Q3 2023 A10 Networks Inc Earnings Call
Speaker 1: Hello and welcome to the A10 Networks 3rd Quarter 2023 Earnings Conference Call. My name is Elliot and I'll be coordinating your call today. If you would like to register a question during today's event, please press star followed by 1 on your telephone keypad.
Hello, and welcome to the Aten Networks' third quarter 2023 earnings conference call.
My name is I think it's not a record 19 your call today.
If you would like to register for a question John statement. Please press star followed by one on your telephone keypad.
I would now like to hand over to Bob.
Speaker 1: I'd now like to hand over to Rob Fink with FNK IR. The floor is yours. Please go ahead.
F N kom.
Hello, Sean Please go ahead.
Thank you operator, and thank you all for joining US today. This call is being recorded and webcast live that may be accessed for at least 90 days via the Aten networks.
Speaker 2: Thank you operator and thank you all for joining us tonight. This call is being recorded and webcast live and may be accessed for at least 90 days via the ATEM website at ATEMnetworks.com.
Website at Aten networks Dot com.
Speaker 2: Hosting the call today are Drew Petrovetti, ATEM's President and CEO , and Brian Becker, DSA.
Hosting the call today are <unk>, president and CEO and Brian Baker CFO.
Speaker 2: Before we begin, I would like to remind you that shortly after the market closed today, A10 Networks issued a press release announcing its third quarter 2023 financial result.
Before we begin I would like to remind you that shortly after the market closed today aten.
It works issued a press release announcing its third quarter 2023 financial results.
Speaker 2: Additionally, ATEN published a presentation on supplemental trended financials.
Additionally, aten published a presentation and supplemental trended financial statements.
Speaker 2: the MAC with the press release presentation and trying to financials on the investor relations set.
The press release presentation, and trended financials on the Investor Relations section of website.
During the course of today's call management will make forward looking statements, including statements regarding projections of future operating results, including their potential revenue share revenue growth industry and customer trends and capital allocation strategy supply chain constraints and expectation positioning the repurchase and dividend programs.
Speaker 2: During the course of today's call, management will make forward statements, including statements regarding projections or future operating results, including their potential revenue share revenue growth. Industry and customer trends and capital allocation strategy supply chain constraints and expectations positioning the repurchase and dividend programs and market.
And market share.
Speaker 2: These statements are based on current expectations and beliefs as of today, November 7th, 2023. These forward looking statements involve a number of risks and uncertainties so much or beyond management's control, such as the potential impact of the COVID-19 pandemic. And these could cause actual results to differ maturely, and you should not rely on those predictions for future.
Statements are based on current expectations and beliefs as of today November seven 2023. These forward looking statements involve a number of risks and uncertainties. So much are beyond managements control such as the potential impact that the COVID-19 pandemic.
And these could cause actual results to differ materially and you should not rely on these predictions for future events.
Speaker 2: ATEM does not intend to update information contained in these forward-looking statements, whether as a result of new information, future events, or otherwise unless required by law.
Not intent to update information contained in these forward looking statements, whether as a result of new information future events or otherwise unless required by law.
More detailed description of these.
Speaker 2: risks and uncertainties, please refer to the company's most recent 10k.
Risks and uncertainties. Please refer to the company's most recent 10-K.
Please note that with the exception of revenue financial measures discussed today are on a non-GAAP basis and have been adjusted to exclude certain charges.
Speaker 2: Please note that with the exception of revenue, financial measures discussed today are on a non-GAAP basis and have been adjusted to exclude certain charges.
Speaker 2: The non-GAAP financial measures are not intended to be or considered in isolation or substitute for results prepared in accordance with GAAP, and they may be different from non-GAAP financial measures presented by other companies. A reconciliation between GAAP and non-GAAP measures can be found in the press release that was issued today and on the trended quarterly financial statements posted on the company's website.
non-GAAP financial measures are not intended to be considered in isolation or substitute for results prepared in accordance with GAAP and may be different from non-GAAP financial measures presented by other companies a reconciliation between GAAP and non-GAAP measures can be found in the press release that was issued today and on the trended quarterly financial statements.
On the company's website.
With all that said I'd now like to turn the call over to true pad to pad the call is yours.
Speaker 2: With all that said, I'd now like to turn the call over to Trouped. Trouped, the call is yours.
Thank you Rob and thank you all for joining us today.
The industry headwinds, we discussed on our previous earnings call impacted our results in the third quarter.
Speaker 3: The industry headwinds we discussed on our previous earnings calls impacted our results in the third quarter, resulting in revenue of $57.8 million, which is in line with our preliminary results.
<unk> billion revenue of $57 8 million, which is in line with our preliminary results.
Speaker 3: Despite these headwinds, year to date, we have achieved our stated EBITDA goal of 26% to 28%, and we continue to generate cap.
Despite these headwinds year to date <unk>, our stated EBITDA goal.
6% to 28% and we continue to generate cash.
While the Bob speak.
Speaker 3: For the past three years, we have been speaking about the importance of our diversified business model and its structural profitability.
Speaking about the importance of our diversified business model, Andy then Carol Robert Gibney.
Speaker 3: This diversification has enabled us to outperform the market, transition to consistent profitability, and support a buyback program, and then a cash dividend.
Diversification has enabled us to outperform the market.
Listening to consistent profitability and support a buyback program and then a cash dividend.
Speaker 3: But the real value of our business model, both in terms of diversification and resource allocation, relates to how we adapt to challenging macroeconomic circumstances.
Real value out of our business model, both in terms of diversification and resource allocation relates to how we adapt to challenging macroeconomic circumstances.
Speaker 3: In February 2021, we had guided to a business model of 80% to 82% gross margin, 26% to 28% EBITDA, and expanding EPS.
In February 2021, we had guided to a business model of 80% to 82% gross margin, 26% to 28% EBITDA and expanding EPS.
Speaker 3: In spite of a challenging top-line environment, we are on track here today to deliver on these as a result of our focus on execution and being the end of the entire process.
In spite of a challenging top line environment.
We're on track year to date to deliver on the as a result of our focus on execution and being customer centric.
Speaker 3: To put it in perspective, our non-GAAP EPS for Q3 2023 of $0.16 was higher than our full-year non-GAAP EPS in 2018 and 2019.
To put it in perspective, our non-GAAP EPS, while Q3 2023, our 16th.
It was higher than our full year non-GAAP EPS in 2018 and 2009.
This demonstrates the progress we have made.
Speaker 3: This demonstrates the progress we have made in establishing durable earnings power building upon a strong technical foundation.
<unk> durable earnings power building upon a strong technical foundation.
We monitor growth opportunity and our sales cycle closely.
Speaker 3: We monitor growth opportunities and our sales cycles closely, using multiple points of view.
Using multiple points of view.
During the quarter.
Speaker 3: And the first few weeks of the third quarter, we saw improving market conditions.
And the first few weeks of the third quarter, we saw improving market conditions.
Speaker 3: But as the quarter progressed, decisions were delayed and our visibility decreased.
But as the quarter progressed.
<unk> will be made and our visibility decrease.
Even so we expected higher revenue levels based on several late stage opportunities that we expect it to close in the last few weeks of the third quarter.
Speaker 3: Even so, we expected higher revenue levels based on several late-stage opportunities that we expected to close in the last few weeks of the third quarter.
As conditions worsen these orders shifted from the third quarter in the future.
Speaker 3: As conditions worsened, these orders shifted from the third quarter into future periods during the last two weeks of the quarter.
During the last two weeks of the quarter.
Speaker 3: As a result, we made the decision to pre-announce our revenue just after the quarter ended.
As a result, we made the decision to pre announce our revenue just after the quarter end.
As has been widely reported subsequent to our announcement.
Speaker 3: As has been widely reported subsequent to our announcement, the North American market, especially with service providers, has been difficult for all of our peers.
North American market, especially with service providers has been difficult for all of our peers.
Speaker 3: Buying decisions are being delayed, projects are being pushed, and inventory gluts are being worked through in response to rising interest rates and inflation concerns.
Buying decisions are being delayed projects are being pushed.
An inventory glut are being worked through in response to rising interest rates and inflation.
Speaker 3: ATEN has not been completely immune to these headwinds despite enterprise segment growth both year-to-date and in the quarter.
Hey, Dan has not been completely immune to the headwinds despite enterprise segment growth both year to date and in the quarter.
Speaker 3: Visibility is reduced, customer cycles are elongated, and quarter-to-quarter volatility has increased.
Visibility is reduced customer cycle are elongated and quarter to quarter volatility has increased.
Speaker 3: However, our global reach, customer diversification.
However, our global reach and customer diversification.
Speaker 3: an effective supply chain management has enabled us to navigate these challenges as evidenced by performance viewed over longer time period.
And effective supply chain management has enabled us to navigate these challenges as evidenced by performance viewed over longer time periods.
Speaker 3: and we are confident that as the market normalizes.
And we are confident that as the market normalizes.
Our solid foundation and commitment to execution will help us to drive sustainable financial results.
Speaker 3: Our solid foundation and commitment to execution will help us to drive sustainable financial results. Our business model enables profitability.
Our business model enables profitability.
Even when we experience revenue.
Few years ago as the challenges that resulted in significant losses and cash burn.
Speaker 3: A few years ago, such challenges would have resulted in significant losses in cash flow.
Speaker 3: Today that is clearly not the case as we reported gap profitability and generated cash.
Today that is clearly not the case as we report a GAAP profitability and generated cash.
Speaker 3: even as we continue to return capital to shareholders while driving innovation.
Even as we continued to return capital to shareholders, while driving innovation.
In the last 12 months, we have returned $95 2 million to shareholders in the form of dividends and repurchases.
Speaker 3: In the last 12 months, we have returned 95.2 million to shareholders in the form of dividends and repercussions.
Speaker 3: In part, we have adjusted our business priorities to aggressively reallocate and reduce spending amidst a challenging revenue environment.
In part we have adjusted our business priorities to aggressively reallocate and reduce spending amidst a challenging revenue environment.
We remain focused on preserving growth oriented investments, while being cognizant of our overall spending.
Speaker 3: we remain focused on preserving growth-oriented investments while being cognizant of our overall spending.
Speaker 3: Subsequent to the end of the quarter, we launched a new component of our already strong security product portfolio.
Subsequent to the end of the quarter, we launched a new component of our already strong <unk> product portfolio.
Our new <unk> detector.
Speaker 3: Our new ATEN defense detector, available as part of ATEN solution portfolio, provides early warning capability to facilitate even more effective and advanced threat mitigation.
Table as part of Aegon solution portfolio provide early warning capability.
The new date, even more effective and as Ron correct mitigation.
Speaker 3: This product targets the growing threat of DDoS attacks.
This product targets the growing threat of Ddos attacks.
And then defend detector helps customer.
Speaker 3: A10 Defense Detector helps customer build DDoS defenses before attack.
Ddos defended before our back book.
Speaker 3: We believe that our portfolio, including AT&D Detector, Orchestrator, and Mitigator, provides the highest levels of scalability and efficacy available in the market today, delivering automated DDoS defenses for the most demanding service provider and enterprise environment.
We believe that our portfolio, including <unk> defend detector orchestrator and mitigate there.
The highest levels of scalability and efficacy of enabling the market to date delivering automated ddos defenses while.
The most demanding service provider and enterprise environment.
We are also in early trials with enterprise customers for our new Ddos threat intelligence service and we plan to integrate this into our solution portfolio in early 2024.
Speaker 3: We are also in early trials with enterprise customers for our new DDoS threat intelligence service. And we plan to integrate this into our solution portfolio in early 2024.
Our security research team already tracked more than $15 4 million Ddos weapon globally.
Speaker 3: Our security research team already tracked more than 15.4 million DDoS weapons globally.
Speaker 3: Our Threat Intelligence Service leverages this experience.
Our threat intelligence service leveraging this expertise.
Our global pipeline of opportunities remains strong in both service provider and enterprise segment.
Speaker 3: Our global pipeline of opportunities remains strong in both service provider and enterprise sector.
Speaker 3: Projects have been delayed but revenue has not been lost.
Projects have been delayed but revenue has not been lost.
Speaker 3: In reality, security and network expansion remain business-critical investments and while higher interest rates and broad economic uncertainty is impacting the sales cycle, these projects cannot be permanently deferred.
In reality security and network expansion remain business critical investments and while higher interest rates and broad economic uncertainty impacting the sales cycle. These projects cannot be permanently deferred.
Our visibility has been reduced but we continue to believe that we are well positioned to navigate these challenges and poised to rebound as the market normalizes.
Speaker 3: Our visibility has been reduced, but we continue to believe that we are well positioned to navigate these challenges and voice to rebound as the market normalizes.
Speaker 3: This is based on a customer-centric approach combined with innovation.
This is based on a customer centric approach combined with innovation.
With that I'd like to turn the call over to Brian quite a detailed review of the quarter and the first nine months of the year Brian.
Speaker 4: With that, I'd like to turn the call over to Brian for a detailed review of the quarter and the first nine months of the year. Brian ?
Thank you.
The results we are announcing today are in line with preliminary results reported on October 3rd.
Speaker 5: The results we are announcing today are in line with preliminary results reported on October 3rd.
Speaker 5: Third quarter revenue was $57.8 million, a decrease of 20% year over year, reflecting the headwinds Drupal described earlier.
Third quarter revenue was $57 8 million, a decrease of 20% year over year, reflecting the headwinds described earlier.
Product revenue for the quarter was $30 3 million, representing 52, 4% of total revenue.
Speaker 5: Product revenue for the quarter was $30.3 million, representing 52.4% of total revenue.
Speaker 5: After modest improvements in the second quarter, market conditions deteriorated, with several projects we expected to close at the end of the quarter being pushed into future periods during the last month.
After modest improvements in the second quarter market conditions deteriorated with several projects, we expected to close at the end of the quarter being pushed into future periods during the last month.
Speaker 5: Services revenue, which includes maintenance and support revenue, was $27.5 million, or 47.6% of total revenue.
Services revenue, which include maintenance and support revenue was $27 5 million or <unk> 47, 6% of total revenue.
Speaker 5: Moving to our revenue from a geographic standpoint, revenue from the Americas, including Latin America, was $25.8 million, down 28% year over year.
Moving to our revenue from a geographic standpoint revenue from the Americas, including Latin America was $25 8 million down 28% year over year.
Speaker 5: This reflects slowing purchasing from large customers, primarily service providers, due to economic.
This reflects slowing purchasing from large customers primarily service providers due to economic concerns.
Speaker 5: Revenue from the Americas was down 36%, primarily related to reduced spending from Tier 1 service providers.
Revenue from the Americas was down 36% primarily related to reduced spending from tier one service providers.
As you can see on our balance sheet, our deferred revenue was $135 7 million as of September 32023 up 8% year over year.
Speaker 5: As you can see on our balance sheet, our deferred revenue was $135.7 million as of September 30th, 2023, up 8% year over year.
Speaker 5: With the exception of revenue, all the metrics discussed in this call are on a non-GAAP basis, unless otherwise stated. A full reconciliation of GAAP to non-GAAP results are provided in our press release and on our website.
With the exception of revenue all the metrics discussed on this call on a non-GAAP basis, unless otherwise stated are.
A full reconciliation of GAAP to non-GAAP results are provided in our press release and on our website.
Speaker 5: Gross margin in the third quarter was 81.8%, in line with our expectations.
Gross margin in the third quarter was 81, 8% in line with our expectations.
Speaker 5: Adjusted EBITDA was $14.4 million for the quarter, reflecting 24.9% of revenue. I'd like to note that we were able to maintain EBITDA margins in excess of 20% even as revenues declined by 20% in the quarter.
Adjusted EBITDA was $14 4 million for the quarter, reflecting 24, 9% of revenue.
Like to note that we were able to maintain EBITDA margins in excess of 20% even as revenues declined by 20% in the quarter.
Speaker 5: non-GAAP net income for the quarter was $12 million, or $0.16 per diluted share, down from $15.9 million, or $0.20 per diluted share in a year-ago quarter.
non-GAAP net income for the quarter was up was $12 million or <unk> 16 per diluted share down from $15 9 million or <unk> 20 per diluted share and a year ago quarter.
Maintaining our non-GAAP net income on lower revenue is a significant accomplishment demonstrating the earnings power, we have built into <unk>.
Speaker 5: Maintaining our non-GAAP net income on lower revenue is a significant accomplishment, demonstrating the earnings power we have built into A10.
Speaker 5: Diluted weighted shares used for computing non-GAAP EPS for the third quarter were approximately 75.8 million shares compared to 77.7 million shares in the year-ago quarter.
Diluted weighted shares used for computing non-GAAP EPS for the third quarter were approximately $75 8 million shares compared to <unk> 77, 7 million shares in the year ago quarter.
Speaker 5: On a gap basis, net income for the quarter was $6.5 million, or $0.09 per diluted share, compared with net income of $12.1 million, or $0.16 per diluted share in the year-ago quarter.
On a GAAP basis net income for the quarter was $6 5 million or <unk> <unk> per diluted share compared with net income of $12 1 million or <unk> 16 per diluted share in the year ago quarter.
Speaker 5: Turning to the year-to-date results, revenue was $181.2 million, down 10.6% year over year.
Turning to the year to date results.
Revenue was $181 2 million down 10, 6% year over year.
Speaker 5: Product revenue was down 18.7%, representing approximately 55.5% of total revenue. And services revenue was up 2%, representing about 44.5% of total revenue.
Product revenue was down 18, 7%, representing approximately 55, 5% of total revenue and services revenue was up 2% representing about 44, 5% of total revenue.
Speaker 5: Year-to-date non-GAAP gross margin was 81.6%.
Year to date non-GAAP gross margin was 81, 6%.
Adjusted EBITDA was $47 2 million, reflecting 26 one.
Speaker 5: The adjusted EBITDA was $47.2 million, reflecting 26.1% of total revenue, in line with our profitability target.
1% of total revenue in line with our profitability targets.
non-GAAP net income for the first nine months was $36 5 million or <unk> 48 per diluted share compared to $39 3 million or <unk> 50 per diluted share in the year ago period.
Speaker 5: non-GAAP net income for the first nine months was $36.5 million, or $0.48 per diluted share, compared to $39.3 million, or $0.50 per diluted share in the year-ago period.
On a GAAP basis net income for the first nine months was $22 1 million or 29 cents per diluted share compared with net income of $28 9 million or <unk> 37 per diluted share in 2022.
Speaker 5: On a gap basis, net income for the first nine months was $22.1 million or $0.29 per diluted share compared with net income of $28.9 million or $0.37 per diluted share in 2021.
Speaker 5: Year-to-date, we have generated $41.8 million in cash from operations.
Year to date, we have generated $41 8 million in cash from operations.
Turning to the balance sheet as of September 32023, we had $169 million in total cash cash equivalents in marketable securities compared to $150 9 million at the end of 2022.
Speaker 5: Turning to the balance sheet, as of September 30th, 2023, we had $169 million in total cash, cash equivalents, and marketable securities compared to $150.9 million at the end of 2022, an increase of 12% compared to the
An increase of 12% compared to the end of 2022.
Speaker 5: In the quarter we paid $4.5 million in cash dividends and repurchased 168,000 shares at an average price of $14.52 for a total of $2.4 million.
In the quarter, we paid $4 $5 million in cash dividends and repurchased 168000 shares at an average price of $14 52.
For a total of $2 4 million.
We continue to carry no debt.
The board has approved a quarterly cash dividend of <unk> <unk> per share to be paid on December one 2023 to shareholders of record on November 17 2023.
Speaker 5: The board has approved a quarterly cash dividend of $0.06 per share to be paid on December 1, 2023 to shareholders off record on November 17, 2023. The board also approved a new $50 million share repurchase plan.
The board also approved a new $50 million share repurchase plan.
As discussed in our preliminary results. We expect Q4 2023 revenue to be between 70 and $80 million in year over year growth in full year 2023 non-GAAP EPS.
Speaker 5: As discussed in our preliminary results, we expect Q4 2023 revenue to be between $70 and $80 million and year-over-year growth in full year 2023 non-GAAP EPS.
Speaker 5: Based on current market conditions and in line with our broader peer group, we expect 2024 revenue and EPS growth. I'll now turn the call back over to.
Based on current market conditions and in line with our broader peer group, we expect 2020 for revenue and EPS growth.
I'll now turn the call back over to <unk> for closing comments.
Thank you Brian.
Speaker 4: ATEM remains well-positioned to generate improved results as market conditions improve and we expect our performance to benefit from our diversification and global presence.
<unk> remains well positioned to generate improved results as market conditions improve and we expect our performance to benefit from our diversification and global presence.
Speaker 4: Our security-led solutions remain in high demand, aligned with durable secular capital.
Our security led solutions remain in high demand aligned with unit both secular catalyst.
Speaker 4: Additionally, our investment in supporting hybrid solutions that work on-prem and in the cloud are well aligned with customer business outcomes. Operator.
Additionally, our investments in supporting hybrid solutions that work on Prem and in the cloud are well aligned with customers' business outcomes.
Operator, we can now open the call up for questions.
Okay.
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Speaker 1: First question today, is from Gray Powell with BTRG, your line is open. Okay, great, thanks for...
Last question today comes from Gray Powell with <unk>. Your line is open.
Okay, great. Thanks for taking the question.
Speaker 6: So, I had a couple here. So, I just look at some of my companies on the network security side of the world. You know, some companies like Fortinet are talking about how a portion of growth the last couple of years was driven by temporary factors like COVID and supply chain. And now, we're in sort of this digestion phase. I know you all are a little bit different, but how long do you think this digestion phase lasts?
So I had a couple here.
So I just look at some of the companies on the network security side of the World.
Some companies like Fortinet or talking about how a portion of growth the last couple of years.
It was driven by temporary factors like Covid and supply chain and now we're in sort of this digestion phase I know you I know you all are a little bit different.
How long do you think this digestion phase lasse.
Speaker 6: And admittedly a tough question, but what do you think growth looks like when we do come out of it?
And then admittedly a tough question, but what do you think growth looks like.
We do come out of it.
Speaker 4: So, no, thank you, Gray. So, maybe I'll address those separately. So first, as it relates to supply chain, you are correct, right? I think if you look at some of the networking infrastructure as well as security companies, in the last 12 to 18 months, a lot of them went through this kind of inventory correction. I go, if you will, where they...
So thank you so maybe I'll address those.
So first as it relates to supply chain.
You are correct I think if you look at some of the networking infrastructure as well as security company.
In the last 12 to 18 months.
A lot of them went through this inventory correction icon if you will.
We could not supply for a while <unk> had a lot of backlog built up a lot of it and then.
Speaker 4: could not supply for a while, had a lot of backlog, built up a lot of it, and then are now kind of working through it and normalizing it. For A10, I think.
Ill kind of working through it and normalizing it.
<unk> <unk> <unk>.
Speaker 4: Because of our footprint and the way we manage some of these operational items, we were never in a situation of having excessive backlog either direction, right? So, in some ways.
Because of our footprint and the way we manage some of these operational item.
We're never in a situation of having excessive backlog of either direction right. So in some way.
Got it.
Okay.
Speaker 4: it's more reflective of the actual market opportunity because most of our business is book and term. And so it gets affected quickly. So we don't expect, or we are not, the Q3 challenges for us had very little or nothing to do with supply chain or inventory levels. But certainly that's a phenomenon we are mindful of. And indirectly, right, we, of course, always look at.
It's more reflective of the actual market opportunity because most of our business it will get done.
And so it gets affected quickly so we don't like.
Are we are not the Q key challenges, Florida.
Very little or nothing to do with supply chain.
Our inventory levels.
But certainly thats a phenomenon, we are mindful of and.
And indirectly right we of course always look at.
Speaker 4: the equipment customers have purchased, what is the utilization, and because our customer base is predominantly service provider or large enterprise rather than, say, small enterprise, we are very well integrated technically to track those things.
That equipment customers per case, what is the utilization and because our customer base is predominantly a service provider, our large enterprise rather than a small enterprise.
We are very well integrated technically to track those so.
Speaker 4: So I do think that in itself is not a major factor. Certainly, where customers will be slower to use inventories they already purchased in the past is harder to predict. But I think we see deferral of new CapEx projects, like building new data centers, more so than kind of.
So I do think that in itself is not a major factor.
Certainly their customers will be.
Lower the use in mendota already but case in the past.
Harder to predict but I.
I think this is deferral of new Capex projects like building, new data centers more so than kind of.
Speaker 4: cancellation of that, right? So that's sort of the supply chain perspective. And if you see some of the peer companies, you see their growth over the last three years, year over year, you can see that bubble, right? And then it normalizes out. So that's something we are mindful of. But unknown for us would be more customers taking longer to consume what they have, not that they have so much that they don't plan to buy.
Cancellation of that right. So.
That sort of the supply chain perspective.
Youll see some of the peer company, you'll see that growth over the last.
Year over year, you can see that bubble and then it normalizes out so.
So that's something we are mindful off.
But unknown virus would be more customers taking longer to consume what they are not.
Not that they have so much that they don't plan declines.
Speaker 4: As it relates to COVID, I think, you know, we had mentioned this earlier, right, but because our business is predominantly in the core of the network, when things move to more remote or more distributed working models.
As it relates to Covid.
Inc.
We had mentioned it earlier right, but because our business is.
What is dominantly in the core of the network.
When things move to more remote or more distributed working models.
Speaker 4: it had a much more profound impact on companies that supported sort of.
<unk> had a much more profound impact on companies that support a startup.
Speaker 4: work from home or remote applications and things like that. For us, ultimately, what mattered was that that data gets aggregated into a core network. And so far as we didn't see a dramatic demand change, again, because of the customers that we are exposed to, right, who would see more data, whether it was from home or the office, for example.
For a more moderate more.
<unk> and things like that.
US ultimately what Matt Audette was.
That data aggregated into our core network and so far we didn't see a dramatic demand change.
Again because of the customers that we added was like who who will see more data whether it was long haul multi office lifestyle. So.
Speaker 4: So those are factors we certainly think are germane. And it's hard for me, Greg, to differentiate that from normal capex cyclic behavior that you see from both customers, right? So how much is due to these factors versus their normal cycle? Hard to know. But hopefully, that gives you a flavor for at least what ATAN is facing.
But those are factors, we sell anything.
Germain and it's hard for me to differentiate that from normal Capex cyclic behavior that you see from those customer site. So hologic due to these factors versus that normal cycle has danone.
But hopefully that gives you a flavor correctly, what aiden is facing.
Speaker 4: Uh, and, uh, your next question around, how do we think, you know, growth resume?
And your next question around how do we think growth is new so.
Speaker 4: If you think of our business, two-thirds service provider, one-third enterprise. Enterprise is predominantly large enterprise. And I would say that is certainly becoming more stable and not on a negative trajectory. And if you see our segment results, you'll see that as well. We expect that to be driven more for us in two ways. One is they are supporting more complex configurations where
If you think of our business to.
Service provider, one third enterprise enterprises, predominantly large enterprise and I would say that is certainly becoming more stable and not not on a negative trajectory and if you see our segment results slide you'll see that as well.
We expect that to be driven.
More quarters in two ways, one is supporting more like configurations, where it.
Speaker 4: more and more of the larger customers want a mixed operating environment on-prem and cloud. We have invested a lot in those products and commercial activities. That we expect to be stable. I think, year-to-date, our enterprise segment is growing like five, six percent, and in quarters slightly better than that, even though overall it's so negative.
More and more of the larger customers want a mixed operating environment on Prem and cloud and we are investing a lot in those products and promotional activities that we expect to be stable and I think year to date, our enterprise segment is growing like five 6% and in quarters.
Better than that so.
Even though overall so negative.
Speaker 4: On the service provider side, I think, you know, we made some progress with Tier 2, Tier 3 a little bit, which is more or less volatile. And with Tier 1 service provider, our assumption and the signs we see are
On the service provider side I think we made some progress at tier two tier three a little bit which is more.
Our less volatile.
The tier one service provider.
<unk> Chen and assigns ECR.
Speaker 4: it will resume towards the growth period, but it's not going to suddenly snap back to where they were. So we are projecting kind of a slow recovery in the beginning of the year, and then as they see a bigger supply-demand imbalance, they will
It will resume towards the growth, but it's not going to suddenly snap back to where they were but we are projecting to have a slow recovery in the beginning of the year.
And then as a bigger supply demand imbalance site they will stengel.
Okay.
Speaker 6: Understood. Okay, great. And I guess just one follow-up question. I mean, you guys have, you've always done a good job controlling costs. How much more room do you have to squeeze on the OPEX side and grow EBITDA and EPS in excess of revenue growth?
Understood Okay great.
Just on <unk>.
One follow up question I mean, you guys, you've always done a good job controlling costs.
How much more room do you have to squeeze on the on the Opex side.
EBITDA.
EBITDA and EPS.
In excess of revenue growth.
Yeah.
Speaker 4: Yeah, no, I think great, great question, Gray, and of course, EPS growth is always more fun with revenue growth.
Great Great question today and of course EPS growth is always more fun with revenue growth.
Speaker 3: uh the uh so for us i think you know this year because of the revenue
So for US I think this year because of the revenue.
Speaker 4: impact versus last year. Obviously, there are temporary cost changes that will resume when we are back in growth mode, such as, right, variable selling cost, commission, channel, all of that. So, we expect that, obviously, to float up again with revenue growth on.
Impact what does last year, obviously that.
<unk> cost changes that will resume when we.
Back in growth mode, such as variable selling cost emission channel all of that so we.
We expect that obviously to load up again with revenue growth.
On G&A side, I think we continue to look for efficiency, so nothing dramatically different but it will always be better as a percent of revenue.
Speaker 4: GNA side, I think we continue to look for efficiency. So nothing dramatically different, but it will always be better as a percent of revenue. And, you know, all of it will grow slower than revenue.
And.
All opex will grow slower than revenue growth.
Speaker 4: The part that I think obviously comes back fastest would be variable comp on sales side with revenue growth. On R&D, I would say the biggest focus for us is
The part that I think obviously comes back phosphates would be variable comp sale sites.
With revenue growth on R&D, I would say the biggest focus for us.
Reallocating resources to where we see the most growth opportunities right. So a lot of our new.
Speaker 4: reallocating resources to where we see the most growth opportunities, right? So a lot of new announcements around capabilities and products will be.
Announcements around capabilities and product will be.
Speaker 4: not more engineers per se, but the ones who are there are working on the most important things. So that's the way we balance it. And when growth resumes, we grow OPEX, but not as fast.
Not more engineers per se, but the ones that I was working on the most important thing.
The.
Lazy balance it and when growth resumes, we grow opex, but not as fast.
Understood.
Thank you very much.
Thank you Brett.
We now turn to how much Cassandra with AWS financial your line is open.
Speaker 1: We now turn to Hamad Khoslandi with BWS Financial. Your line is open.
I was just wanted to understand.
Speaker 7: Hi, I was just want to understand the conversations you're having with your service provider customers. Yeah. How does that relate to your guidance commentary about 2024 when it sounds like earlier in your comments that you still don't have enough visibility even for Q4?
The conversations Youre, having with your service provider customers.
How does that relate to your guidance commentary about 2024, when it sounded like earlier in your comments that you have.
We still don't have enough visibility even for Q4.
Sure.
Yeah no good question so.
Speaker 4: Yeah, no, good question. So, uh, I think, you know, we are obviously, I think we are not giving guidance for 2024, right? I think what I was explaining before is so specific to the service provider customer.
I think we are obviously.
We are not giving guidance for 2024 right that I think what I was explaining before is so specific amit to the service provider customers.
Speaker 4: I would say the difference between North America and the rest, so speaking about North America maybe the most, our conversations are around projects that are planned but are getting postponed, as opposed to them not needing the product anymore or scaling back their plan.
I would say difference between North America and rest so speaking about North America, maybe the most.
Our conversations are.
Around.
Projects that are planned but are getting postponed.
As opposed to them not needing the product anymore or scaling back their plan.
Speaker 8: Second element is some of those customers specifically cite the cost of capital and concerns about their ability to get a rate of return when they are borrowing at those levels. And I think as...
Second element.
Some of those customers, specifically cite the cost of capital and concerns about their ability to get it done when they are borrowing at those levels.
And I think as those being not necessarily decline, but normalize out they will have to fulfill demand right. So they can postpone it but they are planning to add capacity to support new services and new data.
Speaker 8: those things not necessarily decline, but normalize out, they will have to fulfill demand, right? So they can postpone it, but they are planning to add capacity to support new services and new data. So that's the second element of it. And third, I think, you know, obviously North America.
So that's the second element of it.
And Todd I think obviously in North America.
Speaker 8: Some of the service providers have structural capex and capital complexity and challenges. So we are not assuming those go away, right? This is more around customers that were planning something in Q3, we know they're still planning it because we are working with them on testing and deployment. It is more from that perspective than
Some of the service providers have structural capex that capital complexity and challenges. So we are not assuming those goals like this is more around customers that were planning something in Q3, we know they are still planning it because we are working with them on testing and deployment.
It is more from that perspective then.
Speaker 4: Assuming that, you know, some large customer that completely shut off suddenly.
Assuming that some large customers that completely shut off suddenly dumped on it.
Okay and my other question was.
Speaker 7: Okay, and my other question was, you know, you've always been a service provider-centric company. What are you doing to expand your presence in market share and enterprise, and how fast could that segment grow?
You've always been a service provider centric company.
What are you doing to expand your presence and market share in enterprise and how fast could that segment grow for you.
Yes. So good question and I think if you look at our trended financials right then as I said before.
Speaker 4: Yeah, so good question. And I think, you know, if you look at our trended financials, right, and as I said before, enterprise segment, actually, even in this year is growing 5 to 7% for us. Globally, obviously, right? It's revenue wise, it's still not as big or close to
Enterprise segment actually even in this area is growing 5% to 7%.
Globally, obviously United.
Revenue wise.
Still not as big or close to that segment.
Speaker 8: The segment, but I would say our.
But I would say Q3, our enterprise revenue was roughly $29 million out of that so that's a pretty good mix if you will.
Speaker 4: Enterprise revenue was roughly 29 million out of that, so that's a pretty good mix, if you will. Now,
Now we don't wanted to grow because that is declining but that is the <unk>.
Speaker 4: we don't want it to grow because SP is declining, right? But that is a pretty high mark for us so far in the last seven, eight quarters, right? So, and a connection for us really there is lot of the large enterprise customers.
Really high Mark for us so far in the last seven eight quarters site. So.
And the connection for us really that a lot of the large enterprise customers.
Have concluded that it is more efficient then.
Speaker 4: have concluded that it is more efficient and risk management wise better for them to operate on-prem and cloud. And our ability to provide that right is what is helping us regain growth in that market and be credible for those customers.
This managed by management by better for them to operate on Prem and cloud and our ability to provide that like is what is helping us regain.
Again growth in that market and be credible for those customers.
Okay, great. Thank you.
Thanks, Kevin.
Speaker 1: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad now.
As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad now.
Speaker 1: We now turn to Christian Swabe with Craig Hallam capsule. Your line is open.
We now turn to Christian Schwab with Craig Hallum capital.
Your line is open.
Hey, great. Thanks for taking my question I guess.
Speaker 9: Hey, great. Thanks for thinking of my question.
Speaker 9: Looking at your generic guidance then, you know, if we assume enterprise remains stable at 5% and service provider, you know, not sure when it's going to come back, but it should come back eventually. I'm just, does that kind of mean that that's a flat year over year or?
Looking at your generic guidance then.
If we assume enterprise remains stable at 5% and service provider.
Oh not sure.
Did it come back.
It should come back eventually.
I'm just.
It kind of mean that that's a flat year over year or.
Speaker 9: kind of sounds like it should be up modestly, maybe like, like 5%. You know, is that kind of
Kind of sounds like it should be up modestly maybe like like 5% or.
Is that kind of given.
Speaker 9: Given the visibility in hand, I know you're not giving guidance, but it kind of seems what you're implying. Did I hear that right? Or did I not hear that right at all?
Given the visibility in hand.
I'll give you guidance.
It seems like Youre, implying did I hear that right is there that you have that right at all.
Speaker 4: Yeah, good, good, good question, Christian. So, you know, obviously, yeah, we talked about Q4. So, put that aside, you know, one of the principles we talk about, right, is we.
Good good question. So obviously, we talked about Q4, so put that aside.
One of the principles, we talk about right is the plan to always over performed versus our peer group by couple of hundred basis points that execution and strategy.
Speaker 4: Plan to always over perform versus our peer group by a couple hundred basis points with execution and strategy
Speaker 4: And I think if you look at all the things that have already come out.
And I think if you look at all the things that have already come out.
Speaker 4: And you look at our peer group right now, you are correct, right? It would put the zip code for that group next year, year over year, to be 3 to 4%.
And you look at our peer group right now you are correct right. It would with the ZIP code for that group next year year over year to be 3% to 4%.
Speaker 4: And, you know, we obviously expect to do better. So we are not giving guidance, but we certainly are mindful of where the market is and, you know, working on things that help us do a little bit better.
And we obviously expect to do better.
So we are not giving guidance, but we certainly are mindful of where the market is.
And.
Working on things that help us do a little bit better than that.
Speaker 9: Okay. And then, you know, how long would, you know, at these types of growth rates versus kind of, you know, our hopes to be a double digit growth company, not all that many quarters ago, you know, how long, you know, would it take?
Okay.
And then how.
How long.
Wood.
If these type of growth rates versus kind of.
Our hope is to be a double digit growth company not all that many quarters ago.
No.
Lying.
Would it take.
Speaker 10: You know, before you would maybe have to readjust the cost structure of the company, you know, permanently, if you would, if, if the business is, you know, reverting back to kind of call it a mid to high single digit growth company.
Before you would maybe have to readjust the cost structure of the company.
Permanently if you would.
Yes, it will go.
This is reverting back to kind of call it.
Mid to high single digit growth company.
Yeah no. Good question, so I think.
Speaker 4: Yeah, so good question. So I think right now obviously we are taking actions where we can deliver results even without that high double-digit growth number. My expectation is our new products and security-led offerings obviously can grow in that zip code.
Right now obviously, we are taking actions, where we can deliver results even without that.
<unk> digit growth number.
My.
Expectation is.
Our new products and security led offerings, obviously can grow in that Zip code.
Speaker 8: Our ability to drive enterprise, although it's a smaller number, is also in that zip code. Service provider, we are continuing to de-risk. That spending is not going to snap back, but we are trying to de-risk by going more to, you know, also regional providers around the world. And, you know, I would say.
Our ability to drive enterprise, although it's a smaller number is also in that Zip code.
This provider we can do.
To do this that spending is now going to snap back, but yet trying to beat it by going more to also regional providers around the world.
And I.
I would say.
Speaker 4: lot of the other people in our sector have talked about it, they expect service provider pending to resume in the first half, but we add a more normal clip by set an app of 24, right? So I think we obviously will continue to monitor it, but our goal is obviously to get back to the double digit growth without necessarily calling a date, right? Which protect us.
None of the people in our sector have talked about it they expect service provider spending to resume in the first half but be at a more normal clip by second half of 'twenty four right siding.
Obviously, we'll continue to monitor it.
But our goal is obviously to get back to double digit growth.
Without necessarily calling a database to protect I'm done.
Speaker 9: Yeah, that's extremely fair. Great. I don't have any other questions. Thank you. Thank you.
Yes. Thanks.
Okay, Great I don't have any other questions. Thank you.
Thank you Chris.
Our next question comes from and you saw the strong with Sidoti Your line is open.
Speaker 1: Our next question comes from Anja Soderstrom with Siddharthi. Your line is open.
Speaker 11: Hi, thank you for taking my questions. Most of them have been addressed already, but are you starting to see any lost deals, or is it just a matter of them being pushed out, you think?
Hi, and thank you for taking my questions most of them have been addressed already but.
Are you starting to see.
The loss still sorry, it's just a matter of them being pushed out you think.
So I think what we see on the upper a dominantly us push out.
Speaker 8: So I think what we see, Ania, predominantly is push out. And the reason I say that is, with the nature of customers we have, the design cycle is six to nine months, and we would have a pretty good idea if they were planning to switch. And we support those products for multi-years on a highly frequent basis. So we do see push out, and it's not in the category of.
And the reason I say that is.
With the nature of customers, we have right. The design cycle is six to nine months.
We would have a pretty good idea they were planning to switch and we support those products are multi year on a high.
Frequent basis so so.
So we do see push outs and it's not in that category.
Speaker 4: like a modernization project that they canceled, right? It's more.
Like the modernization project that they can sell right it's more.
Speaker 4: to support some subscriber growth, they were planning to invest X dollars, and now they are going to wait another quarter or two quarters to see where that is. So, we do continue to see that. We obviously closely look for win-loss analysis, and of course, around the world, there are deals we do lose once in a while. But majority of what impacts our results is in the deferment or capex slowdown category.
To support our subscriber growth they are planning to invest X dollars and now they are going to wait another quarter or two quarters to see where that is so so.
So we do continue to see that we obviously closely look for win loss analysis and of course around the world at Ids, We do lose once in a while.
Majority of what impacts our results.
Is not in the deployment.
Capex slowdown category than anything.
Speaker 11: Okay, thank you. And then just maybe touch on capital allocation and returning cash to shareholders. Have you changed anything in your strategy on buybacks?
Okay. Thank you and then just maybe touch on capital allocation and returning cash to shareholders.
Have you changed anything in your strategy on buybacks.
No I think we talked about it right. So the board has approved another new buyback 50.
Speaker 8: No, I think we talked about it, right? So, the board has approved another new buyback for 50 million, and we continue to be active in the market. Of course, right, there are some constraints for us around volumes and kind of results and dates and all that, but we expect to be active in buyback. And, you know, as I noted earlier, right, we have invested a lot in buyback and dividend activity even in the last 12 months.
<unk> 50 million and we continue to be active in the market of course right that awesome.
Constrained photos around volume then.
There's always an dates and all that but we expect to be active in buyback and as I noted earlier.
Invested a lot in buyback and dividend activity.
And even in the last 12 months.
Okay. Thank you that was all for me.
And Kenny.
Speaker 12: Thank you, Annie.
Speaker 1: We now turn to Andrew Suvanto with Gubeli Funds. Your line is open.
We now turn to Hendi <unk> with Gabelli funds. Your line is open.
Speaker 13: Good evening and thank you for taking my question, Drupad and Ryan. Drupad, I have a question. So in terms of when the telco service provider demand will recover, I have several questions. Like the first one is, do you think they will recover at around the same time across different geography or one who may see softness first may recover earlier? And then, and then the second,
Good evening and thank you for taking my question two parts and Brian.
Okay.
I have a question of.
When the telco service provider demand will recover.
I have several questions.
First one is do you think David a little bit coffer at around the same time across different geography, or one who may see softness may recover earlier.
And then just like.
Yeah, Yeah. So let me ask that first.
Speaker 13: Yeah, I understand. Yeah, so let me ask that first.
Yes.
Yeah. So I think good question and I would say from.
Speaker 8: Yeah, so I think good question. And, you know, I would say from
What we see around the world right.
Speaker 8: what we see around the world, right? We saw the...
We thought.
Most.
Speaker 4: impact in North America service providers, right, and that is where obviously there is the most.
Impact in North America service parts side then.
That is where obviously that is the most kind of mix are things around capex as well as inflation and interest rates and everything else.
Speaker 4: mix of things around capex, as well as inflation and interest rates and everything else. We did see some slowdown in parts of Europe , but in a couple of large territories, right, with large providers.
We did see some slowdown in parts of Europe, but in couple of like large debt equity side with large providers.
Speaker 4: Beyond that, I think, you know, we saw sort of a general slowdown, but nothing dramatic. So I think outside of North America, we will see that being stable or in line with expectations.
Beyond that I think.
We saw sort of a general slowdown, but nothing dramatic so I think outside of North America, we will see that being stable or.
In line with expectation.
Speaker 4: And in North America, I think, is where we continue to monitor sort of a bigger macro-market environment impact on when that returns, right?
And in North America, I think is where we continue to monitor startup of bigger macro market environment impact.
When that is done inside.
Speaker 4: Certainly, I think the deepest issue for us is North America and that's where we have the least visibility. I think the other regions are not as far off on plan.
Certainly I think the deepest issue for US is North America, and Thats, where.
We have the least visibility I think the other regions are not as volatile.
Yes.
Okay, and then as far as the market recovery and telco service providers Wolfcamp triggered.
Speaker 13: And then, as far as the market recovery in telecom service providers, what can trigger the resumption of the demand? I think, one, maybe the capacity. You can only hold on on existing capacity until a certain point, but I'm wondering what else. Let's say if interest rate remain high, the concern on inflation is growing. I'm wondering what can trigger the demand.
With the resumption of the demand I think one maybe the capacity you can only hold on.
Existing capacity on deal.
Certain fall in but Tom.
I'm wondering like what else into this.
Great.
Hi.
The concern on inflation is growing.
I'm wondering on what Ken triggered demand resumption.
Speaker 4: Yeah, so I think there's two two elements to that answer, right? So one is, as you said, right, which is a pure business case around the products that they used to buy from us.
Yes. So I think there is two elements to that answer right. So one is.
As you said, which is a pure business case around the products that they used to buy from us.
Speaker 4: And I think one is obviously customer demand and network traffic growth, which requires them to invest more to support that traffic. And that, I think, is harder to predict because it comes down to their priorities. And even if their budget is cut, they still have to choose, like, what is not cut or funded. So.
And I think one is obviously customer demand in network traffic growth, which requires them to invest more to support that traffic.
And that I think is harder to predict because it comes down to their priorities.
Even if their budget is that the Este Lauder tools like what is not funded it so.
That's the second part of it right that we have talked about before.
Speaker 4: that harder. The second part of it, right, that we have talked about before is we are also with those existing customers continuously trying to expand the number of categories we sell to them as well as the different parts of those businesses where we sell, right? So in that case, we are not dependent on a single business unit.
We are also with those existing customers.
Continuously trying to expand the number of categories, we sell to them as well as the different parts of those businesses, maybe set right. So in that case, we are not dependent on a single business unit.
Speaker 4: who does certain things in a big company, but it's more distributed around their mobile network, their wireline network, their security infrastructure, all of those.
Certain things in a big company, but it's more distributed around that mobile network wireline network security infrastructure all of those so.
Speaker 3: For us, from what we can control and execute, you know, ability to sell them more categories, even if there is depressed spending, is an important driver. And in terms of when they resume reinvestment, I think it's a function of...
Florida from what we can control and execute in our ability to sell them more category. Even if that has depressed spending is an important driver.
And in terms of win.
It assumes investment I think it.
It's a function of where the network traffic growth.
Speaker 4: is to a point where they cannot sustain the service level to their
It is to a point, where they cannot sustain the service level to their customers.
And then a question for Brian So Brian product gross margin.
Speaker 13: Another question for Brian . So Brian , product gross margin is outstanding despite of the revenue decline. I'm wondering what contributed to the strong gross margin primarily. I'm wondering whether that also reflect the...
Spending despite of the revenue decline.
I'm wondering what contributed to the strong gross margin primarily I'm wondering whether that also reflect the light.
Speaker 13: like a more favorable mix of enterprise versus service providers and then I'm wondering like how much
Favorable mix of enterprise versus service providers and then.
I'm wondering like how much.
Cost discipline cost cutting our supply chain.
Speaker 13: cost discipline, cost cutting, supply chain, improvement play into generating that strong.
<unk> play into Gen.
Generating that strong gross margin.
Speaker 5: Yeah, thanks for the question, Andy. Yeah, I think you're exactly right. First of all, the gross margin improvement is not a function of mix of service provider enterprise. It's more of a function of our execution and demand planning. You know, we've done a lot of work to build different avenues to gain product and to maintain our cost structure, even despite the growing input costs that we see. But yeah, it's, you know, again, it's being able to execute on plan, it's a mix of certain products and services.
Yes, thanks for the question Andy.
I think youre exactly right first of all the gross margin improvement is not a function of mix of service provider enterprise, it's more of a function of our execution and demand planning.
We've done a lot of work to build different avenues to gain product and to maintain our cost structure, even despite the growing input costs that we see but yes.
Again, it's being able to execute on plan at the mix of certain products and services not.
Speaker 5: Not services, but subscription and really managing and monitoring our supply chain and executing on our
That services, the subscription and really managing and monitoring our supply chain and executing on our plan.
Speaker 3: And I think in a different way, and we think of it as like we said, we.
I think in a different way or anything of it as we said we.
Speaker 4: will have gross margins of 80 to 82% and that is in the category of things we can control, right? So, interest rates we cannot control so much, but what we can control, we'll do our best to do what.
We'll have gross margins of 80% to 82% and that is in the category of things we can control right. So.
Interest rates, we cannot control so much but what we can control we will do our best to do what you said.
Yes.
Speaker 13: And then Brian , if I'm not mistaken, I think you mentioned earnings growth remains intact for 2023, which means that full year earnings will be above 73 cents of last year. May I verify that?
And then Brian if I.
If I'm not mistaken I think you mentioned earnings growth.
Rebates impact for 2023, which means that our full year earnings will be above 73, San so flush here may I clarify that.
That's correct.
Speaker 5: Yep, we continue to drive business. You know, we have a fully a non-GAPIPS. Full non-GAPIPS, as I mentioned, we expect to do 70 to 80 million revenue in Q4 and we'll continue to maintain our margins of 82% which we'll fall through and expand EPS year over year for the whole year. Okay. Thanks.
We continue to drive business and we have a full year non-GAAP EPS for non-GAAP EPS as I as I mentioned, we expect to do $70 million to $80 million in revenue in Q4.
We will continue to maintain our margins of 80% to 82%, which will fall through and expand EPS year over year for the full year.
Okay. Thank you.
Thank you.
Yes.
Speaker 1: This concludes our Q&A and I'll hand back to Drew Patravedi, President and CEO , closing remarks.
This concludes our Q&A and I'll hand back to <unk>, President and CEO.
Remarks.
Thank you.
Thanks to all of you and to all of our shareholders for joining us today and your continued support of <unk>.
Speaker 4: Thanks to all of you and to all of our shareholders for joining us today and your continued support of ATEM. Thanks.
Yes.
Ladies and gentlemen, today's call is now concluded. Thank you for your participation you may now disconnect your lines.
Speaker 1: Ladies and gentlemen, today's call is now concluded. We'd like to thank you for your participation. You may now disconnect your line.
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Okay.
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