think it's a.

Speaker 4: software and service play for us. You know, moving us into markets that weren't, we had not traditionally played, and I think it's a real shot in the arm for the Athena platform.

Software and services play for us.

It's moving us into markets that we're not we have not traditionally played and I think it's a real.

But in the arm for the Athena platform.

Speaker 4: Brian , just to add on that, that other string of deals that we announced in this quarter, you know, that 200 is a 313, the 1.3 gigawatt hour, that that portion of those represents that partner we're working with around the same template type of approach to software services. So, you know, this model.

Hey, Brian just to add on that.

Yeah, Yeah, its string of deals that we announced in this quarter, yes that $203 13 to one three gigawatt hour that dad.

A portion of those represent that partner, we're working with around the same temporary tags approach to software services.

This model seems to be working.

Okay now that's great and then the.

Speaker 7: Okay, no, that's great. And then the...

The sort of reiterations around EBITDA as well as the you know the view here that you will be positive in fiscal 'twenty four on adjusted EBITDA.

Speaker 8: the view here that you'll be positive in fiscal 24 on adjusted EBITDA. Maybe I know you're not going to give full guidance metrics because we're not there yet in the calendar but as we think about you transitioning into becoming a positive EBITDA company going forward starting next year, can you just at a high level give us a sense of are you embedding growth margin expansion off of this year's level is it just purely scale, driven higher volume and revenue growth that's getting you to the adjusted EBITDA positive view for the full year. Maybe some of the working around how you get to that outlook for next year without maybe giving us the yes.

Maybe I know you're not going to give full guidance metrics because we're not there yet in the calendar, but as we think about you are transitioning into becoming a positive EBITDA company going forward starting next year.

Can you just at a high level give us a sense of are you embedding gross margin expansion off of this year's level is it just purely scale driven higher volume and revenue growth. That's getting you to the adjusted EBIT to a positive view for the full year kind of maybe some of the workings around how.

You get to that.

Speaker 8: that outlook for next year without maybe giving us the exact ingredients.

That outlook for next year without maybe giving us.

And the exact ingredients. Thank you guys.

Yeah.

Speaker 4: Yeah, so as you mentioned, I think we're going to stay away from full year guidance for next year. But I think, you know, kind of starting with this quarter in particular, I mean, that we're.

You mentioned I think we're gonna stay away from full year guidance for next year, but I think kind of starting with this quarter in particular I mean it now.

Speaker 4: really close to break even I mean at $900,000 negative and you know that's a dramatic improvement from the third quarter.

We're really close to breakeven I mean at $900000 negative in <unk>.

Dramatic improvement from the third quarter really a not a significant amount of additional revenue growth and which is primarily hardware driven so I think cost control continues to be a big part of what we're doing and I think thats part as you start thinking about 2024, I think we're going to continue to see software growth, which is in general is going to be high margin revenue.

Speaker 4: really a not a significant amount of additional revenue growth, and which is primarily hardware driven. So I think cost control continues to be a big part of what we're doing. And I think that's part, you know, as you start thinking about 2024, I think we're going to continue to see software growth.

Speaker 4: which is in general is going to be high margin revenue. And so, you know, you're I think you're going to have to two parts there and have more hardware sales. I mean, I think we're you know, we're expecting to do more of that next year. But more importantly, more software and services. Mike and his team are are doing a lot in terms of expanding our pro serve.

And so I think you're going to have to two parts. There can have more hardware sales I mean, I think we're you know we're expecting to do more of that next year, but more importantly, more software and services, Mike and his team are doing a lot in terms of expanding our pro serve initiative and so youre going to see Marty and margin expansion.

Speaker 4: initiative and so you're going to see margin expansion from that standpoint and more volume just in general. So I think the combination of those two top light items with continued cost control in 2024 at a year of see. Yep.

And from that standpoint, and more volume just in general So I think the combination of those two top line items with continued cost control in 2024, I think you're going to see I mean, that's the that's the pathway for a positive EBITDA year for us.

Speaker 4: I mean, that's the pathway for a positive EW year for that. All right, that's great.

Alright, that's great. Thanks, guys I'll pass it on.

The next question comes from Joe Osha with.

Guggenheim Partners. Please go ahead.

Speaker 9: Thanks. Yeah, it's a mouthful. Uh, Goofing Heart and how, how, how is everybody today?

Thanks, Yes, its a mouthful Guggenheim how is everybody today.

Hey, Joe good to hear from you.

Yeah.

Speaker 9: A couple questions. First, just looking at the working capital accounts, and then there's been some really dramatic swings here, and particularly you guys made some.

Couple of questions first.

Looking at the working capital accounts.

Some really dramatic swings here in particular, you guys made some good progress drawing that that inventory number down still quite at BV receivables number.

Speaker 9: Good progress drawing that inventory number down. Still quite a beefy receivables number. Just wondering how I should think about these in Q4, just in general.

Just wondering how I.

You should think about these in Q4 just in general.

Speaker 9: how these numbers are likely to trend over the course of the next several quarters as your business continues to grow. And then I have another question.

How how these numbers are likely to trend over the course of the next several quarters as your business continues to grow and then I have another question.

Sure. Thanks for the question, Joe first I would so I would say that word.

Speaker 4: Here, thanks for the question, Joe. First, I would say that we're, you know, the first part of that, of course, is that we really, re-intering with the guidance of around $150 million at a minimum cash level. So that would indicate, what from where we are today, we're going to be a cash generator in the fourth quarter, which means that we expect to, you know, effectively do get to, at least two things. One would be to continue to drive into the door again, a much like we did between Q2 and Q3.

The first part of that of course is that we really reiterating the guidance of around $150 million at a minimum cash level. So that would indicate where from where we are today, but we're going to be a cash generator in the fourth quarter, which means that we expect to effectively do you have to at least two things one would be to continue to drive inventory down much like we did.

Between Q2 Q3, and then we're also going to be able to drive down receivables as well, which would be the ultimately the cash collection. So the balance sheet should continue to strengthen and have more cash on it relatively.

Speaker 4: And then we're also going to be able to drive down receivables as well, which would be the, you know, ultimately the cash collection. So balance sheet should continue to. You know, strengthened and have more cash on it relatively. Yeah, that that was.

Yes.

What it does today.

Speaker 9: Okay, and that's Q4, but I guess just kind of more going forward, right? I mean, you do have, you know, this business you've made kudos to you for the progress, but, you know, just in general, right? I mean, this business ties up an awful lot of working capital, a relative to its scale. You know, how should we think about it going forward? You know, how are you going to try and manage these numbers over time?

Okay, and that's Q4, but I guess, just kind of more going toward right. I mean, you do have.

This business you've made kudos to you for the good progress, but just in general right. I mean, this business ties up an awful lot of working capital relative to its scale, how should we think about it.

Going forward.

How how are we going to try and manage these numbers over overtime.

Speaker 4: There's going to be a combination of effects. One I think is going to be the modular ESS is going to drive down working capital usage so you'll see less inventory, less receivables and the same amount of cash.

I think there's going to be a combination of effects. One I think is going to be.

The modular U S. S is going to drive down working capital usage, so youll see less inventory less receivables and the same amount of cash second I think you'll see us having less inventory on the balance sheet just generally for other non modular deals because of where we're.

Speaker 4: Second, I think you'll see us having less inventory on the balance sheet just generally for other non-modular deals.

Speaker 4: because we're shifting the way that we're purchasing equipment. And in the past, even as the latest six, nine months ago, we were longer on equipment than we are today. Right now, the market is much more, you know, say turning to a more spot tied by to be able to take advantage of favorable pricing in terms. So I think inventory is going to continue to decline as part of the overall.

We're shifting the way that we're purchasing equipment I mean in the past yeah evening latest like six nine months ago, we were longer on equipment than we are today right now the market is much more say turning to more spot type by to be able to take advantage of favorable pricing and terms. So I think.

He is going to continue to decline as a part of the <unk>.

Overall, the balance sheet, and I think receivables will as well so I think all of that as we capture more receivables and turn that into cash we should be in pretty good shape. I mean, I think we had pretty good collections quarter.

Speaker 4: or the balance sheet and I think receivables will as well. So I think all of that is we capture more receivables and in turn that into cash. You know, we should be pretty good shape. I mean, I think we had, you know, pretty good collections quarter in general. I mean, we were well over $100 million in collections for the quarter and well driving down inventory and the counts payable. So I think from the standpoint of, that's what I'm saying is I think the balance sheet in general over the next-

In general I mean, we were well over $100 million in collections for the quarter and while driving down inventory and accounts payable. So I think from the standpoint of that's what I'm, saying is I think the balance sheet in general over the next bunch of.

Quarters, it's going to improve.

And end up with more cash on it.

Okay. Thank you and then shifting gears just looking at your software and recurring revenue was really really two questions. If I looked at that storage software and number $8 $1 million up around 32% from the same number last year.

Speaker 9: Okay, thank you. And then shifting gears, just looking at your software and recurring revenue, really two questions. If I look at that storage software number.

Speaker 9: $8.1 million, you know, it's up, you know, around 33% from the same number last year. Your storage AUM, as you reported, has more than doubled. So the optimist in me wants to believe that this implies that there's a, you know, some kind of significant hockey stick embedded in this, the software number as...

Your storage AUM as you report it has more than doubled so the optimist in me wants to believe that this implies that there is.

Some kind of significant hockey stick embedded in this software number as as these projects are our commission is that a fair way to think about it.

Speaker 9: you know, these projects are commissioned, is that a fair way to think about it?

Speaker 4: And I think there's two factors. This is Prakash, Joe. I think there's two factors impacting that. You know, definitely last quarter, we had extraordinary performance on the market participant. In the prior quarter, we had extraordinary performance on the market participation side and not as much in Q3. And then separately, our average deal size has been vectoring much higher. So to your point, we do expect as.

And I think there's two factors as per cash Joe I think theres two factors impacting that definitely last quarter, we had extraordinary performance out of the market.

In the prior quarter, we had extraordinary performance out of market participation side.

And not as much in Q3, and then separately our average deal size has been factoring much higher so to your point you do expect to add.

Speaker 4: These larger systems come online, you're gonna see larger step changes in the software ARR hits the anchor statement. So that definitely is a trend. So I'll hand it off to the next slide.

These larger systems come online you're going to see larger step changes in the software <unk> hit the income statement. So that it definitely is a trend.

Well I'll hand, it off to the next caller. Thank you.

The next day.

Yeah.

The next question comes from Andrew <unk> with Morgan Stanley. Please go ahead.

Speaker 10: Great, thanks so much for taking the question here. I just want to follow up on what you're seeing on the hardware side of the business, in terms of price and availability of supply. I know it's a password for your business, but can you just discuss how it's impacting customer project economics and light of the rising cost of capital environment and therefore demand for your services? Thanks.

Great. Thanks, so much for taking the question here I just wanted to follow up on what Youre seeing on the hardware side of the business just in terms of price and availability of supply I know, it's a pass through pass through for your business, but can you just discuss how it's impacting customer project economics in light of.

The rising cost of capital environment, and therefore didn't answer your services.

Sure.

Speaker 4: It's been a pretty dramatic change. I mean, as you look at the, you know, say batteries, just in general. And I think it's also falls down through to the part of the solar business also. But, you know, availability is prices are down, and we expect that to continue, which is in part why, you know, we're referencing, like, you know, that we're, you know, we feel like, you know, we're gonna be shorter on inventory than we have in the past, or place in purchase orders.

It's been a pretty dramatic change I mean as you look at the say batteries just in general and I think it's also falls down through to the part of the solar business also but availabilities are prices are down and we expect that to continue which is in part why we're referencing.

We feel like we're gonna be shorter on inventory than we have been in the past are placing purchase orders because at this point in time, signing why long dated supply agreement is going to be a tough ask I think.

Speaker 4: because, you know, at this point in time, signing wire, long dated supply agreements, it's gonna be a tough one.

Speaker 4: I think. So for us, that's what we're seeing in the marketplace today, but the market has shifted dramatically in the last year. So I think it's something that we've got to be pretty watchful of over the incoming time period. You are seeing a lot of new supply coming into the market right now, which is really driving, and not just in the US, but also in China. So you're likely going to see declining prices.

So for US that's what we're seeing in the marketplace today, but the market has shifted dramatically in the last year. So I think it's something that we've got to be pretty pretty watchful over over the coming time period, you are seeing a lot of new supply coming into the market right now, which is really driving and not just in the U S. But also in China.

Youre likely going to see declining prices.

Speaker 4: Andrew, this is Prakash. One other thing I'd add is just the equipment price declines we're seeing available from OEMs alone is offsetting the impact of higher interest rates in project economics. So it's a really positive environment with not only that trend, but the fact that as John highlighted, power purchase agreement pricing has continued to be very robust. So overall, we're seeing much better project economics and significant demand.

Andrew This is protest one other thing I'd add is just the equipment price declines we are seeing available from Oems alone is offsetting the impact of higher interest rates and project economics.

Really positive environment.

With not only that trend, but the fact that as John highlighted power purchase agreement pricing has continued to be very robust. So overall, we think much better project economics and significant demand.

Speaker 10: Got it. That's that's super helpful data point. And maybe just to follow up on the prior question on just software services growth, you know, what do we need to see or what needs to happen within your business to get closer towards that 75 percent year over year growth rate target? I think you've been lagging behind that so far this year. What needs to happen practically within the business and maybe in what time frame do you expect that to happen? Thanks.

Got it that's super helpful data point, and maybe just to follow up on the prior question on just software services growth.

What do we need to see or what needs to happen within your business to get.

Closer towards that 75% year over year.

Growth rate target.

Behind that so far this year.

To happen practically took a hit in the business and maybe in what timeframe do you expect that to happen.

Speaker 4: This is per Kesha. I'd say a big part of it is getting the systems interconnected and permitted and we talked about how the broader market has seen challenges that we've moved up to side scale. These projects have been more complex, larger projects generally.

This is per cash I would say a big part of it is getting the systems interconnected and permitted and we talked about other broader market had seen challenges that we've moved up the size scale. These projects have been more complex larger projects generally.

Speaker 4: There is some light at the end of the tunnel with some recent actions on the federal side at the FERC level as well as at the state level.

There is some light at the end of the tunnel with some recent actions on the federal side too.

At the FERC level as well as at the state level. So we're hopeful these things start to normalize let's say in the second half of 2024 and beyond the other piece is as we announced today engagements with large asset owners or developers on a programmatic way to drive services revenue, which really compelling about that is that's not tied to project timelines are.

Speaker 4: So we're hopeful these things start to normalize, let's say, in the second half of 2024 and beyond. The other piece is, as we announced today, engagements with large asset owners or developers on a programmatic way to drive services revenue. What's really compelling about that is that's not tied.

Speaker 4: to project timelines, or actually it's not tied to interconnection timelines, right? Because we can earn.

Actually it's not that the interconnection timelines right because we can earn service revenue even earlier in the project lifecycle, where we're helping them develop project performance or system design and things of that sort. So it should smooth that some of the seasonality and as John mentioned, we're engaged with multiple parties and looking at continued.

Speaker 4: service revenue even earlier in the project life cycle where we're helping them develop project performance.

Speaker 10: or system design picks that sort. So it should smooth some of the seasonality. And as John mentioned, we're engaged with multiple of these parties and looking at inchingies development and we're seeing that space. Super helpful. I'll take the rest of one.

The momentum we're seeing in that space.

Super helpful. I'll take the rest offline. Thank you.

The next question comes from Julien Dumoulin Smith with Bank of America. Please go ahead.

Speaker 11: I think it's Alex on for Julian. I'm just curious. I mean, congrats on the wins in the meeting and co-op space. Definitely one of the more interesting places that we are definitely seeing, I think, storage crop up. I thought this slide where you showed your sort of, the market sure you guys built in in Eisen, Northeast, and then, you know, kind of what's happening, we'll say, beyond in the meeting and co-op space was interesting.

Hey, guys its Alex on for Julien I'm, just curious living congrats on the wins and the media co op space definitely one of the more interesting places that we are definitely seeing I think storage crop up.

I thought this slide where you showed your sort of the market share you guys built in an ICU northeast.

And then kind of what's happening, let's say beyond in the median cost space is interesting.

Speaker 11: I mean, what sort of share do you guys think you could take in that space? And what sort of competitors do you run into? How do you drive differentiation? And I guess one thing you guys have been very good at is sort of carving out niches and dominating in those niches. So just curious how far you can really push that with these announcements.

What sort of share do you guys think you could take in that space and what could sort of competitors do you run into.

How do you drive differentiation I guess like one thing you guys have been very good at is sort of carving out a niche as a dominating in those nishu. So just curious how far you can really push that with the with these announcements.

Speaker 4: Yeah, on the MUTI co-op side, it's a market that's very well suited for our capabilities. These are typically

Yeah on the Muni club side of it it's a market that's very well suited for our capabilities. These are typically smaller entities. So they're not like the larger IOU investor owned utilities, where they have where they may have army of engineers to write software.

Speaker 4: smaller entities so they're not like the larger IOU investor on utilities where they have where they may have army of engineers to write software large-bound sheet to procure the hardware so so we can really bring the complete stem solution to these customers

<unk> balance sheet to procure the hardware. So we can really bring the complete stem solution to these customers and.

Speaker 4: And, uh, you know, they're very forward thinking around wanting distributed generation, wanting greater engagement with their customers.

They are very forward thinking around wanting distributed generation wanting greater engagement with their customers and we just hit it.

Speaker 4: And we just hit the right part of the market at the right time, I think, as John mentioned.

Bright part of the market at the right time, but I think as John mentioned.

Speaker 4: In this discussion around these in less than a year, we went from 0 to 15% market share. We think there's upside there. And we'll continue to bang.

In his discussion around these in less than a year, we went from zero to 50% market share, we think theres upside there.

And we will continue to bang away at that.

Speaker 11: Got it. Makes the kind of sense. Just as far as the bookings themselves is a bit of a follow on, obviously this is a really outside quarter for bookings. Your guidance has maintained on the full year basis.

Got it it makes a ton of sense, just as far as the bookings themselves as a bit of a follow on obviously this is a really outsized quarter for bookings.

Guidance is maintained on a full year basis, but car is up I guess I'm, just trying to kind of reconcile those sort of moving pieces, where these sort of pulled forward.

Speaker 11: But CAR is up. I guess I'm just trying to kind of reconcile those sort of moving pieces. Were these sort of pulled forward relative to some other projects that may have shifted out, that may have been in late stage discussions? Just, I guess, sort of clarify, if you can, the interplay between the bookings in this quarter, the maintained full year, and CAR going up relative to your prior expectations. Thanks.

<unk> to some other projects that may have shifted out that may have been in late stage discussions just sort of clarify if you can the.

Interplay between the bookings in this quarter the maintained full year end car going up relative to your prior expectations. Thanks.

Yeah and thanks for that question. This is bill so I think there's a couple of points in there one of course I mean, this was a record booking quarter for us, but you also referenced that last quarter, we were a little bit lower and so I think it kind of points to some of the lumpiness of the deals and much like we said in the second quarter the bookings.

Speaker 4: Yeah, and thanks for that question. This is Bill. So I think a couple of points in there. One, of course, I mean, this was a record booking quarter for us.

Speaker 4: But, you know, you also referenced that last quarter we were a little bit lower. And so I think it kind of points to some of the lumpiness of the deals. And, you know, much like we said in the second quarter, the bookings are not revenue.

Are not revenue based and so we feel less pressure to sign a deal in a particular quarter until the terms makes sense for us and so.

Speaker 4: And so we feel less pressure to sign a deal in a particular quarter until the terms make sense for us. And so, yes, that's kind of how we think about that. We've always thought the billion five at the midpoint was a was a reasonable target for us.

So that's kind of how we think about that we've always thought the $1 five at the midpoint was it was a reasonable target for us and I think the fourth quarter is going to be able to get us. The rest of the way there were just under $1 3 billion. So it really is a it's an opportunity for us to continue to sign deals in markets, which we.

Speaker 10: And I think the fourth quarter is going to be able to get us the rest of the way there. We're just under 1.3 billion.

Speaker 10: So it really is a, it's an opportunity for us to continue to find deals in markets, which we think are interesting. There's been a whole bunch of transactions that have happened here in the last little bit. And as Prakash mentioned, you know, the, the, the meeting, the co-op space has been really successful area for us as well as our kind of our core markets, California, Texas, and New England ISO. So I think from our standpoint, we continue to look for good deals that represent opportunities for us to place more software and services into them.

Think are interesting there's been a whole bunch of transactions that have happened here in the last little bit and then as for cash mentioned.

The Muni and co op space has been really successful area for us as well as our kind of our core markets, California, Texas, and New England, ISO So I think from our standpoint, we continue to look for good deals that represent opportunities for us to place more software and services into them and I think that you know.

Speaker 10: And I think that one of the tenants is that, as Prakash mentioned, that meeting co-op space is really a good area for that. Thanks guys, I'll take the rest off.

One of the tenants is that it was for cash mentioned that media co op space is really a it's a good area for that.

Got it thanks, guys I will take the rest offline.

Yeah.

The next question comes from Sean Milligan with Janney. Please go ahead.

Hey, guys. Thanks for taking the questions.

Speaker 4: Hey guys, thanks for taking the questions. I wanted to go back to Joe's question and just focus a little bit on the supplemental revenue detail. So when you look at the storage software services revenue, I think it was 5.5 million this quarter, down from 7.7 last quarter.

I wanted to go back to Joe's question, and just focus a little bit on the supplemental revenue detail. So when you look at the storage.

Software services revenue I think it was $5 5 million this quarter down from $7 seven last quarter.

Speaker 12: Prakash, I think you mentioned like higher market participation last quarter, but just wanted to kind of get your thoughts if there was anything else going on there. I mean, it's my understanding that there was some SPE, legacy SPE revenue that was running through there. And if you back that out, that kind of implies like a.

Okay. So I think he mentioned by higher or higher market participation last quarter, but just wanted to kind of get your thoughts if there was anything else going on there.

I understanding that there was some SPE.

Legacy S. T E revenue that was running through there and if you back that out that kind of implies like that.

Speaker 12: 60% decline, quarter of a quarter in the, I guess, the core storage software revenue. So just any thoughts there would be helpful.

60% decline quarter over quarter in the I guess, the core storage software revenue. So just any thoughts there would be helpful.

Yeah.

Speaker 10: Yeah, so and thanks for the question. So I think there are a couple of things moving through the course. One, one as we I think

Yeah, so and thanks for the question.

So I think there were a couple of things moving through the quarters.

One as we I think we noted last last quarter, we had quite a bit of market participation revenue come through the books that got reflected there. So it looks like a sequential down when its really kind of on the on the basic business, it's really slightly up not a lot, but slightly up so I think that's one thing.

Speaker 10: last quarter we had quite a bit of market participation revenue come through the books that got reflected there So it looks like a sequential down when it's really you know kind of on the on the basic business It's really slightly up not a lot but slightly up

Speaker 10: So I think that's one thing to note. And I think as Perketsch mentioned, I mean, interconnection continues to be an issue in terms of the apTIC and what the software revenue is.

To note I think as <unk> mentioned, I mean interconnection continues to be an issue in terms of the uptick in what the software revenue is and across the isos in particular, I would say New York.

Speaker 10: and across the ISOs in particular, I would say, New York.

Speaker 10: with the Veter program and in Texas you're really seeing significant slowdowns and how quickly systems can get turned on. So what you end up happening is you have a hardware sale but not in a company hard software sale in a reasonable time period.

The beta program and in Texas, you are really seeing significant slowdowns and how quickly systems can get turned on so what you end up happening happening is you have a hardware sale, but not a accompanying hardware software sale in a reasonable time period. So that's really kind of what's happening on the ground. The good news is theres no cans.

Speaker 10: And so that's really, you know, kind of what's happening on the ground. The good news is, you know, there's no cancellation. So it's pushing software revenue out. And that's really the reflective of the car difference.

Halation, so it's pushing software revenue out and naturally the reflective of the car difference, whereas you see card continuing to grow.

Speaker 10: Yeah, where they see car continuing to grow.

Speaker 10: But not necessarily being reflected on the income statement line, that's a direct reflection of what's happening in those markets as it relates to intercollection.

But not necessarily being reflected on the income statement line, that's a direct reflection of what's happening in those markets as it relates to interconnection.

Speaker 4: The other thing I'd ask this is, is some of the apps we've been rolling out recently focus on this trend generally. So if you look at Powerbit or Pro as an example, or event manager, those can go to existing assets, existing customers. So we're not as tied to just interconnections and greenfield development. And that's a big part of our product roadmap generally.

The other thing I'd add this is for cash it's some of the apps we've been rolling out recently focused on this trend generally so if you look at power better Pro as an example, or event manager with those can go to existing assets existing customers. So we're not as tied to just interconnections and Greenfield development and that's a big part of our <unk>.

Roadmap generally.

Speaker 12: Okay, that's helpful. And then, just to build on that in the response there, if you look at CAR, I guess the third quarter of last year, you know, you were $61.5 million, now you're $87.5 million. Just wanted to confirm, one, does CAR include the project services business? And if not, I think if you look at kind of the

Okay. That's helpful.

And then.

Just to build on that and the response here. If you look at car I guess, the third quarter of last year.

61, and a half million now you're 87 and a half million dollars.

Just wanted to confirm it.

One is car include project services business and if not I think if you look at kind of the.

Speaker 12: You've probably run rate of storage and solar, you're kind of up five million on an annual basis every year. And just if you're like at average timeframe to turn on storage business that we should think about, like in terms of how to model a mocking additional car over the next 12, 18 months, and then I know you haven't given guidance on how far Clark stands, but is there something you're seeing in the portfolio and how long it takes to turn on storage assets?

And cloud run rate of storage and solar you're kind of up $5 million on an annualized basis year over year and just is there like that average timeframe to turn on.

Storage business that we should think about like in terms of how to model.

Unlocking additional car over the next 12 to 18 months I know you haven't given guidance on.

How far car extends but is there something you're seeing in the portfolio how long it takes to turn on storage assets.

Speaker 10: Yeah, so a couple of, a couple of points in there. So first, I would, I would reference you back to the investor presentation that we had in September . There's a pretty detailed slide on the various types of projects and the timing that it takes to get them through all the way into interconnection operation. So just, you point that out to you. I think that's available on our website. And you know, so you tend to have to have any questions about that. We can take those up later. So that's, that's the first part. I think the second is that you, you know, point we are seeing growth in software and services.

Yeah. So a couple a couple of points in there. So first I would I would reference you back to the Investor presentation that we had in September there was a pretty detailed slide on the various types of projects and the timing.

Takes to get them through all the way into interconnection operation. So just point that out.

That's available on our website.

Yeah to the extent you have any questions about that we can pick those up later so that's the first part I think the second is that.

To your to your point, we are seeing growth in the software and services line item.

Speaker 10: line item and car does not include

And car does not include any cars software. It's that's just really a software line item. It does not include items that wouldnt would be non reoccurring.

Speaker 10: And his car is software, it's that's just really a software line item. It does not include items that would would be non-reoccurring.

Speaker 10: So imagine that to be like mentioned software and service contracts that are long term that generally have cola style adjustments associated with them that would typically last anywhere on solar side, you know, say three to five years, storage side 10 to 20 years.

So imagine that to be like you mentioned software and service contracts that are long term generally have cola style adjustments associated with them that would.

Typically lasts anywhere on the solar side say three to five years storage side 10 to 20 years.

Okay.

Speaker 12: OK, yeah, I guess I'm just kind of looking at the numbers this quarter like the.

Okay, Yeah, I guess I'm, just kind of looking at the numbers this quarter Lucky.

Okay.

It sort of implies that the storage businesses.

Speaker 12: From a software side is like four to five million annualized. So most of the software revenues come from the solar side right now. Again, just trying to kind of understand a little bit better of like when when you start to turn on more storage and we start to see more Athena revenue.

From a software side is like four to 5 million annualized and most of the software revenues coming from the solar side right now and again, just trying to kind of understand a little bit better like win.

When you start to turn on more storage and we start to see more Athena revenue.

I'm through the line items in it and there was a little bit of I thought there was a little bit of a step change in the first half of this year, but I guess I guess that was more market participation than true underlying recurring revs.

Speaker 12: come through the line items. I thought there was a little bit of a step change in the first half of this year, but I guess that was more market participation than true underlying recurring risk.

Speaker 10: Yeah, I mean, I think, you know, as you mentioned, I mean, this, you know, we are seeing more solar revenue, you know, software revenue today. But I think the, you know, as we've mentioned, the reason why there is not more storage is really a relation of how long it's been taking to get these storage projects that are expected. So the car.

Yeah, I mean, I think you know as you mentioned I mean.

We are seeing more solar revenue software revenue today, but I think the you know and I think.

As we've mentioned the reason why there's not more storage is really is the relation of how long it's been taking to get these storage projects interconnected so the.

The car.

Speaker 10: aspect is really what's going to happen in the future at any point in time that it's always transitioning from contracted into say a straight AR metric and we've just seen you know this year in particular for you know and I think I would point out the spot like New York and in Texas we've really just had a really hard time getting those projects across the way you know as a result either you know in some cases interconnections in some cases there are some supply chain issues that have slowed down those individual projects.

Aspect is really what's going to happen in the future at any point in time, there's always transitioning from contracted into say a straight a metric and we've just seen this year in particular and I think I would point out spots like New York and Texas, We've really just had a really hard time getting those projects across the way.

As a result, the either you know in some cases interconnection. Some cases, they've had some supply chain issues that have slowed down those individual projects.

Speaker 10: Yes, as I mentioned, good news is those projects have not gone away and that car is going to turn into, you know, a gap revenue item.

As I mentioned good news is those projects have not gone away and Quebec car. He is going to turn into a GAAP revenue item.

Okay. That's helpful. Thanks.

Speaker 1: The next question comes from Justin Clare with Roth MKM. Please go ahead.

The next question comes from Justin Clare with Roth and Kim. Please go ahead.

Speaker 2: Yep, hey guys, thanks for taking the questions here. So, first off, I just wanted to ask about the expected timeline for delivering the first modular ESS solution or software only sale. So, in Q3, was there any revenue associated with the modular ESS or software only sale?

Yeah, Hey, guys. Thanks for taking the questions here.

First off I, just wanted to ask about the.

The expected timeline for delivering the first modular.

Solution or a software only sales. So in Q3 was there any revenue associated with the modular DSS or software only sales and just trying to get a feel for how that scales up looking forward.

Speaker 2: And just trying to get a feel for how that scales up looking forward from here. So, thank you.

From here so thank you.

Yeah, So I think and thanks for the question.

Speaker 10: Yeah, so I think, and thanks for the question, we should start seeing modular ESS systems, depending on, again, and I hate to kind of harp on the point, but as interconnections get dragged out, we do expect to see the first modular systems be installed in the first half of next year, 2024.

Shouldn't start seeing modular yes, that's.

System, depending on again and I hate to kind of harp on the point, but you know as the interconnections and get dragged out we do expect to see the first modular systems installed in the first half of next year 2024.

Speaker 10: We of course have been doing software only now for quite some time. You know, the first system actually dates back to 2018, even when we did the portfolio down in Southern California. It just slides off forward to that. So those are, those are longer term efforts that have been continuing for quite some time.

We of course have been doing software only now for quite some time. The first system actually dates back to 2018, even when we did the portfolio down in southern California, We just buy software to that so those are those are longer term efforts been continuing for quite some time.

Got it okay.

Speaker 2: Got it. Okay. All right. And then, so shifting gears, just on the SB energy agreement, I was wondering if you could share a little bit more detail on how that's structured. Is this something where you have kind of the right of first refusal to supply the 10 gigawatt hours of project there? Just wondering how that agreement moves through into, you know, contracts and flowing through into your, into your bookings here.

Alright, and then sort of shifting gears just on the SP Energy agreement I was wondering if you could share a little bit more detail on how thats structured as it is this something where you have kind of the right of first refusal to supply the 20 gigawatt hours of projects there.

Just wondering how that agreement.

Agreement moves through into.

Contracts and flowing through into your into your bookings.

Speaker 3: That's just John , I look, I don't want to go too far into this, the physics on the contract, but suffice to say that we will be working very closely on every storage.

Yeah. This is John I I look I don't want to go too far into the specifics on the contract but.

Suffice to say that we will be working very closely on every storage platform and project that they have and I think what's really exciting is we'll be able to integrate it.

Speaker 3: platform and project that they have. And I think what's really exciting is we'll be able to integrate Athena into their digital platform as well. So.

It.

Digital platform as well so you.

Speaker 3: The more to follow, we'll certainly keep everybody updated on that, but it's like I said earlier, a massive and growing pipeline. And as I also stated earlier, I really am excited about the fact that these beauties as a model or a template to carry on to other large bulk power developers.

So more to follow we will certainly keep everybody updated on that but.

Like I said earlier, a massive and growing pipeline.

As I also stated earlier I really am excited about the fact that we view this as a model or a template to carry on to other large full power developers to further drive our services and software strategy.

Speaker 9: to further drive our services and talk for strategy.

Okay, great. Thank you.

Speaker 1: Once again, if you have a question, please press star then one. The next question comes from Abhi Sinha with...

Once again, if you have a question. Please press Star then one.

Next question comes from obesity Huh.

Northland Capital. Please go ahead.

Speaker 13: Yeah, thanks for squeezing me in. Just want to learn on that as being a GD. I know it's a multi-year project and just want to see when exactly do you start getting the revenues and maybe sometime it's a 24-year-end, 25-year-end.

Yeah. Thanks for squeezing me in just wanted to know.

And on that as being a good deed I know, it's a multiyear project.

Wanted to see when exactly do you start getting the revenue guidance.

Maybe sometimes it does 'twenty four 'twenty five.

Ed.

Speaker 13: And second, how do you get, if you can elaborate, like how do you get compared the economics of these big projects? What's the swallow ones that you guys have announced? Like when I'm comparing these two projects, like this one or something smaller. I'm in character which is really of the exact same Wait for Men thing of, they're all living this. Let's see. But what we like differently is that they're only standing for

And second.

How do you that if you can elaborate like how do you guys compare the economics up.

Projects.

The smaller ones that you guys are at now like when I'm comparing these two projects like this one or something smaller.

And then kind of understanding you.

Speaker 13: you are, how popular are these big ones versus a bunch of smaller ones.

Hop off at about these big ones.

A bunch of smaller loan fundings.

Yeah. This is Jon on the first part of your question.

Speaker 3: Now, this is John . On the first part of your question,

Speaker 3: um, you know, we're working through the project specifically and I hate to keep harping on interconnection, but It's going to be predicated on that There's a chance in 24 Possibly 25 but moves around so it's hard for us to say right now when the first project is going to be operational and interconnected more importantly, but uh, we'll obviously keep everybody up to speed and it was hard to understand

We're working through the projects, specifically and I hate to keep harping on interconnection, but it's going to be predicated on that there's a chance in 'twenty four possibly 25, but moves around so it's hard for us to say right now when the first project is going to be operational in interconnected.

Importantly, but we'll obviously keep everybody up to speed and it was hard to understand the second part I think it was around the economics.

Speaker 3: second part. I think it was around the economics.

Right I'm, just trying to understand the project economics for this kind of big science projects.

Speaker 13: Right, I'm trying to understand the project economics for this kind of big size projects, trying to see if, you know, half up to these versus the smaller projects that you can get like in the much smaller that you get to get the hold of.

Trying to see.

How profitable are these what it says the smaller projects that you've been making are much smaller.

Hello.

Hi, This is protest yeah generally the this engagement should deliver higher margin projects. Then then when we're selling hardware into a particular customer right. This is purely a software and services engagement. So the services can be delivered anytime in the project lifecycle.

Speaker 4: Hi, this is Prakash. Yeah, generally, this engagement should deliver higher margin projects than when we're selling hardware into a particular customer, right? This is purely a software and services engagement, so the services can be delivered any time in the project lifecycle, those are around 30 to 50% versus margin, and the software is 80% GM.

Michael that those are around 30% to 50% gross margin and the software is 80% Jim.

Speaker 13: So that's why, so that economic does not change even if such a big project comes in there. I mean, you still maintain that kind of profit margin.

Alright, so that's why I said that the economic does not change even if such a big project comes in there I mean do you still maintain that kind of profit margins.

That's right. Yeah. These are just leveraging our capabilities, it's not it's not discounted or anything of that sort of.

Speaker 4: That's right. Yeah, these are just leveraging our capabilities. It's not it's not discounted or anything of that sort.

Alright, thank you.

This concludes the question and answer session I would like to turn the conference back over to John Carrington for any closing remarks.

Speaker 1: the question and answer session. I would like to turn the conference back over to John Carrington for any clothing.

Speaker 3: Yes, thanks. I want to thank everyone for joining Third Quarter earnings call and we certainly look forward to speaking with you during our fourth quarter earnings call, which will take place in February .

Yes, Thanks, I want to thank everyone for joining <unk> third quarter earnings call and we certainly look forward to speaking with you during our fourth quarter earnings call, which will take place in February.

This concludes today's conference call you may disconnect. Your lines. Thank you for participating and have a pleasant day.

Speaker 14: This concludes today's conference call. You may disconnect your lines. Thank you for participating and have a pleasant day.

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